entertainment

Candy Crush Saga: On the One Hit Wonder in Gaming Apps

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This is a very smart take from James Surowiecki on the one-hit wonder game “Candy Crush Saga,” which is propelling the maker of the gamer, King Digital Entertainment, to file for an IPO:

In its I.P.O. filing, King claims that a “unique and differentiated model” for developing games will enable it to create new hits, and plenty of analysts believe that King has cracked the code of hooking consumers. But that’s unlikely. The world of pop culture contains many more one-hit wonders than hit factories. After all, luck plays a huge role (is there really a good explanation for the hula-hoop frenzy of the fifties?), and, more fundamentally, serial innovation is just tough: studies suggest that most new products fail. In the gaming industry, success has always been highly unpredictable. Parker Brothers, according to a history of the company, found that there was no secret formula: products that tested well often flopped in the marketplace, while “an in-house flop could become the hit of the industry.” It says something that King, which has been making games for a decade, had profits of just $7.8 million in 2012. The company didn’t make eighty times more in 2013 because it had cracked a code; it just caught lightning in a bottle.

If you read King Digital Entertainment’s F-1 carefully, you’ll notice this statement:

Our top three games accounted for 94% of our gross bookings in 2013. This compares to 61% of our gross bookings in 2012. As we continue to launch new games, we anticipate that the concentration of gross bookings across our top games will decline.

Those top three games are Candy Crush Saga, Pet Rescue Saga and Farm Heroes Saga. All of those games sound like a fad, as evidenced by this statement:

Gross bookings in the quarter ended December 31, 2013 slightly declined compared to the quarter ended September 30, 2013. The decline was driven by a decrease in Candy Crush Saga gross bookings, which was mostly offset by an increase in gross bookings across all of our other games. This growth in the other games was driven by a further diversification of our portfolio in the mobile channel as we released more games on that channel in the middle and later part of 2013.

I think, as an individual investor, you’d have to be a fool to buy into this IPO. The word “decline” appears 35 times in the F-1. But you can’t blame the owners for wanting to cash out quickly.

 

Kickstarter as Entertainment

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The latest Kickstarter darling is OUYA: “a new kind of video game console” that connects to your HDTV like a PlayStation but allows anyone to publish games for it. The company behind the device raised their $1 million target in eight hours, and at the moment, more than 40,000 users have contributed more than $5 million to the campaign. Ian Bogost, a video game designer and professor at Georgia Tech, has an interesting theory about Kickstarter and its backers:

Kickstarters are dreams, and that’s their strength rather than their weakness. People back projects on Kickstarter to fund the development of a new creative work or a consumer product that might never see the light of day via traditional financing. But what if Kickstarter is more about the experience of kickstarting than it is about the finished products? When you fund something like OUYA, you’re not pre-ordering a new console that will be made and marketed, you’re buying a ticket on the ride, reserving a front-row seat to the process and endorsing an idea. It’s a Like button attached to your wallet.

The fact that OUYA raised so much money so fast speaks more to our fantasies than the market reality. Whether or not OUYA will disrupt the console business is beside the point–no one could predict such a thing anyhow–the pleasure we get from imagining that possibility is highly valuable.

Citing a pen for which he paid $100, Bogost concludes:

When faced with the reality of these products, disappointment is inevitable–not just because they’re too little too late (if at all) but for even weirder reasons. We don’t really want the stuff. We’re paying for the sensation of a hypothetical idea, not the experience of a realized product. For the pleasure of desiring it. For the experience of watching it succeed beyond expectations or to fail dramatically. Kickstarter is just another form of entertainment. It’s QVC for the Net set. And just like QVC, the products are usually less appealing than the excitement of learning about them for the first time and getting in early on the sale.

Myself? I’ve only funded one Kickstarter project. And I was sorely disappointed with the final product. So Ian Bogost’s post resonated with me.