King Video Game

King Video Games

Barcelona, Spain

By: Nia Hilson and Ivana Roman

Overview

King Video Games is now known as a mobile app developer. Since their launch, they have developed over 200 games, but focus on four main games which are the popular Candy Crush, Farm Heroes, Pet Rescue, and Bubble Witch. After 15 years of developing games, King has grown to have over 600 million unique users, making it the largest video game user base in the world.

King focuses on creating puzzle games for the casual gamer, but have begun some development into mid-core games to reach a larger audience. The video game company has seen huge success in developing their saga game model, the first game company to do so. King started by creating web based games, which later evolved to social media integration and finally app games.

Being a casual game focused company has shaped the way they develop games for their target market. It has affected what businesses King targets to sell advertising space on their games. Their business model has remained relatively the same, but their company culture has a huge impact on the innovation in their games.

Background Information

King Video game was founded in 2003 by 6 individuals who’d all worked together on a number of websites. The original CEOs, Riccardo Zacconi and Toby Rowland worked together at uDate.com under Melvin Morris. When Morris sold the uDate.com to Match.com, the two teamed up with former coworkers to start KingVideogame.com. Morris gave an angel investment to help get the men started. By Christmas 2003, the website had not taken off as they’d hoped. Morris than gave them more money to stay afloat. It was very good that he did because 2 years after their opening, they received investments from major investors. In 2005 Apax Partners and Index Ventures invested $43 million in the company. They didn’t need any more investments after that as the company was going strong and partnerships with yahoo and other search engines helped to get their website better known.

In 2009 there was an obvious shift in usership. At this time, social games were coming out. They proved to be more convenient for users and were easy to share. Social games didn’t exactly mean playing with each other, rather playing on social media sites. Many of the games in this model were games where you may spend hours at a time cultivating the game such as a Farmville. King entered the market with a new game offering which may attribute to their quick success. Miner Speed was their first social game and it was released in 2009. The game was reminiscent of Bejeweled where you move the pieces to break them off of the board.

King started the idea of saga games soon after. They started with Bubble Witch saga. This game was released in 2011. The saga game was created as a game that allowed you to play for a while and stop without losing your progress. Most games allowed you to play until you died and then you had to start again with every new round. The saga allowed users to come back again later without completely losing their progress. By April 2012 BWS had over 30 million unique users. After the success with Bubble Witch Saga, the company released the Candy Crush Saga. Candy crush remains one of the top played casual games with approximately 408 million unique users. The company noticed the growing market in mobile gaming. In 2012 both BWS and CC were created into mobile apps. Today, BWS is on its 3rd generation and the Candy Crush Saga has created a brand umbrella of games. There are other successful games in the King Portfolio as well including Pet Rescue Saga and Papa Bear.

With all of their success the company opened themselves to outside investments when they became a publicly traded company in 2014. In previous years they had taken no money since the Apax and Index investments. In 2015, Activision Blizzard announced they planned to purchase the company for $5.9 billion. The deal was completed in 2016 and as of today, it is a good merge.

Strategy

King designs its game to be played casually, specifically with the ability to be picked up and put down throughout the day. This model was created as the saga maps where levels don’t get harder, but players move throughout a map that unlocks new content the more the game is played. The first in the gaming company to launch this type of gameplay, the saga model can be found replicated throughout the App Store.  

Another feature of King Video Games is the ability to be played across platforms on Facebook and mobile app with no interruptions. This facilitates the ease of users being able to play throughout their day, at their own convenience.

All games developed by King are free to download and play with the option to purchase virtual items to enhance game play. According to a site visit to their Barcelona office, only 10% of their users actually make a purchase with 1% of those purchases paying more than $1. For this reason King must focus on acquiring a large user base to ensure they can make a profit. As of Q3 2017, there are 293 million active users per month, which means about 30 million users are making at least 1 purchase.

The final component of their game design is the social integration feature. The popularity of King games has relied on its ability to be viral through sharing among social networks. The vitality feature is even embedded in the lifetime value of a customer, which has led Candy Crush to currently be #1 in the App Store.

At the site visit to their Barcelona office, a representative explained in further detail the game life cycle seen in the picture below.

A brief summary of the process:

  1. Idea pitch, which can be made by anyone at any level in the company
  2. Prototype for testing, the minimum viable product of game mechanisms
  3. Preproduction of building teams and resources to develop game.
  4. Production, where games are tested multiple times in small markets before the final launch of the game in their target market.

This process of experimentation ensures that King Video Game is delivering the best possible content to their target market. Data scientist at the studios are constantly receiving user feedback from the game through engagement and button interaction to constantly refine gameplay. This constant refinement improves experience to make current versions of the game the best possible.

Since ideas can come from any part of the company, it is important to King to foster a culture of innovation, where employees feel comfortable sharing their ideas. To accomplish this, Kings as a company invests heavily in the development of their employee, from the hiring process to their career development. Whenever possible, the CEO also encourages employees to share their ideas. The success of this strategy lies in their business model of basing every decision in data.

Business Model

King Video Game has a two pronged strategy to make profit and develop growth. The first is the Business to Consumer marketing of the app. While free to play, the in-app purchase is the main revenue stream for King. About 85% of their revenue comes from this aspect of marketing, and at one point it was enough to sustain the entire enterprise. For a few years, King Video Games did not utilize their second source of revenue of selling advertising space in their games.

King started using incentivized 15-30 second videos in game, which consumers felt were less intrusive, higher than average engagement, and led to positive brand association for the advertised brand. Leading above industry average, King has a click through rate of more than 5% and a video completion of 85%. In 2013, King rolled out an innovative suite of ad solutions available to their advertising partners which included the incentivized videos and “brand as a friend.” This solution allows  advertisers to include themselves as an in-game “friend” to players, helping users unlock new content in the game. This increased user engagement with the brand and reflected positively with the brand as well.

According to the data scientist during the site visit, there is another aspect of what has made King successful. Rather than.  Jump into every new technology that emerges, King has had a strategy of waiting a few years for new platforms to mature and stabilize before developing games for it. They used this strategy for Facebook and mobile apps, and have been successful when their games have launched. This avoids wasting resources in developing games for a platform that might fail.

When King is evaluating the investment into any campaign, they compare the cost of the customer acquisition vs. the historical lifetime value of the customer. The cost of customer acquisition is straightforward, especially in digital channels where platforms and third party ad networks will evaluate how much an installation will cost the company. The lifetime value is a function of retention (time) multiplied by sales (money) multiplied by the virality (sharing within network). If a data scientist can prove that the lifetime value will be more than cost, a campaign will move forward. In this way, King is maximizing as much as possible their investments.

Marketing/Branding

On the 10th anniversary of the company in 2013 all brand and marketing for King.com was revamped, starting with the name. The .com was removed from the company logo and marketing materials to reflect their presence and availability in places other than their online website. The company has decided to market their games to American women aged 25-55. These are generally the decision makers in homes. So their games, logo, and other aspects of the experience are optimized for them. While currently they do not advertise directly in Candy Crush, they have created alternative ads to help make the game become more fun. One alternative ad a company can use is an in game friend. Whatever company would like to advertise to users can purchase a character who will interact with users and help them to move forward in the game with helpful tips and tricks. Other ads include 30 second ads in exchange for game enhancers or special themed game versions. By holding this market they are able to charge a premium for in game advertising both in Candy Crush and their other offerings.

King also does it’s best to advertise itself. In 2017, CBS signed a season of a live Candy Crush themed game show hosted by Mario Lopez. When the show was coming out, they optimized the app to allow users to play along at home and get special game enhancers. Unfortunately the show didn’t take off as they’d liked and it will not be returning for another season. They also advertise via Facebook, app stores and many other internet mediums.

Current Success

In 2017, King Video Games had a number of successes:

  • Candy Crush’s 5th Anniversary
  • CBS signs Candy Crush as a TV Game Show series with host Mario Lopez (it was later cancelled after one season)
  • Vanessa Hudgens collaborates with King for the release of their Bubble Witch 3 app

King continues to develop new games and expand on their current games. This has added to their success, which has led to Candy Crush Saga becoming #1 in the Apple App Store once again after a few months of hovering in the top 3.

Competition

Competition for King Video Games includes:

  • Zynga
  • Wooga
  • Social Point
  • EA
  • DeNA
  • Fun Technologies
  • Gree
  • Peak Games
  • Rovio
  • Pop Cap
  • Pretty Simple

Conclusion

King Video Games comes from very humble beginnings. Unlike some other browser based gaming sights of yesterday, they have been able to withstand this tech revolution that we’ve seen in the first part of the century. They were able to grow the largest user base in the world and place themselves in a prime spot for success even after being very close to failure. With perseverance and skill they were able to make themselves the gaming company to beat for casual games. As they work on entering new markets, it will be interesting to see their business model changes. In visiting the company, we were able to see the type of experience they create for themselves to best serve their users. The company culture at King reflects in their gaming and creates an openness for users and workers alike.