NEW YORK — Perhaps virtual candy is not as enticing as once thought. King Digital Entertainment, maker of the hit puzzle game “Candy Crush Saga,” priced its stock offering at $22.50 a share Tuesday, said a person briefed on the matter. That was the midpoint of an expected price range. Still, that values the company at just over $7 billion in one of the biggest initial public offerings this year.
Now King must convince new investors it can come up with new hits to replace its aging cash cow.
King, an 11-year-old multinational company, has posted huge growth thanks to “Candy Crush.” Nearly 100 million users play every day, drawn, in part, by a seemingly endless supply of new levels and features. Its success has overshadowed King’s other titles, including “Farm Heroes Saga.”
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King relies on a freemium model: Its games are largely free to play, but additional content or virtual goodies cost money. Most players of freemium games never buy anything. The small percentage who do, however, spend a lot.
The company’s earnings jumped 7,000 percent from the same time a year ago, to nearly $568 million.
King hopes to avoid the fate of Zynga, the company behind “FarmVille.” After a splashy market debut in 2011, the US game maker has struggled to stay relevant, prompting a painful restructuring.