King Digital Entertainment Plc struck gold with Candy Crush Saga, the runaway hit that made its way onto hundreds of millions of smartphones and spawned a $1.5-billion franchise.
Now, the rest of the smartphone game sector is waiting to see if King can pull off a coup in the public markets, and perhaps spur a mobile gaming initial public offering (IPO) rush in the process.
London-based King is seeking a valuation up to $7.6 billion when it lists on the New York Stock Exchange on March 26. The offering would mark the largest US IPO from a booming sector keen to emerge from the shadow of Zynga Inc, the social gaming firm that lost half its value after a 2011 IPO that valued it at $7 billion.
"The market is ready to move on from Zynga," said Kevin Chou, the chief executive of San Francisco-based social and mobile game company Kabam. "There are no great public companies (in gaming) for investors to invest in the West that have the large majority of their revenues coming from mobile."
Others say King will struggle to shake off comparisons to one of the consumer dotcom sector's most oft-cited failures. Some investors warn of the danger of a sector where games like Draw Something can top the charts then decline steeply in several months. Or, where an indie app like Flappy Bird can attain overnight success, often without clear reason.
No wonder King, which ported its games to mobile devices relatively early, has tried to set itself apart from Zynga, which was slow to revamp desktop-bound hits like FarmVille. But like Zynga and its game Farmville, King also relies heavily on Candy Crush for three-quarters of its revenue.
A successful IPO would be a triumph of discipline for King chief executive Riccardo Zacconi and a company that almost shut a few months after it was founded in 2003.
King, formerly King.com, was saved from bankruptcy by a last-minute infusion of investor capital on Christmas Eve in 2003, and survived to eventually turn a profit in 2005, and every year since.
The company has grown slowly, keeping a low profile while its more flamboyant rival Zynga went public in late 2011.
King, which will offer 22.2 million shares at between $21 and $24 a share, saw its addictive puzzler Candy Crush Saga begin spreading virally on Facebook in mid-2012.
By late 2013, Candy Crush Saga had soared to the top of the app charts, with 53 million daily users and was being touted by Ellen DeGeneres on her TV show. The game was the most-downloaded free app and top revenue-grossing app in 2013.
Now some warn Candy Crush, which accounts for three-quarters of King's 2013 revenue of $1.9 billion, may have reached its peak, and its decline could seriously threaten King's business. King's revenue for the quarter ended December 31 declined three per cent from the preceding quarter, which the company said was due to a fall in Candy Crush gross bookings.
"We're rooting for them," said Dennis Fong, a retired pro-gamer, known as Thresh and heads gamer network Raptr. "But Candy Crush is already on the decline if you look closely at the numbers and it's similar to what Zynga looked like when it went public."
Zacconi, a mild-mannered Italian who co-founded King, emphasised in public comments as far back as 2012 that King's games were doing well on Facebook even while Zynga's user base shrivelled. In private, he was fiercely competitive with a firm he believed was out to crush his company.
Zacconi, who sports rimless spectacles, often told friends he had heard Zynga employees gave the code name Six Feet Under to an internal project to bury King.
"I'm taller than six feet so that's not going to work," a person close to Zacconi recalled him saying.
Before King, Zacconi worked for dating site uDate, at venture capital firm Benchmark Capital Partners and with the Boston Consulting Group.
King has not had a funding round since September 2005, when it raised $46 million from Apax and Index Ventures.
Analysts have speculated King could be under pressure from its investors to go public now rather than test their ability to replicate Candy Crush Saga at its peak.
For other fast-growing game companies with IPO ambitions, King's performance may set the tone.
Kabam, which raked in $360 million in gross revenue in 2013 and expects to hit $550 million to $650 million in 2014, is currently weighing an IPO and waiting to see how the market responds to King's offering, said Chou, the chief executive.
With games making up 90 per cent of the top-grossing apps on app stores, Chou was confident there would be investor appetite.
"In my discussions with investors, analysts and bankers, the receptivity seems incredibly positive, and King would not have their filing public if they didn't see what I'm seeing in the marketplace," Chou said.
