In its IPO filing, King admits that Candy Crush Saga has peaked and is in decline.
The slowdown raises questions about King's monetization strategy for the game. It also adds some color to reports from December that said King had delayed the IPO because Candy Crush was "too successful."
But the company does have some unused weapons in its arsenal that could reignite revenue growth.
Buried on page 54 of the disclosure is this language that shows Candy Crush is over:
Gross bookings in the quarter ended December 31, 2013 slightly declined compared to the quarter ended September 30, 2013. The decline was driven by a decrease in Candy Crush Saga gross bookings , which was mostly offset by an increase in gross bookings across all of our other games.
Those "other games," however, are a much smaller portion of King's business.
Monthly unique players are in decline.
Here, as of December 2013, are the daily average users for King's top games.
- All distribution platforms: over 128 million average DAUs
- Candy Crush Saga (93 million average DAUs),
- Pet Rescue Saga (15 million average DAUs),
- Farm Heroes Saga (8 million average DAUs),
- Papa Pear Saga (5 million average DAUs)
- Bubble Witch Saga (3 million average DAUs).
In other words, King is basically almost entirely Candy Crush.
That makes the Q4 2013 decline in revenue especially worrisome.
Q4 ought to be a huge quarter for any mobile game company, for three reasons. First, Apple released two new iPhones in the quarter, the 5S and the 5C, which should have triggered new app downloads. Second, Christmas day is a big day for app downloads as new users unwrap their iPhone gifts.
And third, mobile games see a huge influx of ad revenue during the holiday shopping season.
King, however, infamously (in the mobile adtech world at least) stopped allowing advertising inside Candy Crush back in early 2013 because it found that selling in-game purchases (extra moves, lives, and a pink lollipop hammer) was more lucrative than running ads between levels.
In hindsight, it looks as if that strategy hurt revenue in Q4.
However, in terms of future growth it means that King can run ads in Candy Crush any time it wants — a model that Rovio has used inside Angry Birds for years.
More From Business Insider