Video game mania and the hunt for the next Candy Crush hit
Video games aren’t just for kids – adults and youngsters are now playing them more than ever on their tablets and smartphones. The video game industry has exploded in size and a new game release is now more lucrative than a typical Hollywood blockbuster. Now many investors are looking to grab a piece of the action.
Gartner predicts the worldwide video market will top £33 billion in 2015 – up £12 billion from last year. The only thing that can dampen the prospects or pleasure of gaming now is probably the battery life of the average smartphone!
Given all the excitement surrounding the industry, it was disappointing to learn that King Digital made a lukewarm debut at the New York Stock Exchange. The games developer is famous for creating Candy Crush Saga – the most downloaded free app of 2013. Despite its extraordinary success, the company’s share fell 15% by the afternoon, making it the worst opening day for an IPO this year.
Why the sour reception? There’s a concern among investors that King Digital relies too much on the success of one game and the ability of it to sustain its popularity in the long term.
The firm has developed over 180 games, but only three have been big hits. Candy Crush Saga, Pet Rescue Saga and Farm Heroes Saga – account for 95% of its total revenue.
Determining what the next hot video game will be is difficult to predict but King Digital is confident it will continue to play a big role in the industry. The uncertainty of where the next hit will come also hasn’t deterred the UK’s own red-hot gaming sector from growing.
Grand Theft Auto – created by Take-Two Interactive Software – had been referred to as one of Britain’s top cultural exports. The game’s fifth release smashed a record for the gaming industry by passing the $1 billion sales mark in just three days – more than any movie opening in history. This success also helped the creators double their profits this year. This phenomenal achievement has not only changed the gaming industry forever, but also the entertainment business.
For developers trying to emulate this mindboggling success, there’s good news on the investment front. The EU has granted tax relief to producers of video games across the continent. TIGA, the trade association representing the UK video games industry, believes the new gaming tax break will give companies an extra £188m to invest into the sector over the next five years.