Kabam, the free-to-play gaming company that has raised some $125 million in venture funding and looks to be among those weighing up an IPO, has acquired Phoenix Age, a games studio based in San Francisco. The deal was done for diversification: it will give Kabam some strong franchises, and games developing talent, specifically in the area of role-playing games.
“Phoenix Age’s hit games and world-class talent further solidify Kabam’s leadership role in the free-to-play games space while expanding Kabam into new genres,” said Kent Wakeford, COO for Kabam, in a statement.
Phoenix Age, which was founded in 2009, is the developer behind the mobile games Underworld Empire and Castle Age, with the first out on Facebook and iOS and the latter on iOS. It also has a third game still in development. It has 44 employees, who will continue to work out of its existing offices.
For Phoenix Age, consolidation with a bigger company is an obvious route to helping it scale (it appears to have been bootstrapped up to now): “We couldn’t be more excited about joining Kabam,” said Edwin Shew, co-founder of Phoenix Age, in a statement. “Becoming part of their team instantly gives us the expertise, experience and infrastructure to scale our games to a global level we couldn’t achieve independently.”
Terms of the deal were not disclosed but we’re trying to find out.
Kabam describes the deal as its “first acquisition in 2014,” which in a way seems to imply that we will be seeing more. The company last year went through a secondary stock sale that valued the company at $700 million and it says that four of its games — led by Kingdoms of Camelot — grossed more than $100 million by the end of 2013, with $360 million in revenues for the year. It estimates that 2014 sales will be between $550 million and $650 million.
Although CEO Kevin Chou has not ruled out an IPO, it’s worth wondering if Kabam will follow the route of the likes of Zynga and look to the public markets for future growth, or whether it will stay private, or find a middle ground and go the way of new exchanges like the NASDAQ Private Market.
To date Kabam has made seven acquisitions including Phoenix Age. The others are Exploding Barrel Games, WonderHill, Fearless Studios, Gravity Bear, Wild Shadow Studios and Balanced Worlds.