The initial public offering of the game company King Digital Entertainment Plc didn’t have a very good opening. The shares plunged approx 15 percent soon after its debut on Wednesday. What could have possibly gone wrong? The company seemed to do quite well since the official launch of Facebook game “Candy Crash Saga” in 2012.
Diversity is indispensable for sustainability. No tech companies can live on one specific business idea nowadays. What has made King famous lately is its recent addition of Candy Cash Saga to its gaming library. Now, how long it expects to survive based on a handful of hit games on its plate? King needs to take peer pressure seriously. Before a rival company takes over its place, the mobile gaming company has to meticulously analyse its position in the market. The company has to understand its industry trend and the pattern of evolution. It has to be more observant in terms of identifying the key driving factors of the industry.
Second, the company has to grow as a more inventive market participant. The mobile gaming industry is always under the pressure of producing the new big hit. King Digital Entertainment Plc has to be a little faster in terms of product innovation. The company should invest more in new game ideas and be able to publish many more hit games like Candy Crush Saga. The more will be the number of its fan followers subscribing to its game service, the greater and lengthier will be the chances of the company’s survival in the future.
King Digital Entertainment Plc has been in the industry since 2002. However, it took the company almost 12 years to emerge as one of the top players of the industry. Even for that, the company had to rely on the social media giant – Facebook. Almost everyone would agree on the fact that the most popular game of King – Candy Crush Saga – got major attention from the Facebook users or social media site visitors. Now, if Facebook pulls out its hand, or denies any collaboration in the future, does the company have a backup plan in place to continue its existence in the market? King Digital Entertainment Plc has to think about it and reach out for new collaboration opportunities.
Reasons Why Analysts Believe King’s Share Will Regain in the Future
First, King showed a spectacular revenue growth in the fourth quarter of 2013. The company generated revenue of $602 million in that quarter, which was a huge jump from a revenue of $22 million generated in the first quarter of 2012.
Second, analysts don’t really want to take a pessimistic outlook at this point of time. King’s future plan have been quite appealing to the investors. For example, analysts think King has revenue potential. The biggest chunk of company’s revenue come from its other small games. According to the company spokesperson, instead of chasing Candy Crush Saga success for long, King expects to build a portfolio of high quality games for its target consumers.
In all, it can be said that it’s time to take a long call. Investors should buy King’s share and take a long term position as there are chances of revival in the future.
