The Mobile Candy Is Turning a Bit Sour

A year ago, Kevin Chou decided against an initial public offering for his company, Kabam, which makes smartphone games based on popular Hollywood franchises. Instead, the chief executive officer opted to let employees and early investors sell $40 million worth of stock to investors, a move that didn’t subject Kabam’s finances to public scrutiny on a quarterly basis. “We’ve kind of taken the need for an IPO off the table,” says Chou. It was the second time Kabam had done that in two years.

When a startup that’s considered going public decides not to, it’s generally seen as a defeat. But Chou got some validation on Nov. 2, when Activision Blizzard bought King Digital Entertainment, the maker of Candy Crush, for $5.9 billion. While that’s a lot of money, it’s $1.2 billion less than King’s 2014 IPO value. The Activision deal was a reminder of both how big mobile game companies can become and how vulnerable they remain.