King.com, the European-casual-gaming-company-that-could, is cementing its ascendance on the Facebook platform by poaching one of the key producers responsible for EA’s Sims Social and opening a new game development studio in London. The company just hired Catharina Mallet away from EA to lead the new studio, which should have 40 people by year-end.
King.com, which started in Sweden and hasn’t taken outside funding since raising $43 million seven years ago, is one of two European gaming companies that have made a serious run on the Facebook platform in the last year. While Zynga has seen its revenue growth slow and other longtime Facebook developers like Crowdstar and Funzio have mostly moved onto mobile games, both King.com and Germany’s Wooga have both climbed up the developer leaderboards.
King.com has beat out EA and more recently, Wooga, for the #2 spot among game developers in terms of daily active users on Facebook, according to AppData. The number of game sessions has also blown up by tenfold to 3 billion per month, from 300 million a year ago.
The company has a long, long history. It’s almost a decade old and started out building casual games for a destination site at King.com (naturally). That made for a decent business that’s been profitable for seven years. But King.com got turbo-charged when it started building Facebook games too. The company’s long history of building for an independent destination site has given it a few competitive advantages. Launching games outside of Facebook ensures that only the very best and most viral games make it onto the platform.
“Because we see which games fail outside of Facebook, what we have managed to do is have a hit-proof business on Facebook,” said chief executive officer Riccardo Zacconi. It’s worth noting that Zynga and many other developers like Kixeye are ironically going in the opposite direction by pouring resources into standalone destination sites.
The business now has several legs to stand on. It has a destination site for casual games, Facebook games and then mobile titles. Like Zynga, it makes money through virtual currency sales and advertising. But it also has a third revenue model. The company also recently signed a deal with AOL to provide skilled tournament games. Those are games where players have to pay a very small entry cost (like less than $1) and compete with others. This deal is financially material to King.com, although the company won’t say how much the partnership will bring in.
All this said, King.com is starting to feel the competitive heat on Facebook. Zynga recently launched Bubble Safari, which looks a lot like Bubble Witch Saga, King.com’s top game on Facebook.
“We have the leading bubble shooter on Facebook. While there are a fair number of copycats popping up, we’re pleased with the continued audience engagement that we get with Bubble Witch Saga,” said chief marketing officer Alex Dale. “We think that will improve further when we launch the game on mobile.”
Zacconi adds that King.com’s model is more capital efficient than Zynga’s. “For one of their games, they might need 80 people,” he said. “But Bubble Witch Saga had a team of eight. To launch a new game on the web, we need two people.”
He also says that the company hasn’t been feeling the effects that other game developers have as Facebook clamped down on viral channels, notifications and requests for games. He says King.com’s K-factor or viral coefficient is roughly 0.8. “For every user we get, we get almost another one for free,” Zacconi said. Keep in mind though, that number is still way down from the heights of 2008 and 2009, when apps ran wild on the Facebook platform. Other social gaming companies, which still have the institutional memory of that era, have had a harder time coping with the Facebook platform’s new realities.
When Mallet comes on-board, she’ll be spearheading the development of casual games. Zacconi stresses that King.com is not going into resource management or sim games. Mallet was of the top producers behind Sims Social and she came to EA through the up to $400 million acquisition of social gaming company Playfish.
Over the last year, EA’s social gaming push has faced several management changes. After Zynga poached John Schappert to be chief operating officer, Barry Cottle followed him over to spearhead mergers and acquisitions. That made room for Playfish co-founder Kristian Segerstrale to move up in the ranks and become EA’s executive vice president of digital. Another key Playfish executive, John Earner, recently left to be an entrepreneur in residence at Accel Partners.