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Kabam expands with TapZen and Magic Pixel Games acquisitions

The purchases bring former Zynga executive Mike Verdu on as an executive ahead of eventual public offering.

kabam-kingdoms-of-camelot.jpg
One of Kabam's biggest hits, Kingdoms of Camelot, has grossed $450 million since its 2009 launch, making it one of the most successful strategy games running on Facebook. Kabam

Kabam has swallowed up a couple more studios as it speeds toward its goal of becoming one of the next big video game companies.

The San Francisco-based game maker acquired games studios TapZen and Magic Pixel Games, both based in Los Angeles. The purchases, announced Tuesday, mark Kabam's eighth and ninth acquisitions in less than five years and will increase the company's headcount beyond its current 800 employees worldwide.

Kabam, which specializes in games that can be initially played for free, aims to become the next successful mobile games company. The larger game industry, which includes Sony, Nintendo and Microsoft, has struggled to consistently grow sales despite releasing of new gaming hardware and ever more realistic-looking titles.

Meanwhile, games played on mobile devices and websites are beginning to represent a larger portion of the industry and its opportunity for growth. That's due in part to a shift toward purchases over the Internet, which grew to $1 billion in the US this last November, according to industry watcher SuperData Research.

The company declined to disclose what it paid for the LA-based studios.

TapZen, co-founded by former Electronic Arts and Zynga executive Mike Verdu, is rare in the free-to-play space. Instead of growing exponentially, taking in troves of investor dollars and hiring a large staff, much as Zynga did in its early days, TapZen has focused on trying to strike gold with a mobile hit like King Digital's Candy Crush Saga or Supercell's Clash of Clans, yet with far fewer employees than those competitors. In 2014, TapZen partnered with development studio Magic Pixel Games to release its first game, This Means War!

Kabam plans to use the partnerships the companies already have to continue pumping out new games at a steady clip.

Among the few successful free-to-play studios that are still privately held, Kabam is on the road to an eventual public offering. Going public remains a controversial move for game companies, particularly following the struggles of companies like Zynga and King, which have so far disappointed investors by failing to produce more than one or two breakout titles. One of Kabam's most successful games -- Kingdoms of Camelot -- has grossed $250 million in four years.

Kabam has received about $240 million in funding, including $120 million from Chinese e-commerce giant Alibaba in July, which put its valuation at $1 billion. Other investors include Canaan Partners, Redpoint Ventures, Intel Capital, Pinnacle Ventures and Google Ventures.

Along with Verdu, Magic Pixel co-founder and former EA engineer Michael Seegers is also joining Kabam's executive team.

"This new troika of industry executives gives Kabam unprecedented AAA console quality game development experience and global management firepower that will propel Kabam Studios to the next level," Kabam CEO Kevin Chou said in a statement.