PopCap, Eyeing an IPO this Fall, Talks Revenue Growth, Shifting Platforms, & Zynga Jealousy in a Blitz with Media, Investors
PopCap, the Seattle-based maker of popular online and casual games like “Bejeweled” and “Plants vs. Zombies,” is coming off a very newsy week as it tries to build buzz among investors ahead of a possible initial public offering later this year. Of course, if PopCap actually files an IPO prospectus with securities regulators, the company would have a legal duty to keep quiet—so it’s clearly getting the hype-building done now.
First, we saw CEO David Roberts giving Reuters some more detail on the IPO plans. Roberts pegged the target date as the fall, specifically between Labor Day and Thanksgiving, provided the market doesn’t stumble. Roberts added that he thought it would be attractive to go public before Zynga, the red-hot maker of “FarmVille” and other social-game hits, gobbles up all kinds of mindshare on Wall Street.
PopCap also laid out some selective financial numbers in its media media blitz. The company said it hauled in about $100 million in revenue last year, which represented growth from about $80 million in 2009 and $50 million in 2008. Digital sales account for about 80 percent of the company’s business, with the balance from retail stores.
Reuters reported that PopCap “is auditioning bankers, who are giving “test road shows” and presenting slides to potential institutional investors to gauge the viability of the IPO.” And Roberts said he’s heard pitches from both the New York Stock Exchange and NASDAQ about potentially listing the company, although he said NASDAQ, the trading hub of more smallcap tech companies, “is more likely.”
Business Insider followed up by publishing some of the slides from PopCap’s presentation about itself, showing that the mobile platform has kept relatively steady. About one-third of the players of PopCap games have used the mobile platform in the past five years. In that same time, console and online play have grown to make up for a decline in desktop gaming. Another slide said PopCap’s monthly social-game revenue has doubled since last August, to about $2.5 million.
In an interview with Games.com—which noted that the company was on an “NYC media tour where they’ve been outlining their plans to make a splash on the stock market”—PopCap co-founder John Vechey said he was a little jealous of how Zynga has grown successful games on Facebook.
But he also said Zynga’s experience enabled PopCap to introduce a social version of one of its big games, called “Bejeweled Blitz,” which Vechey said had earned more than $1 million in recent weeks. “Before, if you asked me if Zynga would be around in five years, I would have said no. Now I can see Zynga being around — the question is whether it will be relevant or not,” Vechey told Games.com.
Finally, the PopCap duo talked with Gamasutra, where Roberts delved a little more into the strategy and psychology behind the possible IPO. That includes whether investors “can understand a company like ours,” he said, adding that investors tend to “think of us as a manufacturing company.”
“They all want to know, ‘what’s your pipeline, how many games are in the pipeline, how do you make them faster and make them cheaper,’ and that’s not what we do. A lot of our challenge will be explaining that to people, as a lot of the stock price for a company like EA is what investors think is going to happen with their next game,” Roberts said.
He also pointed again to the effect of Zynga, which coincidentally just opened a Seattle talent-recruiting beachhead in Seattle’s Pioneer Square. “Because if they go public, they’re going to define the market,” he said. Common sense would say that there will be a lot of interest in Zynga, with its estimated revenues of $500 million a year. But it will be interesting to see if Zynga hogs all the limelight on Wall Street for gaming companies, or whether it will leave room for players like PopCap.