It seems pretty certain that digital gaming is set to be a major industry. Companies like Zynga Inc (NASDAQ:ZNGA) and King Digital Entertainment PLC (NYSE:KING) have shown that it’s possible to make money in the sphere, though neither of them have managed to show it’s possible to keep the money flowing. After Zynga’s earnings report, and on the way to King’s, now the time to ask which of the risky duo is the best bet.

Zynga

Zynga Inc (NASDAQ:ZNGA) earnings, which arrived on Wednesday afternoon, showed that the excitement surrounding the social gaming market has slipped away. Investors are no longer looking at the company as a major source of growth and are instead betting that it can stem the flow of cash from its coffers. King Digital Entertainment PLC (NYSE:KING) is in an opposing situation. Its profits were plentiful last year but investors are wondering whether that can be repeated in the year ahead.

Zynga: The case for mobile

It’s been a disappointing couple of years for any unfortunate who was convinced to bet on Zynga Inc (NASDAQ:ZNGA) as it went public. The company’s stock has lost more than half of its value since its 2011 debut, though it has been recovering some of that value in recent months.

The most important positive mover at Zynga Inc (NASDAQ:ZNGA) is increasing stability of management. The company is now led by Don Mattick, an experienced industry executive. It no longer dreams of lobbying to legalize online gambling in the United States, it dreams of building a gaming company on a solid foundation

The case for Zynga is simple. The company is reducing its costs and reversing its revenue decline, it’s trading at just over four times 2013 revenue and analysts reckon it could return to profit in 2014. The company comes weighed with risk, but its more conservative management appears aware of those problems. Revenue generation is still an issue, however.

King: New kid’s all right

King Digital Entertainment PLC (NYSE:KING) is trading at just over four times its 2013 profit. The company is young and cash rich. It has a single blockbuster property that’s failing it right now, and several others that have achieved a small amount of success, mostly off of the back of Candy Crush.

The market has valued King Digital Entertainment PLC (NYSE:KING) as a company that’s going to disappear soon, and it’s easy to see why. With only one product, and one that’s expected to decline massively in popularity inside the next year, the firm may be worth little more than the cash it holds.

King Digital Entertainment PLC (NYSE:KING) management have shown some ability to create a game that brings in a profit, but they don’t have much of a track record beyond that. Their ability to catch the next trend in gaming is questionable, and their commitment to doing so has not yet been tested.

Zynga or King?

So what’s the best risky bet in the mobile gaming world? It’s tempting to say that King has a lower valuation, trading at just 3 times revenue, but that’s not quite fair given the revenue drop off expected next year.

Both Zynga Inc (NASDAQ:ZNGA) and King Digital Entertainment PLC (NYSE:KING) have cash and neither has much in the way of guaranteed cash generating assets. Neither company owns anything, or operates in a way, that makes it seem all that different.

The industry is far to risky to get into as a value investor, but a risk seeking growth investor could be tempted. With that in mind, Zynga Inc (NASDAQ:ZNGA) looks like a better pick. It has proven management sitting on top of its investment decisions. King CEO Riccardo Zacconi is untested, driving the risks through the roof.