PopCap Games Ready for IPO in 2011

PopCap Games is planning to go public this year after spending more than a decade as an independent company.

The Seattle-based company is the king of casual, for producing hit titles such as Plants vs. Zombies, Zuma Blitz and its most-recognized title, Bejeweled, which four million people still play every day.

“We are ready to be public this year if we think it makes sense,” said PopCap’s CEO David Roberts.

For most of the company’s existence, it has made money primarily by charging users for a game that they either buy in a box off the shelf or download over the Internet. In 2010, PopCap’s revenues totaled $100 million.

But the revenue mix is slowly starting to change.

Always an equal-opportunity platform developer, PopCap has aggressively developed games for computers, video-game consoles and mobile phones, leaving no gem unturned.

Now it’s focused on Facebook, the ridiculously lucrative market that has spawned new game companies like Zynga, Electronic Arts’ Playfish and Disney’s Playdom.

Two years ago, PopCap started to see Facebook’s potential and launched Bejeweled for free. In May 2010, it started monetizing the game by selling virtual goods, like coins and power-ups. It took only two months for PopCap to hit $1 million in monthly revenues on Facebook.

Roberts declined to say how much it is making on virtual goods now, but points out that it is the sixth-largest developer on Facebook in terms of daily active users, after other game makers, like Zynga, Electronic Arts and others, according to AppData.

“Our biggest growth is Facebook, virtual goods and microtransactions,” he said. “We are halfway through our transition from license to Facebook.”

If it is not already obvious, Roberts says, the two dominant themes of the year will be social and mobile.

PopCap’s iPhone games have also done exceedingly well, scoring two of the top 10 best-selling apps of 2010. Bejeweled 2 and Plants vs. Zombies were ranked fourth and ninth, respectively.

Interestingly, of the games that made the list, each of them costs 99 cents, except for Plants vs. Zombies, which costs $2.99.

What makes gaming such a big opportunity?

The major trend developing from smartphones and social is that games can now be as popular as a movie and “not be a weird, niche-y thing,” he said. “The new platforms are what drove that change.”

The trend that Roberts is referring to was cemented late last year when Activision Blizzard reported that Call of Duty: Black Ops hit $1 billion in sales after slightly more than one month. In its first five days alone, it outpaced all records for five-day box office receipts of any movie.

Unlike Call of Duty, PopCap’s games are more inviting. It forgoes guns and missiles for brain teasers and puzzles that offer players a few minutes of relaxation.

That’s not a small niche. On average, roughly 50 million people are playing a PopCap title across its network every month.

Roberts said there’s an opportunity to communicate with that audience more, but it has some learning to do, about how and when to send messages on game tips or cross-promoting titles. “If we are going to be a broad-based consumer company, we have to learn to be that kind of company.”

PopCap has 400 employees, half of which are based in its downtown Seattle sky-rise offices and the other half at its studios around the world, including Shanghai and Dublin. It has the enviable position of being profitable and self-funded, other than taking a small mezzanine round of funding a couple of years ago.


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