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Kabam hits new high of $400m annual revenue

Five straight years of growth and three of profit see private company blossoming

Kabam has hit another sales milestone with a record high of $400 million in revenues for 2014, making it the fifth consecutive year of growth for the mobile company and the third of profit.

As a privately held company, Kabam does not reveal the intricacies of its balance sheets, but it is open enough to admit that, despite the new record, sales actually fell short of the targets set internally.

"While we achieved another record, Kabam's 2014 revenue was not consistent with our initial forecast," explained Co-Founder and CEO Kevin Chou. "One of our newer divisions underperformed and we intentionally dialled down other revenue-generating opportunities to better position Kabam for the long term.

"We made 2014 a transformational year by rebuilding our Studios leadership team, delaying some games and tightening our focus on high performing games. As always, we take the long-term view to ensure satisfied customers, sustainable growth and a slate of new games that will lead the market. These bold transformational initiatives put Kabam in a stronger competitive position for sustained leadership and growth into the future."

That new leadership team involved some high profile appointments. EA's Nick Earl joined as head of worldwide studios, followed by colleague Aaron Loeb as head of North american studios. Mike Verdu, once chief creative officer at Zynga, also joined Kabam thanks to the acquisition of his start-up, TapZen.

"We have enjoyed some good successes with publishing, but not at the volume we planned. We look forward to continuing our relationship with our key third party developer partners as we concentrate our resources on publishing the industry's best AAA console-quality games for mobile devices"

CEO Kevin Chou

As part of it refocussing, Kabam tightened the screws on its third-party division, instead placing more faith on internally produced games - that sign of self-confidence was combined with a relaxation on the intensity of its monetisation strategy, giving players more for less as part of a push to create long-term customer loyalty rather than the churn of a fast buck.

In terms of successful titles, Kabam's Marvel: Contest of Champions was singled out as a big winner, hitting 17 million downloads. That success was partly attributed to patience, with the company delaying the title considerably to ensure proper quality at the point of release. Kabam now has four games with over $100 million in lifetime revenues under its belt and 12 games which earned over $1 million for at least one month last year.

Another smart move in 2014 saw the firm sign a huge deal with Alibaba, currently very much the investment partner du jour. Not only did that deal give Kabam access to Alibaba's vast network of Chinese mobile customers, it also saw a direct injection of $120 million, raising the company's valuation above $1 billion for the first time. As a publisher with a strong existing customer base in the US and Europe, a partnership with a well-established major Asian player instantly gave Kabam a much larger global footprint, as well as the understanding necessary to capitalise on it.

"Truly successful games companies have to be globally successful"

"Truly successful games companies have to be globally successful," said Chou at the time. "This strategic collaboration with Alibaba provides Kabam the resources, infrastructure and distribution to help bring our current and future durable franchise games to China and elsewhere in Asia and make an immediate impact."

Don't go looking for an IPO just yet, however. In December of 2014, Kabam paid out $40 million to employee and investor stock holders, reiterating that it has no plans to alter its private status.

"Investors and strategic partners want to be a part of Kabam," explained Chou. "As Kabam has grown and expanded its global footprint, we wanted to reward the employees who have worked so hard for the company's growth and the investors who have believed in Kabam from the beginning, without having to go public. We have chosen liquidity options other than an IPO because staying private longer has many advantages, including not exposing our competitive roadmap or needing to meet the quarterly demands of public investors."