On 26 May, Kabam, a leading free-to-play MMO social games company headquartered in Redwood City, San Francisco announced series D funding of US$85 million. The round was spear-headed by Google Ventures and Pinnacle Ventures. Additional funding was provided by Performance Equity and SK Telecom Ventures, as well as previous financial investors Canaan Partners, Redpoint Ventures and Intel Capital. Total funding now amounts to US$125 million. I spoke with Andy Lee, Managing Director of Kabam Asia to find out more.

Originally named Watercooler, the company was founded in 2006 and focused on developing sports and entertainment apps. In 2009, they shifted strategy and experimented with building a social multi-player game, Kingdoms of Camelot which was launched on Facebook and became very successful. In August 2010, the company changed their name to Kabam and has exploded from 25 people to over 400 people in California, Luxembourg and Beijing. Kabam China now has around 80 staff and with multiple games teams made up of engineers, artists and game producers. Kabam values the gaming industry at US47 billion and believes it is “ripe for disruption.”

Highest revenue per user in the industry, “many times” higher than peers

Andy remarked that Kabam is the leading MMO social company that is disrupting both traditional and social gaming industries.  Unlike other big name players like Zynga and Popcap which aim for traffic, Kabam is focused on building a community of core gamers. According to industry insiders, Kabam is one of the fastest growing gaming companies.

Kabam’s target users are hardcore gamers and are 70% male. So they have focused on creating a very rich immersive experience for the players with rich illustrations. This also differs from the more cartoon like social games like Plants vs. Zombies.

Game development is an analytical business

Game development is a unique balance between science and art. As Roy Liu of Popcap told me, you have to first make the game “fun, fun, fun!” But to really know how games are performing, social game companies have to also “make hypothesis, releasing features, measuring user feedback so it’s a cycle of testing and analysis. This reiterates what Andy Tian of Zynga believes. “Games are launched at a minimum viable level at about 20-30%, and then product road-maps are used to release new features every 1-2 weeks.” Said Andy.

Kabam may localize and partner with Asian distributors

Although China is not the main target market right now, Andy sees a need to localize Kabam’s games, “we may need to localize language, art, customer service, payments so we are set up for success. In the case of Asia, since we are a Western company, we may need to find a good local partner across the region.  For markets where Facebook is not the dominant platform, we may need the expertise and relationships of local partners to help us distribute games.”

No Facebook, no problem

Kabam is looking to de-risk itself from Facebook by expanding into other networks, including creating their own platform on Kabam.com.

“China is exciting to us because it’s a new market and Facebook is not here. It’s a mature game market where players are very sophisticated. The platforms are large and scale tremendously fast. Even if you’re not Tencent, you can be larger than other social networks in other countries. We believe our games could be very relevant to this market, so there is a lot of opportunity but at the same time a lot of competition.” Said Andy.

Kabam’s future plans – mobile and IPO

Kabam is planning to release mobile versions this year on smart-phones and tablets.

Andy mentioned that, just like Zynga and Popcap, Kabam is on track for an eventual IPO, but its focus is building a global, durable business that seeks to deliver a compelling game experience to its users.