Making Serious Money From Casual Games: King.com CEO Riccardo Zacconi (Part 6)

SM: Can you describe the games that people are playing in these tournaments?

RZ: We had about 150 games on the site. They are classic casual games. They go from puzzle and word games to suduko and card games. We develop all the games in-house. There are a few games which are very popular, such as Scrabble and Bejeweled, which we license. We also licensed Who Wants To Be A Millionaire? and Deal or No Deal. We use those games in our TV commercials.

SM: How is your outlook for this year? Has the recession affected you much?

RZ: We have three business models on the site. One is the strategic gaming model. The second one is the advertising model. The third is the micro-transaction model for virtual items. Now when you play on the site, you can not only win money but you can also win jewels and stars that you can use to acquire virtual attire or items for your personal page.

SM: It is a virtual payment model.

RZ: Exactly. We definitely do feel the recession on the advertising model. We see that CPMs have reduced. We do not see a decline or any impact of the recession on the other two models.

SM: In terms of total revenue, what is that doing to your business now?

RZ: I do not have the official numbers yet. We have seen growth in terms of revenue.

SM: Are you public or planning to go public?

RZ: We do not have a plan to go public. Our only plan is to focus on the company, and I do not see any benefit in going public.

SM: I agree with you. Until you are $130 million, there is no point in going public.

RZ: Absolutely. It adds a high level of complexity but does not add any real value.

SM: You mentioned that you achieved profitability in 2005. Did you raise money beyond that point?

RZ: Yes. In September 2006, we brought two institutional investors on board, Apex and Index Ventures. They invested 34 million euros. Part of it went into the company and part of it went as a secondary to the founders and shareholders.

SM: Some of the founders cashed out?

RZ: Basically, we sold part of the shares and took some money out. Nobody cashed out 100%. It was basically a way to secure part of the achievement while gaining partners who are focused on long-term growth and achievement. I think that it is a typical structure.

SM: We do not see a lot of people taking money off the table around here.

RZ: I think that when you found a company from scratch and you put in your own money, and struggle a bit to live, then it is definitely very helpful in terms of having a long-term view of the company.

SM: I think it is right. Starting something from scratch takes a lot of years to do. Taking some money off the table gives you the personal energy and cash flow to do that comfortably, without feeling unduly stressed. I don’t see that happening a lot here in Silicon Valley. It is good that your investors are compatible with that way of thinking.

RZ: It occurs frequently here. It is not possible for companies that are not profitable, but it is common for companies that are.

This segment is part 6 in the series : Making Serious Money From Casual Games: King.com CEO Riccardo Zacconi
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