Kabam makes two new purchases to expand to LA

Mobile gaming company buys TapZen and Magic Pixel Games, will merge them into new LA-based studio

Financial trends and news by Steven Loeb
January 13, 2015
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With its mix of celebrity culture and strength in tech spaces like e-commerce and fashion, the LA startup ecosystem has been on the rise for at least the last few years. Given its focus on entertainment, it’s no surprise that it has also become a hub for another big tech space: gaming.

Now mobile gaming company Kabam wants in on the action. The company has made two key purchases that will give it a presence in the entertainment capital of the world for the first time.

Kabam has acquired two Los Angeles-based games studios, TapZen and Magic Pixel Games, it was announced on Tuesday. They will be merged into a new Kabam branded Los Angeles studio, located near Culver City. No financial terms of either acquisition were disclosed. 

TapZen was founded by Mike Verdu in 2012, following his departure as co-president and Chief Creative Officer at Zynga, where he had spent the previous three years. During his time at Zynga, Verdu had launched such games as FrontierVille, CastleVille, and Empires & Allies.

As per the deal to purchase TapZen, Verdu will be joining the Kabam Studios leadership team. 

“Joining Kabam was an opportunity we could not pass up,” Verdu said in a statement. “I’ve been impressed at how Kabam has quickly become a leader in the free-to-play games space, and I look forward to helping the team drive the evolution of mobile games into the next generation.”

This is not the first time that TapZen and Magic Pixel will be working together: they previously collaborated to create the mobile strategy game This Means War!

While it is getting some big time talent, for Kabam the most important part of these acquisitions is the location of the studios. Having a presence in Los Angeles will allow Kabam to deepen its relationship with the big studios, and partner with them on upcoming games.

:Having a dedicated presence in Los Angeles deepens Kabam’s existing partnerships with Hollywood studios such as Disney/Marvel, Universal, Warner Bros., and Lionsgate and will allow us to create even more engaging games based on blockbuster IP," the company wrote in an accompanying blog post

TapZen and Magic Pixel represent the eighth and ninth acquisitions for Kabam since 2010. The company has previously purchased Wonderhill, Wild Shadow, Balanced World Studio, Fearless Studios, Gravity Bear, Exploding Barrel Games and, most recently, Phoenix Age.

Founded in 2006, Kabam is one of the better-known gaming studios out there right now, especially when it comes to its free-to-play games. Its games The Hobbit: Kingdoms of Middle-earth and Kingdoms of Camelot: Battle for the North both generated more than $100 million in revenue. Last year, Kabam had two of the top ten grossing apps in the App Store.

In 2013, Kabam had more than $360 million in revenues, a 100 percent increase over 2012. 

The company has raised $245 million, most recently taking $120 million from Chinese Internet giant Alibaba in August of 2014. As part of that deal, Alibaba agreed to publish Kabam's mobile games in China across its mobile applications, including Mobile Taobao and Laiwang. The round also valued Kabam at just north of $1 billion.

Previous investors have included Redpoint Ventures, Intel Capital, Canaan Partners, Google Ventures, Pinnacle Ventures, Performance Equity and SK Telecom Ventures.

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