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Startup Kabam on fire

In the world of free-to-play games for smartphones and tablets, San Francisco-based Kabam is one of the fastest-growing players in Berlin.
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Last year, Kabam started offering some of its games in Asia, and also started helping Asian game developers export their games to North America and Europe.

The company, which counts GoogleGOOG +0.89% among its major investors, is now looking to increase its presence in Asia through possible alliances with operators of mobile messaging applications and other online services in the region.

Like most other mobile gaming firms, Kabam makes money by charging for virtual items and other optional features after people download and start playing its games for free. The company also takes a slice of the sales of Asian games they export to Western markets. Last year, Kabam’s revenue doubled to $360 million, and this year, it forecasts revenue of $550 million to $650 million.

In an interview with The Wall Street Journal, Kabam co-founder and Chief Executive Kevin Chou talked about the company’s business in Asia and the gaming industry’s future.

In the early days of free-to-play online social games, we were one of the first companies to really go after core gamers who traditionally played games on dedicated consoles or personal computers.

After building a track record of hit games, we were able to work with Paramount Pictures to develop a game based on “The Godfather” movie franchise. The success of that game later helped us land other Hollywood tie-ins with “The Hobbit” and “Fast and Furious” franchises. Compared to working with classics like “The Godfather,” deals with upcoming movies is a lot harder to execute, in part because there is a lot of confidential information.

Looking back, our decision to target core gamers when others weren’t focusing on that area was the key to our success. If you try to get into the same market today, it will be much more difficult because there’s so much competition.
As a game developer we want to make sure that our games can reach the largest audience possible. And where is the growth in hardware today? Last year, over 1 billion units of smartphones and tablets were sold around the world.

I think the future of gaming is the free-to-play model, and it’s very clear that consumers are using smartphones and tablets that they already own to play games. Gaming apps are among the most popular mobile apps.

Mobile devices are affecting not only the gaming industry, but also the way people watch television shows and videos and listen to music. That has an implication for all kinds of dedicated devices such as music and video players as well as game consoles.

Google is one of our major investors, and its venture capital arm, Google Ventures, has a board seat at Kabam. We spend a lot of time talking about possible games for Google Glass, even though we haven’t announced any specific Google Glass projects yet.

In Asia, we are helping local game developers export their games to North America and Europe. We are working with leading developers and their games that are already successful in this region. We don’t just translate the games into European languages. We change many aspects of the Asian game to make it more appealing to the Western audience.

We also offer our own games in Asia. Last year, we started bringing some of our games to China, Korea and Japan. We are doubling down on this kind of investment, and we recently opened a new office in Seoul.

Today, Asian messaging apps like Line, KakaoTalk and WeChat are offering games through their communication platforms. These apps are starting to play bigger roles in the way games are distributed, and we are trying to understand this trend. That’s why I’m spending a lot of time in Asia. As we think about bringing our games to Asian markets, we are looking at ways to team up with local communication platforms. I’m talking to all the potential partners in Asia – major Internet companies and operators of messaging apps.

We don’t really see this trend in the U.S. yet. When it comes to the role of mobile communication apps, I think the U.S. market is lagging Asian markets by about two years. But I expect more U.S. mobile messaging apps to become more involved in games.

Source: WSJ