MARCH 10, 2014 • Kabam, Inc. is bringing another independent studio under its banner, Phoenix Age. Financial terms of the acquisition were not disclosed. However, Kabam told the Wall Street Journal last month that it had more than $70 million in cash available. Since 2007 Kabam has raised $125 million through four funding series, and is actively considering an IPO. Phoenix Age is best known as a producer of RPGs for iOS devices and Facebook. Since 2010 Kabam has acquired Balanced Worlds, Exploding Barrel Games, Fearless Studios, Gravity Bear, Wild Shadow Studios and WonderHill. The company had four titles that together generated $100 million in revenue, out of $360 million total revenue, during 2013. Kabam is projecting 2014 revenues of between $550 million to $650 million.
Impact: DFC Intelligence has been covering the growth of Kabam for several years. Specializing in core smartphone and social network games before doing so was fashionable, Kabam has become one of the darlings in the mobile side of the games business much like King Digital Entertainment plc. The steady stream of studio acquisitions in recent years has definitely aided the company in fueling the momentum of its own releases. And as studios like Phoenix Age come into the fold with content in production, Kabam has swiftly bolstered its release slate. Such growth has its downsides however, such as stretching customer service resources as the number of players requiring attention balloons. Regardless, Kabam has stood out from the crowd by targeting young males on Facebook with challenging strategy titles, and then branching off onto mobile platforms. Like King, the combination of Facebook with mobile has proven to be a hit. Routinely mentioned in financial circles among the top-five smartphone game makers, a lot of pressure is falling on Kabam to follow King into filing an IPO. Our perspective is that the company is more focused on growing its business in Asia than in pursuing an IPO. Kabam already has titles there, yet recognizes that the growth trends are being driven by releases on chat networks such as WeChat, KakaoTalk and Line. Making the transition to these chat networks is likely gobbling up a good deal of resources at Kabam, and is one of the reasons why the firm recently opened up an office in Seoul, South Korea. So we think the IPO plans are on hold for now. But one thing that you can say about Kabam though, management has accurately seen strategic opportunities early and has deftly positioned itself to succeed during the last eight years.
