Kabam's Hardcore Games for Social Networks

Extracted 07MAR2012 from http://venturebeat.com/2011/05/26/kaboom-kabam-raises-85m-for-hardcore-social...

Kabam has raised $85 million in a fourth round of funding to fuel its business making hardcore games for social networks such as Facebook. The backers include Google Ventures, Pinnacle Ventures, Performance Equity and SK Telecom Ventures, as well as earlier backers. It’s as good a sign of disruption in games as any. Based on the funding from such heavy-duty backers, Kabam is now one of the most valuable independent companies making games on Facebook... raising $125 million to date.

Kabam clearly has users who are far more valuable than the standard social game player, because Kabam’s users are willing to pay Kabam a lot of money for a hardcore game experience on Facebook. Kabam’s four active games include Dragons of Atlantis, Kingdoms of Camelot, Glory of Rome and Global Warfare ...

They’re all hardcore role-playing games where users play for four hours at a session, compared to maybe 10 minutes for a Zynga game. About 90 percent of Kabam’s players log into their games six or seven times a week... about 80 percent of the company’s players say they play hardcore games on the consoles or the PC. And now they are spending less time with those games and more time with Kabam games. This had to happen. With nearly 700 million users, Facebook has become a mirror of society. And society includes a lot of hardcore games. Kabam is one of the few companies to realize this and to target those gamers, who are accustomed to spending a lot of money on games...

Kabam’s games are free-to-play, where users play for free and pay real money for virtual goods... While many users play for free. There is a sizable percentage of users who pay money for the time-saving aspects of the game... The high growth and high value of the user base justifies a higher valuation for the company... They’re willing to spend more than $60 sometimes, just to get a much-needed advantage that will make them look good in front of their fellow alliance members (as many as 100 players can band together in alliances).

Console gamers may laugh at the low interactivity of Kabam’s games now, but Chou says there’s a full pipeline of games coming, and each one will reflect learnings from Kabam’s direct observation of millions of gamers. Traditional video game executives would kill to get that kind of feedback.

Global Warfare, Kabam’s newest game, has minimalist, cinematic-style cut scenes (as much as Facebook can handle) and it takes the game play from Glory of Rome to a higher level. The game forces players in an alliance to be more social by requiring them to coordinate assaults on strategic resources in the game...

There is some precedent for Kabam’s funding. The game industry took notice of the Kabam-style model of getting more dollars out of hardcore gamers when China’s Tencent bought the majority of Riot Games for nearly $400 million in February...

Over time, the social network platform will become better at running online games. And then Kabam will likely try to create games that include the animations and 3D graphics that hardcore gamers want.