Alibaba (Pending:BABA) is investing $120M in social/casual game developer Kabam at a $1B+ valuation. The companies will also partner to distribute popular Kabam mobile games through Alibaba's apps, including Mobile Taobao and the Laiwang messaging app.
With Kabam having posted $360M in 2013 revenue and already on pace to do $550M in 2014, Alibaba is buying its stake at fairly low multiples. The deal could be a precursor to a Kabam IPO. "We continue to at the board level have discussions about an IPO and are constantly valuing the markets," says COO Kent Wakeford.
Alibaba's move is aimed at Tencent (OTCPK:TCEHY), which continues to tower over the Chinese gaming market. Tencent's mobile game revenue soared 200% Q/Q in Q1 to RMB1.8B ($292M), and accounted for 17% of its its total gaming revenue.
Alibaba launched a mobile game-publishing platform in January, and has been trying to win developer support by letting them keep a relatively steep 70% of revenue.
Yesterday: Alibaba reportedly looking to invest in Snapchat