Make a mobile game that climbs near the top of the charts, and the dollars start flowing. In a big way.
For proof, look no further than the booming business that's fueling casual game developer SGN. The maker of such titles as "Cookie Jam" and "Panda Pop" is poised to almost triple revenue this year to about $280 million from $100 million in 2014, according to Josh Yguado, president and co-founder of the Los Angeles-based company.
Critical to a breakout mobile game is having tens of millions of users download the app and play all they want for free, with a small percentage of fanatics paying for advanced features or to skip levels.
The 10 percent of paying SGN users are producing pretax profit margins for the company in the neighborhood of 20 percent, at a time when scores of heavily funded tech start-ups are burning millions every month for growth.
But just like hit-makers in other industries, the eternal challenge is staying power. In today's world it requires creating multiple hits that become top 20 grossing games on iOS and Android.
Zynga was pummeled as gamers shifted from desktops to smartphones and has yet to recover despite a renewed focus on mobile. King.com, creator of the massively popular "Candy Crush" franchise, is trading below its IPO price from a year ago even though the company has produced successful follow-up games "Farm Heroes" and "Pet Rescue."
SGN is steering clear of public markets for now and focusing instead on creating an arsenal of popular titles.
"The market doesn't seem to like casual game developers right now," said Yguado, who previously worked at Fox and MTV. "We want a big enough portfolio so that there are no ups and downs or surprises."