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.

Jason Lim

Jason is an Australian born Chinese living in Beijing, specializing in entrepreneurship, start-ups and the investment eco-system in China, especially in the tech and social area.

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7 Comments

  1. but they are second rate and always havew bugs in their games..alot of them ..plus their is so much lag half the time you cant play or get reports..kabam isnt very good as a game provider …however they charge rates for rubies as if they were top rate game company

    1. I completely agree, and why are they trying to expand more when they cant even fix or handle the bugs they already have, this company sucks as a gaming company and if they leave facebook they will be completely screwed as the only reason they have such a large amount of players is because of the facebook sheep who wouldnt know what a real game is.

  2. I agree rates for rubies are out of control…. If they were smart they would charge less, then more people would buy… basic economics. Not only are the rubies themselves expensive but the in-game items u spend rubies on are super expensive as well.  You can spend 50$ worth of rubies in 2 mins and that is just stupid and a BAD business model for a long term company. Sure they’ll make a quick buck but if they want to last they need to rethink their Business Decisions let alone all the bugs every game has.

  3. kabam’s customer servies is the worst!!!!! don’t spend a cent on any of their games you will be sorry i promise!!!!! I AM!!!!!

  4. Really, I don’t understand why people would spend money on Kabam games when you can just cheat.  Your money is worthless.  There are 12 players in one world of AoD that have 21m combined power.  That is allot for this slow power building game.  This company is permitted to scam money from new players until it is too late.  All their games have troop cheats.  Stop paying or quit playing if you are addicted.

  5. Look up Kabam Enchanted Gardens…. Kabam dumped a lot of paying customers there like rocks. You can’t treat people that way without it catching up with you eventually. Rumor has it that Kabam will drop all of their games like rocks because they care nothing about fun. All of their games are based around hate and if you try to spread fun, cheaters pound the hell outta’ you while support turns a blind eye. Kids cover your eyes because the talk that goes on is like being in prison with no sensors!

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