Hollywood films draw more video game interest

Kabam Inc., a closely held publisher of free-to-play mobile games, acquired two Los Angeles-based developers, advancing the company's plans to make more titles based on Hollywood films.

TapZen and Magic Pixel Games, with about 40 employees total, will join San Francisco-based Kabam's global staff of 850 in the cash-and-stock transaction, Kabam Chief Operating Officer Kent Wakeford said in an interview. He declined to provide financial terms.

Kabam, which makes mobile-strategy titles, is investing to produce high-grossing games for Hollywood studios. The company worked with Warner Bros. on The Hobbit: Kingdoms of Middle- earth, which generated more than $100 million in sales. Mike Verdu, who founded TapZen in 2012 after working at Zynga Inc. and Electronic Arts Inc., will lead Kabam's new Los Angeles office, Kabam said in a statement.

"We now have teams on the ground in Los Angeles where we are minutes away from all of our major partners in Hollywood," Wakeford said. "This is a major step to further build those relationships."

Kabam was valued at more than $1 billion following a $120 million investment from China's Alibaba Group Holding in July 2014, Wakeford said. The company had 2013 revenue of $360 million, is profitable and cash-flow positive, according to the statement.

The deal is Kabam's ninth studio acquisition since 2010, according to the statement. Michael Seegers, a co-founder of Magic Pixel and also an Electronic Arts veteran, will join Kabam.

Magic Pixel and TapZen worked together previously to produce This Means War!, a mobile strategy game. At Electronic Arts, Verdu oversaw Lord of the Rings: Battle for Middle-earth.

Users of free and mobile games make up 29 percent of all gamers, according to a June 2014 study from NPD Group Inc. Players on phones or tablets tend to be older females, the Port Washington, New York-based research firm said.