This blog is an extension of our blog on Candy Crush: Proposed IPO Analysis of King Digital Entertainment plc.
Investors and analysts do tend to benchmark and compare!
Old habits die hard!
90% of us tracking technology/ internet – based entertainment space would have been reminded of Zynga once again the moment King Digital’s IPO news came into public domain. And it’s quite logical. We have seen one gaming company’s IPO and the aftermaths.
Fingers were burnt then.
Will they be burnt again?
Do we have a lesson to learn?
Do we need to be cautious?
Did King Digital think through these questions before announcing its plans to go public?
We will be in a position to answer these questions only if we compare the two companies:
Inorganic Growth Route by Zynga
Prior to its IPO in Dec 2011, Zynga acquired the following companies:
Exhibit 4: Acquisitions by Zynga prior to its IPO in 2011
Source: Wikipedia, various internet sites, http://www.businessinsider.in
King Digital, on the other hand, has only publicly announced one acquisition in its 10 year history: that of Fabrication Games, which was a Stockholm, Sweden-based mobile games developer with just 12 employees.
While there are a few grounds of similarity between Zynga and King Digital; there is much dissimilarity as well. While a generic comparison between the two is expected; King Digital definitely brings a better, transparent and profitable model though it has higher concentration. It sincerely proposes a better investment case than Zynga 3 years ago.
Can you think of some more similarities or differences between Zynga and King Digital? Share your thoughts below!