After making a killing on mobile, Kabam and Warner Bros. are launching a new version of their Hobbit game on Facebook and the web. The companies launched the Kabam-created free-to-play browser game, The Hobbit: Armies of the Third Age.

The new launch follows the successful debut of The Hobbit: Kingdoms of Middle-earth for mobile devices. That game debuted in the fall before Peter Jackson’s blockbuster film, The Hobbit: An Unexpected Journey, hit theaters. Now as that movie from New Line Cinema and Metro-Goldwyn Mayer Pictures debuts on disc and streaming, the companies hope to cash in on another transmedia game. This one will be available on Facebook, Kabam.com, and the Google Chrome Store.

I’m still playing the mobile version of the game, which is typically addictive in that it resembles many other Kabam games, such as Kingdoms of Camelot: The Battle for the North. In the mobile game, you build up your kingdom and armies, join an alliance (mine is the Levellers — hi, mates!), and then battle other players in real-time fights that can involve scores of players. You grow your Might and try to wipe the enemies off the map.

That mobile game was the No. 10 grossing game worldwide on iOS in January, and it was one of the top 15 games on Google Play that month, according to market researcher App Annie.

The Hobbit: Armies of the Third Age is similar. But you can’t cross-play between the mobile and the web versions. In the new game, you select a character like Bilbo Baggins, Thorin Oakenshield, and Radagast the Brown. You lead an army of Elves, Dwarves or Orcs in a tactical combat game. You can join alliance and partake in an epic war online.

“The Hobbit: Armies of the Third Age and The Hobbit: Kingdoms of Middle-earth deliver two immersive and dramatically different ways to experience the most iconic fantasy world of all time, across the Web and mobile devices,” said Andrew Sheppard, the president of Kabam Game Studios. “Kabam is unique in its ability to deliver compelling, high-fidelity free-to-play games across genres and platforms.”

The new Hobbit game is available in English, French, German and Spanish.

“The Hobbit: Armies of the Third Age from Kabam and Warner Bros. Interactive Entertainment is a great example of the type of high quality games being built on Facebook,” said Sean Ryan, the director of Games Partnerships, Facebook. “Kabam’s first strategy game Kingdoms of Camelot launched on Facebook in 2009 and became a major franchise, and we’re excited to see Kabam build their latest game on Facebook. As the Facebook games ecosystem grows, we look forward to seeing more highly engaging experiences from Kabam.”

“We’re eager to bring The Hobbit: Armies of the Third Age to the millions of Middle-earth fans who engage online,” said Greg Ballard, the senior vice president, digital games, for Warner Bros. Interactive Entertainment. “The Facebook and browser-based portals are key locations where The Lord of the Rings and The Hobbit film fans can regularly engage with Middle-earth in a shared interactive environment.”

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Kabam said today that its 2012 revenue grew more than 70 percent, past $180 million. The privately held company did not disclose earnings, but it said it was profitable.

The San Francisco-based company isn’t under any obligation to disclose its financial performance, but it is no secret that the social and mobile game company is an initial public offering candidate. Kabam said that its fastest growth is in the mobile sector, where its games are popular on both iOS and Android devices.

A spokesman for Kabam declined comment on the potential for an IPO.

“Kabam blew past its plan in 2012,” said Kevin Chou, the chief executive and cofounder, in a statement. “At this time last year we forecast 2012 revenue to grow by 30 percent to 40 percent. Because of our team’s focus on strategic growth across diverse game genres and platforms, including mobile and the Web, we exceeded our own expectations and entered 2013 with an annualized run rate in excess of $200 million.

“We have built what is now well more than a $100 million-plus annualized mobile business in less than one year with a slate of exciting new games across multiple genres.”

Kabam makes free-to-play strategy games that appeal to hardcore gamers. Such titles, where gamers play for free and pay real money for virtual goods, can disrupt the traditional game industry that charges $60 at retail for a game, Chou said.

“Kabam is leveraging its franchise intellectual property and technology to become the leader in free-to-play games on mobile devices in the Western world,” Chou said.

Kabam has raised more than $120, including a $75 million round in May 2011. At that time, Kabam was valued at more than $500 million by investors such as Google Ventures, Intel Capital, Redpoint Ventures, and Canaan Partners. Late last year, Warner Bros. Entertainment (Warner Bros.) and Metro-Goldwyn-Mayer Studios (MGM) also invested by buying shares from an earlier investor.

Kabam chief financial officer Steven Klei said, “Because Kabam’s financial model and unit economics are so strong, we expect both continued rapid growth and margin expansion again in 2013. Kabam is well positioned to continue its significant investments in growth as we enter 2013 with more than $45 million of cash.”

It disclosed its average revenue per daily active user (ARPDAU) is eight to nine times larger than the industry’s largest company. It also noted that its Kingdoms of Camelot: Battle for the North placed first on Apple’s highest Ggrossing apps list for 2012. Kabam recently launched The Hobbit: Kingdoms of Middle-earth for mobile devices. That title has become one of the top 10 grossing apps in 50 countries.

Seven Kabam games grossed more than $1 million per month in 2012. Kingdoms of Camelot has generated more than $100 million since it launched in 2009. At the end of 2011, Kabam was 100 percent dependent on Facebook. Now it has diversified across iOS, Android, and the web in addition to Facebook. And Kabam has development studios across North America, Europe, and Asia. Kabam has more than 500 employees.

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Kabam made a successful transition beyond Facebook in the past year, and now it is expanding again. The San Francisco free-to-play game company is acquiring Exploding Barrel Games, a 35-person development startup in Vancouver, Canada. Terms of the deal were not disclosed.

As free-to-play social and mobile games become higher quality, Kabam has set its sights on matching the quality of console games, said Kevin Chou (pictured left), the chief executive of Kabam, in an interview with GamesBeat. And Exploding Barrel Games is full of people like Scott Blackwood (pictured right), the studio’s president, who worked at companies like Electronic Arts for years building franchises such as Need for Speed.

Most recently, Exploding Barrel worked on Margaritaville, a critically acclaimed Facebook game published by THQ. But THQ has struggled, filing for bankruptcy in December, and it is no longer focused on social games. That created an opportunity for Kabam, which has doubled down on its free-to-play game studios with multiple acquisitions. With the addition of Exploding Barrel, Kabam will have more than 600 employees.

Exploding Barrel is based in Vancouver’s historic Gastown district. It is working on three unannounced games. Since 2010, Kabam has also acquired WonderHill, Fearless Studios, Gravity Bear, Wild Shadow Studios, and Balanced Worlds. In May 2010, it opened a development studio in Beijing, and it created a development studio in Austin, Texas, last year. It is hiring across the board, said Chou.

The company can do this because it has made a well-timed shift from social to mobile games. Its Kingdoms of Camelot: Battle for the North placed first on Apple’s highest grossing apps list for 2012. Kabam grew its revenues more than 60 percent above its 2011 revenue of $100 million. Once dependent on Facebook, it now earns more than 70 percent of its revenues from web and mobile games. Titles include Kingdoms of Camelot, which has generated more than $100 million since its launch in September 2009, and The Hobbit: Kingdoms of Middle-earth.

“We blew away our targets for 2012,” said Chou. “We did much better than we publicly talked about. It was a phenomenal growth year for us. That’s why we felt it was the right time to acquire EBG.”

Blackwood said in an interview that his team formed the company in 2009, focusing at first on triple-A console games and platforms such as Xbox Live. Then the studio switched its focus to digital platforms such as Facebook, and now it is making both social and mobile titles. One of the company’s games is undergoing testing in Canada, and it worked closely with Kabam on that title. Blackwood said that the studio looks forward to creating triple-A games, but not on the consoles. Rather, he’ll do that for new digital game platforms accessible via smartphones, tablets, and the web.

“Kabam is at the top of their game in the free-to-play space,” said Blackwood. “We learned a lot working with them.”

Chou said he sees free-to-play games as a merger of art and science, combining traditional gamemaking with analytics and science for running games with a trove of customer behavior data.

The industry is clearly changing, said Chou. He went to the Consumer Electronics Show in Las Vegas, where you could “symbolically see mobile is the wave of the future with Paul Jacobs of Qualcomm taking the opening keynote from Microsoft. The whole focus of the show was going mobile. And the connected living room is coming to fruition in the market. The next generation of consoles is coming, but they will battle a whole line-up of smart TVs from every TV maker. Those are Android-based TVs, and they will have games.”

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Update 12:47 a.m. PST, January 11: The Hobbit is back up and running. I have email confirmation from Swasey, Kabam’s vice president of communications, that he is checking on the situation.

The superpopular Tolkien take-off The Hobbit: Kingdoms of Middle-earth is apparently too popular. Gamemaker Kabam can’t seem keep the game live tonight as its servers have been crashing continually, making sustained gameplay impossible.

Kingdoms of Middle-earth has been marching up the iOS app leaderboards, with the success of The Hobbit movie helping propel it to eleventh on the top-grossing app list in the U.S. It gained three spots just this week. In the game, players get a city in world similar to that of The Hobbit and The Lord of the Rings, build might by training soldiers such as elves and Ents while leveling up farms, mines, city walls, and more. You can also form alliances with other players and attack enemies to get their resources and money.

But this past week, it has been increasingly unreliable, causing the dreaded error message: “Balrogs! There was a network error. Please retry.” And tonight, the game has been virtually unplayable.

Kabam’s Twitter account is of no assistance in determining why the game is down — the latest update there is from December 21. And Kabam’s dedicated The Hobbit Twitter feed has not been updated in the last eight hours. But after about an hour of failures to reconnect, the game now displays this message:

VentureBeat is contacting Kabam to find out what is happening and why the game has been offline and will update this post when we know more.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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The Hobbit has been good for Kabam. First, the social gaming company created a best-selling mobile game based on it. And that relationship has led to a new round of funding. Today, Warner Bros. Entertainment (owner of the rights to the upcoming The Hobbit trilogy films) and Metro-Goldwyn Mayer Studios are announcing an investment in Kabam. The amount wasn’t disclosed.

Kabam launched The Hobbit: Kingdoms of Middle-earth on Nov. 8. The game was co-developed by Kabam and Warner Bros. Interactive Entertainment. It is based on the novel by J.R.R. Tolkien and Peter Jackson’s upcoming trio of films based on the novel. New Line Cinema and MGM are co-producing the movies. After a month, The Hobbit game has become the 13th top-grossing mobile app on Google, and it is a top-25 grossing mobile app on Apple in the U.S.

Kevin Tsujihara, the president of Warner Bros. Home Entertainment (WBHE) and a member of the office of the president at Warner Bros. Entertainment, and Gary Barber, the MGM chairman and chief executive officer, will join the Kabam board as member and observer, respectively.

“Partnering with Warner Bros. and MGM is a natural fit for Kabam as we create new storylines and extensions of Hollywood studios’ intellectual properties for millions of gamers worldwide,” said Kabam co-founder and chief executive Kevin Chou.

Kabam and Warner Bros. Interactive Entertainment are making another Hobbit game to be played via web browsers. The Hobbit: Armies of the Third Age is expected to release early next year. The first of the three Hobbit films is set for release by New Line Cinema and MGM on December 14.

“We partnered with Kabam almost a year ago to deliver incredible games for The Hobbit trilogy, arguably one of the top intellectual properties in the world,” said Tsujihara. “As we worked with Kabam, it became clear that a closer, more strategic partnership made sense for us both. Kabam is a leader in the industry and we look forward to being a part of their continued growth.”

“Kabam offers great strategic vision and discipline for growth, and they are the best at what they do,” said Mr. Barber.  “They are a natural partner for us on both our vast selection of IP as well as potential future projects.”

MGM co-owns rights to The Hobbit. Kabam previously raised money from Google, Intel, Canaan Partners, and Redpoint Ventures. San Francisco-based Kabam was founded in 2006 and has more than 550 employees. I’ve been playing the Hobbit game for a while. It’s a reskin of Kingdoms of Camelot, but I still find it to be addictive. I’m looking forward to seeing more original titles related to this franchise come from the developer.

To date, Kabam has made social and mobile games mostly with its own intellectual properties. But the company has become more ambitious as its revenues climb above $100 million (for 2011).

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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In a partnership with Warner Bros’ game division, game maker Kabam will make social and mobile games based on Peter Jackson’s upcoming The Hobbit film trilogy.

The deal is a big step up into well-known entertainment properties for San Francisco-based Kabam, which has made social and mobile games mostly under its own new intellectual properties. But The Hobbit, loosely based on the classic novel by J.R.R. Tolkien, is expected to be one of the most  important movie properties of all time, given the prior success of Jackson’s The Lord of the Rings movie trilogy.

Kabam was virtually unknown a few years ago. Its success in hardcore social games on Facebook and the iPhone has made it into an attractive partner in extending a movie brand into games — something that used to happen only with established console game companies such as Electronic Arts or Activision Blizzard.

Kabam will make two multiplayer strategy games that will be free to play, where users play for free and pay real money for virtual goods. Hobbit: Kingdoms of Middle-Earth will debut on mobile devices. The Hobbit:  Armies of the Third Age will debut on web browsers. Both will launch in the fall of this year. Starting Sept. 25, players can sign up to take part in the upcoming beta for The Hobbit: Armies of the Third Age.

The Hobbit trilogy is being made by director Jackson and produced by New Line Cinema and Metro-Goldwyn-Mayer Pictures. The first film, The Hobbit: An Unexpected Journey, debuts Dec. 14. The second film, The Hobbit: The Desolation of Smaug, opens Dec. 13, 2013, and the third film, The Hobbit: There and Back Again, will be released July 18, 2014. The films are based on a single novel by Tolkien, but Jackson is taking artistic liberty in adding his own material. The movie, for instance, includes the elf character Legolas, who appeared in the Lord of the Rings but never in the book version of The Hobbit.

“The Hobbit films are among the most anticipated entertainment launches of all time,” said Kabam CEO Kevin Chou. “Kabam’s unique ability to blend the art of game design and the science of free-to-play distribution makes us a natural fit to partner with Warner Bros. Interactive Entertainment.”

“Kabam’s [games] will be an excellent way for The Hobbit film fans around the world to … interact with the characters in the universe,” said senior vice president of digital games for Warner Bros. Interactive Entertainment Greg Ballard.

Previously, Kabam moved into the licensed property realm with its The Godfather: Five Families social game.

The Hobbit: Kingdoms of Middle-Earth will let players build and manage their own kingdom in Tolkien’s world. Chris Carvalho, chief operating officer of Kabam, said that the games will be based on Kabam’s existing engines, such as Kingdoms of Camelot: Battle for the North. But the games will have original elements and will not be simple “re-skins” of existing titles, he said.

Chou told us recently that Kabam generated more than $100 million in revenues last year, and Bloomberg reported that Kabam was considering its options for an initial public offering. Carvalho confirmed that an IPO was an option in an interview with GamesBeat.

“This move [into licensed brands] is a logical progression for a company like ours,” he said. “We’re so excited to work with Warner Bros. on this. The web game will be a mixture of a tower defense game with lots of new features. It will incorporate characters in the films. We’ll leverage the engines we have used before and build upon them. The films have very high production values, and we’re very passionate about doing this work.”

The Hobbit: Armies of the Third Age is a browser-based game where gamers lead an army of Elves, Dwarves, or Orcs. The players control heroes including Bilbo Baggins and Gandalf the Grey. The game will involve “fast-paced strategic combat,” but Kabam has not otherwise described it or released screen shots. Carvalho said the lead designer on Kabam’s The Hobbit games is Haden Blackman, who was the executive producer of LucasArts’ renowned hardcore PC and console game, Star Wars: The Force Unleashed. Kabam has been working on the games during the past year.

Chou co-founded Kabam in Redwood City, Calif., in 2006. The company has since moved to San Francisco and has more than 550 employees. Kabam’s other successful titles include Dragons of Atlantis, Edgeworld, and Kingdoms of Camelot.

“We’ll have other interesting games coming down the road,” Carvalho said.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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