Kabam starts 2013 with more than $200M in Gross Revenue
Having ended 2012 with gross revenue of $180 million, (revenue doesn’t account for the 30% platform cut that Apple, Google or Facebook take but is up 70% from last year). The mobile gaming company Kabam is boasting its expected revenues for the coming year.
While Kabam hasn’t disclosed their marginal profits, they are a pioneer in midcore freemium gaming on Facebook. Unlike Zynga, they didn’t focus on reaching the largest audience possible or the stereotypical 35-year-old female casual gamer. Instead, focusing on a smaller player base (usually more male) that spent more on average to play. As Facebook became a more challenging environment, they transitioned to mobile as many other game developers did. That mobile transition, which includes extensions of their Kingdoms of Camelot franchise, is now a more-than $100 million business.
The companies lastest valuation from back in May of 2011 was $500 million during a round of funding that raised $75 million for the company. It also said the recent strategic investment from Warner Bros. Entertainment Inc. and Metro-Goldwyn-Mayer Studios Inc. was secondary, with the investors purchasing shares from earlier investors. Oh, and they also have $45 million cash in the bank.
Why toot your own horn?
Kabam says it’s to: “establish who’s leading.”
Historically other companies have also done this from time to time to posiion themselves ahead of a sale or additional investment.
I.E. PopCap talked about a potential IPO for months before EA turned around and bought the company for up to $1.3 billion including earn-outs. Because Kabam has raised around $125 million, it means the bar for an exit (whether through a sale or through a public offering) is much higher. Kabam has mentioned an IPO in the past as a possibility, “depending on what’s right for the company”.
Although, given how Zynga performed in 2012, it’s hard to imagine public investors have the desire to invest in another freemium gaming IPO. Seeing as Zynga is valued at 4.5 times the $500 million that Kabam said it was worth in the 2011 round, on at least six times the revenue.
Many other game developers of similar or smaller size face the same issues in an inhospitable public market, as there are a relatively small number of potential buyers and lower valuations of publicly-traded comparable companies. This means that there might still be some misalignment between what game developers and acquirers are expecting to see in M&A discussions.
It will be interesting to see how the US market evolves, unlike Japan which is doing some incredible things on their own.
Kevin is an Online and Mobile Marketing Strategist who has worked with companies of all sizes over the last 6 years. You can follow Kevin on any of the social platforms below.
