Kabam’s Kevin Chou on setting a strategy to win in global mobile gaming

GamesBeat: Marvel has other partners. You almost go project to project. Your strategy seems like it should be to be their best partner, to make the most successful Marvel game.

Chou: We are doing that, certainly in terms of downloads and revenue and product reviews. We’re quantifiably the best Marvel product out there. It’s been funny. Here in China I get a lot of questions like, “Aren’t you worried that everyone will see your strategy and execute against it?” While we have great relationships with Hollywood, we’re not the first Marvel game out there. There were 15 Marvel games on mobile before Contest of Champions, but it’s been the most downloaded, highest revenue Marvel project so far. It’s not about getting the license. It’s about all the other aspects of making a quality product — the right team, the right marketing and publishing. Slapping “Marvel” on something is not enough.

The way we think about our relationship with Marvel, as well as our other Hollywood relationships, is very different than what I think people expect. I see a lot of other companies chasing IP at this point. They think, “All I have to do is write a check, take my existing product, mix it with this IP, and get a bunch of downloads.” To be fair, that’s probably how we started, a bit, when we made The Godfather and The Hobbit and so forth. But the way our strategy and thinking about our Hollywood relationships has turned is 180 degrees different.

Now we start with the fan of an IP — a really deep Marvel fan, for instance — and think, “If they’re already a fan and they play our game, we’ll succeed if we make them an even bigger fan.” How do we make a product that adds to the IP, adds to the franchise, and delivers a ton of value to our IP partner? That, to me, is the measure of success. If we can answer that question, we’ll get all the best deals in the industry. We’ll make our partners happy, build the best relationships, and find a ton of value if we do the right deal with the right economics and the right terms.

But it starts with how we can make somebody a bigger fan of the IP after they play the game. If we can succeed at that, we’ll be successful as a company in the long term.

GamesBeat: Is it different with someone like Warner where they have their own mobile division? They’re doing five mobile games now. Eventually, if you make the mobile business this attractive, they’re going to start doing the job themselves.

Chou: Disney has its own mobile division as well. Universal doesn’t. Paramount doesn’t. Disney has a very large internal unit doing console and mobile games and so on. There is a bit of potential competitive issues, but in the end, the nice thing about these major media entertainment companies is that they already manage this for movies and television.

If you think about movies and TV production, a lot of studios team up to publish something together on one project, and then on the next project they’re competing head to head with similar movies on similar launch dates. There’s an interesting element of competition among the media companies already. They’re already set up to manage projects that are collaborative and projects that are competitive.

We have a lot of conversations with our media partners about conflicts of interest. We want to share as much information with them as possible. A lot of times those are contractual relationships. At the same time, we’re very careful from the outset to determine the boundaries of where that information goes inside the company.

Above: Marvel: Contest of Champions

Image Credit: Kabam

GamesBeat: I remember David Haddad from Warner saying that the type of game you did for Lord of the Rings was more like your specialty. That made sense, going to you guys with that license for that game.

Chou: That’s one way we manage through that. We don’t try to compete directly on a very specific product together. With Star Wars, there’s Star Wars Commander. Even though strategy games were how we built this company up, big surprise, we’re not doing a Star Wars strategy game ourselves. Our Star Wars game is an action-RPG, totally different from their internal title.

The relationships and the success we’ve had with our projects give us deep conversations with all the right executives and decision-makers. We have very deep conversations. It’s not just, “Hey, Kabam, we’re writing you a check.” I’m a huge fan of David Haddad, actually. I’m very happy to work with Warner and I expect to continue working with them, even though they have an internal division.

GamesBeat: It seems like it’s a very complicated business, but you have plenty of options for how to do your four games a year.

Chou: The beauty of this is that we have Warner as an investor in the company. Kevin Tsujihara sat on the board [He resigned after becoming WB CEO]. They knew we were going to work with Marvel and Disney. In some ways Marvel and DC are direct competitors. But it’s been fantastic working with Disney and fantastic working with Warner. The experience of managing through that — we’ve made our share of mistakes, but we’ve learned a tremendous amount. It’s very unique that we’ve been able to work with both Warner and Marvel as closely as we’ve had.

GamesBeat: It seems like highest challenge remains those top three games on the top-grossing list. What do you think about those guys — Machine Zone, King, and Supercell?

Chou: I think of it as a big opportunity. It’s a problem, in the entertainment industry, to have uncertainty about where your next hit will come from and how long that hit will last. Those two primary questions are the key challenges for the whole industry. When it comes to the second one, it used to be that the top-grossing charts changed every month. Even if you had a hit, one or two months later you weren’t nearly as relevant anymore. The economics weren’t compelling. It only cost half a million dollars to make a top-grossing game, but it didn’t last that long and only made a few million. That’s okay, but it’s not a great business.

Great businesses are what we’re starting to see today. It costs somewhere in the mid-seven figures to make a great game, but if you’re successful, that could be a $5 billion game. My personal prediction for Clash of Clans is $5 billion over its lifetime. Those are compelling economics. The fact that you can make a game last for years and years is incredible.

I do sympathize with some of the indies out there, when they look at the top of the charts and see nothing moving there. But if you really want to build a business to eventually stand toe to toe with EA or Activision, these great gaming companies, you have to have predictability when it comes to at least the duration of a hit, of a franchise.

The next question is, where is the next hit coming from? That has a little bit more predictability these days as well. We’ve been lucky as a company. Marvel is our fifth game to cross $100 million. We don’t have a $5 billion game, but I feel like we have an interesting model at this point.

Above: Iron Man character from Marvel: Contest of Champions at ChinaJoy.

Image Credit: Dean Takahashi