How Riccardo Zacconi launched a $5bn gaming phenomenon

Riccardo Zacconi
Riccardo Zacconi: grand old man of the industry

“Glance across any tube or bus and the chances are you’ll catch somebody playing Candy Crush Saga,” says The Independent.

Since launching in November 2012, this “deceptively simple” puzzle game has stormed the app charts, notching up more than 500 million downloads and establishing itself as “one of the most popular commuter distractions” in the world.

Its developer, King Digital, is thought to be taking more than $900,000 a day from the app – and this week announced plans to float on Nasdaq. If the $5bn valuation being bandied around when rumours of an initial public offering (IPO) started circulating last summer is true, co-founder Riccardo Zacconi will have earned his accolade as “the poster boy of the European gaming industry”.

For a while, it looked like the float might be pulled at the last minute – because of worries among would-be investors that King would prove to be a “one-hit wonder” (see below), says The Daily Telegraph. But Zacconi, an Italian living in London, has shown he has staying power.

King is more than a decade old and was trading successfully when Mark Zuckerberg was still drooling over pictures of Harvard hotties in his dorm. Zacconi – a 46-year-old veteran of the dotcom bust from whose ashes King eventually sprang – might be said to be a grand old man of the industry.

He is described by many as “charming”, but one reporter noted a “thin-skinned irritability” when he visited the company’s office in the narrow streets of Soho. Its colourful walls are decorated with cartoonish murals depicting characters from King’s games, but Zacconi came across as having “more in common with traditional office managers” than the stereotypical young, creative gaming boss.

If that’s the case, it’s hardly surprising, says The Guardian. Zacconi, who was born in Rome in 1967, is an economics graduate and polyglot who began his career in Germany as a management consultant with LEK, before joining Boston Consulting in 1993. He met King’s co-founders when he moved to head Spray, the German unit of a fledgling news, search and email portal.

They hoped to float, but when the bubble burst they were forced into a firesale. Zacconi dusted himself off, moved to London in 2001 and two years later founded King. He describes the bust as “a wake-up call”. “We learnt that you have got to think long term and stick to healthy economic principles.” King went into the black in 2005 and has stayed there ever since.

King has used cash attracted from private-equity firm Apax and venture-capital firm Index Ventures to fund an aggressive expansion: it has several offices in Europe and one in San Francisco and the main focus now is Asia.

“The company is growing explosively. We are continuously reforecasting upwards,” Zacconi told The Daily Telegraph last year. Bullish talk. But, with the flotation looming, he must be praying that lightning doesn’t strike twice.

Is this more than a one-hit wonder?

Compared with recent high-profile tech launches on Nasdaq, King looks a winner. For starters, say Tanya Powley and Sally Davies in the FT, it is highly profitable. In 2013 King made revenues of $1.8bn and a pre-tax profit of $714m, according to filings to the American regulator, the Securities and Exchange Commission.

The worry is that around 75% of gross revenue derives from one game alone: Candy Crush Saga. The question that might trouble investors is whether the success of that single game can be turned into a sustainable business.

The “ghost” that haunts Riccardo Zacconi, says Katherine Rushton in The Daily Telegraph, is that of its rival Zynga, the company behind FarmVille – a former Facebook favourite, like Candy Crush Saga, whose “inflated” 2011 IPO left many investors burned. Shares, which floated at $13 in December 2011, peaked at $14.70, before crashing to around $4-$6.

“Zynga’s problem is that it didn’t produce a convincing enough follow-up to FarmVille,” says Emma Haslett in Management Today. And although King has other creations (Bubble Witch Saga, Farm Heroes, Pet Rescue…) none has had the storming success of Candy Crush Saga. And no one needs reminding that interest in these games “tends to wane pretty quickly”.

The rigour of the company’s development plan gives grounds for hope, says Oscar Williams-Grut in The Independent. King aims to produce a new game every month and to test which ones it should develop. If a game doesn’t work, “it fails fast”, Zacconi told The Daily Telegraph. He has also worked out the optimum timings.

Each level is designed to take a maximum of three minutes – a timeframe he calls “the minimum common denominator” for consuming content. “It’s the length of a tube stop or a queue for a coffee.” The one-hit-wonder problem will never go away. But it’s hard to imagine that anyone has thought more deeply about cracking it than Riccardo Zacconi.