This article was first published on blog.estimize.com
Tonight we get another read on the state of the mobile gaming space when King Digital reports after the closing bell. The Estimize community is currently expecting EPS of $0.45 vs. the Street’s $0.42, a year-over-year decline of 24%. Revenue expectations from Estimize of $524.19M are actually lower than the sell-side consensus of $525.75M, an implied decrease of 12% YoY. It’s no secret that mobile gaming platforms have not been performing well for sometime, meanwhile traditional video game platforms have been on fire as seen in recent reports from Electronic Arts and Activision Blizzard.The gaming industry is a battle of blockbusters. A single big hit can drive years of profitability for a game studio. Candy Crush is the hit that allowed King to run up a huge valuation in an initial public offering, debuting on the stock exchange to much fanfare. However, most of that money raised in the IPO has gone towards developing the next big hit, most of the games have been commercial flops and are expensive to produce. While KING did have three games in the top 10 grossing games on both the Apple App Store and Google Play Store in Q1, Candy Crush is still their bread and butter. However, the company’s dependence on that one game seems to be subsiding. Just last year Candy Crush made up 78% of total revenues, which has since dropped to 48%. Even though King Digital’s monthly active user (MAU) count increased 14% last quarter and the average spend per paying customer is growing, total revenue is still falling. This implies that the number of paying customers is actually shrinking. From FQ4 2013 to last quarter King’s quarterly average monthly unique payers dropped from 12.2 million to 8.5 million. Even though KING games operate on a freemium model, premium features offered through micro transactions are available, but becoming less popular with users.