STOCKHOLM-- King Digital Entertainment PLC posted a 28% drop in net profit in the most recent quarter, as revenue from its three-year-old "Candy Crush Saga" game continued to decline.

The Swedish company reported net profit of $119 million, or 38 cents per share in the second quarter, down from $165 million, or 52 cents a share in the same period a year earlier. Revenue fell 18% to $490 million.

King Digital blamed the lower profit and revenue on the weakening performance of its hit signature game but said it would keep investing in it.

"'Candy Crush' is here to stay," Chief Executive Riccardo Zacconi said in a telephone interview. "We work on continuous innovation, adding levels, and new game play elements.

King Digital earned its crown as the mobile-game industry leader by number of users when it launched the "Candy Crush Saga" game on cellphones and tablets in 2012. The game has since consistently been a big money spinner, generating nearly 40% of King Digital's gross bookings--a gauge of future revenue--in the second quarter, and hanging firmly to the top of charts.

But the success of "Candy Crush Saga" is also King Digital's Achilles' heel, analysts say, amid concerns that the aging puzzle game is losing popularity among players.

The company's efforts to diversify its revenue base, with new products such as "Alphabetty Saga," a word puzzle game, have yet to bear fruit.

In fact, King Digital's reliance on the "Candy Crush" franchise was only reinforced last year when the company launched "Candy Crush Soda," a derivative of the "Candy Crush Saga" game.

"Nothing has really lessened the dependence on 'Candy Crush' substantially," said Tero Kuittinen, managing director at Magid Associates. "That dependence may actually be set to soar as important B-string games are fading fast."

In its quest for a new blockbuster, King Digital released "Paradise Bay" last week, a game in which players can test their farming skills, picking cotton and managing a coconut grove.

One week after its launch, the game has risen to number 22 in the ranking of highest-grossing games on the U.S. iPad stores, according to app-tracking firm App Annie.

Write to Jens Hansegard at jens.hansegard@wsj.com

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