Todor Pichurov

King Digital Entertainment PLC (NYSE:KING) Launches Candy Crush in China

by Todor Pichurov August 25, 2014

In an attempt to squeeze what cash is left in its Candy Crush Saga IP, King Digital Entertainment PLC (NYSE:KING, KING message board) struck a distribution deal with Chinese Tencent Holdings. As of last Friday the candy-squashing game is available in China through both of Tencent's messaging services as well as on the Chinese Apple Inc. (NASDAQ:AAPL) app store.

The move seems to be the next logical step for the UK-based game maker. It appears KING has found itself unable to sustain, much less repeat the success of Candy Crush Saga. The company's CEO stated that Candy Crush has shrunk more than expected, while non-Candy Crush IPs have grown less than expected. These two factors made for a corrosive mixture that sent KING crashing 23%.

On Friday KING closed 4.6% up, showing the first real signs of recovery following the crash, likely assisted by the news of the new Asian launch. The positive is obvious – a huge market and massive exposure through the Tencent messaging services that are hugely popular in China, with nearly 230 million users on the WeChat platform alone.

Some are worried that the game may not find the kind of traction the company hopes for due to the quick emergence of unofficial spinoffs and the general impatience of Chinese customers. If KING intends to use the revenue streams from the Chinese market to stabilize its course while it releases a new smash hit, that would be fine. A more worrying scenario would be the expansion in Asia being a last resort to improve revenue streams and patch up failing user metrics.

With no sequel to Candy Crush despite talk of one being in the works and no other IPs that can rival its success, failure in the Chinese market could mean darker days for KING.

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