Kabam is selling the majority of its assets to South Korea’s Netmarble Games, effectively exiting the fast-growing but hypercompetitive business of creating games for mobile devices, according to a report at the Wall Street journal.
The deal, expected to close in the first quarter of 2017, gives Netmarble control over the Vancouver, British Columbia, studio that created Kabam’s most prized game, “Marvel: Contest of Champions.” The studio generates 95% of Kabam’s revenues.
Financial terms of the deal weren’t disclosed. In October, San Francisco-based Kabam had received several offers for the studio in the range of $700 million to $800 million. A person familiar with the deal said the sale price was in that range. Mobile is the biggest slice of the nearly $100 billion videogame industry, fueled by recurring sales of virtual goods. But in-app purchases rely on fickle gamers returning day after day, a struggle when new free-to-play games flow continuously into app stores.
In the third quarter, Netmarble was the No. 13 top-grossing mobile-game company in the world with $183 million in revenue, according to estimates from Sensor Tower Inc. Kabam ranked No. 32 with $60 million.
Kabam said “Marvel: Contest of Champions” is its most lucrative title ever, having generated more than $450 million in revenue world-wide since launching December 2014. But the studio sale shows the challenges companies face in repeating success. Only a handful, such as “Clash of Clans” maker Supercell Oy and “Candy Crush Saga” maker King Digital Entertainment PLC, have managed to land more than one game among the top 10 on U.S. charts of revenue-generating apps. Those companies sold for billions of dollars earlier this year.
Kabam, valued at $1 billion in August 2014, had raised $245 million from investors including Alibaba Group Holding Ltd. Its board sought bids for the Vancouver studio after receiving an unsolicited offer over the summer from an Asia-based company that wasn’t Netmarble. Kabam decided against an initial public offering for the decade-old company, opting to return profits to its investors through a sale, operating chief Kent Wakeford said. “The U.S. public markets haven’t been great for mobile-gaming stocks,” he said.
Netmarble, which has 3,500 employees, will acquire the Kabam name and more than 250 customer-service, marketing and other personnel. Three remaining Kabam studios in Los Angeles, San Francisco and Beijing will become part of a new entity the company plans to sell after the Netmarble deal closes, Mr. Wakeford said.
The South Korean company, founded in 2000, has been plotting a deeper expansion into Western markets. Last year it bought a majority stake in Los Angeles -based mobile- game developer SGN, now called Jam City Inc., for $130 million. The Vancouver studio will expand its global footprint while giving it another game based on Walt Disney Co.’s popular Marvel superheroes franchise.
First seen at and source: Wall Street Journal