Why did Kabam sell about 10% of Alibaba shares?

Last August, Alibaba, one of the world’s largest and, undoubtedly, the largest Internet company in China, acquired about 10% of Kabam for $ 120 million, which developed the games “Heroes of Camelot” and “The Hobbit: Kingdoms of Middle-Earth”. The other day, studio CEO Kevin Chou told The Wall Street Journal about the reasons why he made a deal with Alibaba. we decided to focus on the most interesting moments of this material. 

Why would a company with a projected revenue of $550 million – $650 million for the current year make a deal with the Chinese Amazon, whose position in the mobile gaming market is still very shaky, unlike, for example, Tencent, which earns $ 1 billion a quarter from its gaming products?

Kevin explains his decision for three reasons.

Firstly, Alibaba already has the opportunity to distribute games through three digital channels: Taobao (online store), Laiwang (messenger) and UCWeb (mobile store operating within the framework of the UC Browser). 

True, it is not entirely clear why Kabam is retail, but the general direction – presence on popular distribution channels – is clear.

Secondly, Alibaba has a movie ticket service. Kabam wants to bring mobile game film adaptations to the market simultaneously with the appearance of tickets for the original tapes. Close cooperation with Alibaba may allow Kabam to get advertising space in these very services. Bought a ticket? Download the game.  

Thirdly, Alibaba has its own Alipay payment system. Working together with a Chinese Internet company, Kabam immediately gets access to a paying audience with bank accounts. 

At the same time, Alibaba does not prohibit Kabam from working with other Chinese gaming platforms. Moreover, according to Cho, she is interested in this, being a strategic partner of an American company that will receive financial bonuses in the event of Kabam’s growth.