How's this for a clever business idea: develop a fun-looking app that sells items that don't even exist to millions of consumers. That's what the makers of the hit digital game Candy Crush Saga did. It works like this: the game is free, but players who want to gain an edge have to pay. And pay they did, to the tune of nearly $700 million in 2013.
Digital games like Candy Crush are by far the fastest-growing component of the entertainment industry. A hit digital game can bring in more than a box-office blockbuster. Last year, the top-grossing movie, Iron Man 3, generated sales of just over $400 million.
What about the best-selling book of 2013? Candy Crush crushed that, too. Hard Luck, the eighth book in the Wimpy Kid series, sold the most hardcover copies, 1.8 million, according to Nielsen BookScan. Total sales came to something like $20 million.
The Entertainment Software Association (ESA), an industry group of digital game providers, says 58 percent of Americans play computer and video games. The average player spends a whopping 13 hours a week on them, according to the consumer market research group NDP.
What makes digital games so popular? For starters, all you need is a smartphone. The ESA estimates that one third of Americans who play games do so on their smartphone. And games like Candy Crush don't cost anything to begin. You pay only if you get hooked and want a boost to advance to the next level. The price of each additional goodie seems small; another "life" can cost as little as 99 cents and a booster just $1.99. Either item runs you much less than a movie ticket.
That's why when King Digital Entertainment, maker of Candy Crush, went public last month, it was able to raise half a billion dollars from investors on the New York Stock Exchange. Despite trading lower, the company is still worth $6 billion. You can buy a lot of boosters with that.