Source: King

Monetization problems plague the social gaming industry, and investors responded with a retreat. Zynga (ZNGA) shares have fallen about 60% from its IPO price in 2011. King (KING.DL) shares have slipped over 11% since its listing last month. Zynga's recent news suggests a profitable new turn, but King remains overreliant on Candy Crush Saga. How much will that dependence hurt King further down the road? 

Zynga and King both focus on freemium games, or titles that make money through in-game purchases rather than the sale of the game itself. The key monetization metric for those in-game purchases is monthly unique players, or MUPs, which includes the number of unique players who made a payment through a supported platform. It's an imperfect metric, as single players can sometimes register twice if two different platforms were used; still, it provides an invaluable window into how well these companies can and will monetize their user base. 

While Zynga's MUPs have slipped, King is poised for a Humpty Dumpty-style fall. 

King wins MUPs... for now
Here's a look at the MUPs for Zynga and King over the past two years. Note that Candy Crush Saga was released in the spring of 2012 for Facebook and toward year's end for mobile devices. 

Source: Company filings 

Zynga's MUPs have declined for several quarters, while King's numbers soared as Candy Crush became popular to the point of being a cultural phenomenon. That was vital for King's business, since 78% of its total fourth-quarter bookings came from Candy Crush.

The chart also tells another story, though. Zynga's declining, but not at an alarming rate... especially since the company seems to have a change of business strategy in the works. The company also has three strongly performing games supporting its bookings. 

King is poised for a very big fall when Candy Crush loses popularity. That day will certainly come, too... just ask Rovio, makers of the once ubiquitous Angry Birds games. 

Is Candy Crush the next Angry Birds? 
Rovio reported an over 50% profit drop between 2012 and 2013 with an implied weakening from the games segment. Revenues were still up year-over-year, but that owed more to the Consumer Products segment that accounted for nearly half of last year's total revenues and includes a wide array of products including amusement parks, cartoons, and toys.

Source: Rovio

The company attempted to push Angry Birds back to the forefront last year with the release of the freemium Angry Birds Go!, a title that failed to find an audience or much goodwill from reviewers. Rovio still has the benefit of that Consumer Products segment as support, though.

King could certainly pursue a hard merchandising push related to Candy Crush Saga. The push would have to get enough products onto the market before the game's popularity crashes in order to have a similar cushion, however. 

It's impossible to say when Candy Crush will lose favor with players. However, in its IPO paperwork, King admitted that fourth-quarter gross bookings were down more than 2% from the previous quarter due to a decrease in Candy Crush gross bookings.  That's not a warning sign quite yet, but if the quarterly results this year show further declines due to Candy Crush then it might be time for concern. 

Foolish final thoughts 
King is doing a far better job at monetizing its user base than Zynga. That wind could easily shift in the other direction if Candy Crush Saga popularity dwindles, however. King might not have the time to establish a business-saving merchandising empire like Rovio, either.