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Volume 21 No. 1
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Partnership with Cal is Kabam’s coming-out party

When the University of California, Berkeley, late last year agreed to a stadium naming-rights deal with video game company Kabam, it broke new ground. The 15-year, $18 million deal to create Kabam Field at California Memorial Stadium marks the first time a college sports facility will carry the name of a video game company.

But for Kabam co-founder and CEO Kevin Chou, the partnership with Cal had a natural fit. Chou, 34, is a 2002 Cal graduate. And while Kabam may not be a household name, the company doubled revenue to $360 million in 2013 and forecasts up to an 80 percent increase this year. Its free-to-play game titles include “The Hobbit,” “Fast & Furious 6” and “Kingdoms of Camelot,” and its games are available in more than 100 countries online as well as via Apple and Android devices, with Microsoft mobile platforms on the way.

Chou (middle) said Kabam’s business plan was conceived at Cal.
Photo by: KABAM

Chou sat down recently with SportsBusiness Journal correspondent Robert D. Gray to discuss the deal with Cal. He also talked about comparisons of his company and its naming-rights deal to stories of past dot-com busts, and how the deal with Cal may help recruiting — for his own company.

What was it like seeing Kabam Field for the first time?

CHOU: It was a once-in-a-lifetime experience to be on the field and unveil the new logo we’re going to be using on that field. That’s where I graduated. It’s an incredibly special period of time to be able to do that at my alma mater.

Did you ever think this would happen?

CHOU: Not in my wildest dreams.

Aside from Cal being your alma mater, what is special about the deal?

CHOU: There are three elements to this deal. One is the big branding, coming-out party for Kabam. We’re a big company, profitable, growing quickly, doing a big deal with UC Berkeley. The second is on the collaboration with academics, and the third one is on the hiring and talent front … given that recruiting a great engineer is $30,000 to $50,000, not to mention their salary — talking purely the finding fee associated with finding great engineers.

What’s been the reaction so far?

CHOU: A lot of excitement. This is one of the first steps by UC Berkeley to embrace more corporate partnerships. I think that what makes this one unique is that it’s not just a marketing and branding element. We do a lot of work with UC Berkeley in terms of academics, big data studies, video gaming/visual entertainment, and we recruit a bunch from UC Berkeley. About 10 percent of our workforce is Cal alumni. … Three of the founders of Kabam went to Cal. We met there, and the business plan was conceived at UC Berkeley in a classroom.

Would you do another naming-rights deal?

CHOU: Probably not. We’re not in the business of plastering our name everywhere. We want to create great products and entertain consumers. This deal allowed us to give back to the community and establish our brand on a world stage and also recruit and hire from one of the best schools in the nation.

What would you tell other startups about doing a similar deal?

CHOU (laughing): First, get to a few hundred million dollars in revenue and be profitable. That’s step one. Step two, find a school that has a lot of meaning both to your company, the employees of the company, as well as the overall future of your industry, and create a win-win scenario as much as you can with a partnership like ours with Cal.

What do you say to critics who may liken this deal by an upstart tech firm to deals done by the likes of PSINet, CMGI and Enron in years past, companies whose fortunes soured not long after they signed their stadium naming-rights deals in the early 2000s?

CHOU: You mentioned some companies that faded away, but there are some very successful companies in our backyard that have been around for decades, that will be around for decades, that are doing some innovative things and doing these types of deals. … We’d rather think more about AT&T, Oracle and Levi’s and what those guys are now doing. Those are the things we look up to, and think about “How do we build a long-lasting business like them? And partner with people in our community to do that?”

Robert D. Gray is a writer in Los Angeles.