Mar 17, 2017 · 29m · 20vc
20VC: Why Success in Gaming is Like Success in VC, The Key To Building An Enduring Game & Why Few Metrics Matter in Gaming with Kevin Chou, Founder & CEO @ Kabam
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The 20 Minute VC, Kabam Founder and CEO Kevin Chou discusses the evolution of mobile gaming into enduring multi-billion-dollar franchises, retention and monetization metrics, and key lessons from building, scaling, and selling Kabam.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 25.6% of the talking time here. How this is scored →
Harry as informed peer 3.7 Guest teaching 5.0 Guest disagreement 1.7 Harry pushing back 2.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 4:40 Reframing the one-hit wonder criticism onto VCs
Kevin humorously and sharply rejects Harry's VC premise by stating that relying on a single hit actually describes the venture capital business model rather than modern gaming companies.
Hardest push from Harry ▶ 20:42 Challenging the esports landscape on infrastructure and rightsHarry explicitly challenges Kevin's framing of esports by asserting that publishers fail to capture enough of the monetization pie due to underdeveloped media rights and infrastructure.
Biggest teaching moment ▶ 12:10 Deconstructing why DAU and MAU fail for gaming investmentsKevin provides a deep masterclass for the host, demonstrating why traditional tech metrics like DAU and MAU provide false signals and detailing how consecutive-day play churn models are required for gaming.
Harry holds his own ▶ 20:42 Harry's thesis on esports media rights and publisher pieHarry demonstrates strong industry expertise by injecting a well-formulated argument regarding TV rights, player licensing, and publisher revenue share in esports.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| The Founding Evolution and Pivots of Kabam | 2 | 2 | 0 | 0 | Harry opens with a standard interview prompt asking about Kabam's founding story and pivots. Kevin provides a comprehensive narrative of Kabam evolving from a social network into a successful mobile gaming company. The exchange is purely friendly and narrative without dynamic challenge. | |
| Building Enduring Gaming Franchises vs. One-Hit Wonders | 4 | 6 | 4 | 3 | Harry challenges Kevin by citing another VC's opinion that gaming companies are one-hit wonders. Kevin counters by wittily pointing out that one-hit wonder dynamics describe venture capital, before explaining how modern gaming franchises sustain revenue across decades. | |
| Mobile Gaming Longevity and the Godzilla Game Phenomenon | 4 | 6 | 1 | 2 | Harry asks probing questions using industry commentary from Ben Holmes and asks how a new VC should evaluate gaming metrics. Kevin educates Harry on why traditional consumer metrics like DAU and MAU fail for gaming, introducing consecutive-day play models and specific churn triggers instead. | |
| Monetization Timing and Western vs. Asian Gaming Markets | 3 | 5 | 1 | 1 | Harry asks about the timing of monetization and regional game transferability. Kevin breaks down the stark behavioral differences between Western players who demand fairness and Asian players who accept pay-to-win dynamics due to historical market maturity. | |
| The Evolution, Challenges, and Future of Esports | 5 | 5 | 3 | 5 | Harry takes an active stance on esports infrastructure, arguing that publishers do not capture enough pie from media and TV rights. Kevin respectfully refutes Harry's thesis, asserting that financial infrastructure will naturally resolve itself and that short athlete career longevity remains the actual industry bottleneck. | |
| Quick Fire Round: Tech Trends, Acquisitions, and Valuations | 4 | 6 | 1 | 1 | Harry conducts a quick fire round touching on VR, books, and public company valuations. Kevin delivers an insightful breakdown on valuation multiples, comparing 12-14x EBITDA console multiples to 5-6x mobile multiples based on market perception of game longevity. |
Statements from this episode (14)
Kabam's ad revenue dropped from $3M to $300K after 2008 crash
“Our advertising revenue went from three million down to about 300,000 dollars in run rates in about 12 months.”
Chou: Venture capital is as hit-driven as the gaming industry
“I would say that that is the exact description of a VC's business. You may have a big hit, but you may not ever have another one.”
Successful games can grow revenue for 3-5 years and endure a decade
“Games can continue to grow for three, four, five years in terms of its user base, in terms of its revenue, and potentially have a nice shelf life for another five to 10 years beyond that.”
Chou: $30B gaming giants derive value from a few decade-old games
“And if you look at Activision, you look at EA, these thirty billion dollar public companies, they're really trading at that value based on a very small number of games that have been around for many, many years, oftentimes a decade, and will likely be around f…”
Top mobile games sustain top chart positions for two to four years
“Today, when you take a look at the top grossing charts, the top download charts, they tend to be games that have been there for a very long time. So today, you know, the Candy Crushes, the Clash of Clans, the Game of Wars, Marvel Contents of Champions, Star Wa…”
Kevin Chou predicts a mobile game will generate over $10 billion
“And so this idea that there'll be a Godzilla game at some point in the future that, let's say, gets half a billion people or a billion people, you know, four or five years down the road to play it, and monetizes the way that a Clash of Clans or a Game of War, …”
Chou: Standard consumer metrics like DAU and MAU fail in gaming
“Looking at day one, day seven, day 30, day 90, day one 80, day 365, none of these metrics. Really tell the right, you know, story, nor does looking at DAU, and certainly not MAU. So some of these kind of common metrics that other kind of consumer services use …”
Chou: Long-term player retention matters far more than early monetization
“By Far and away, the most important thing is to get the long-term retention, right? And you can screw that up in the early days through monetization, at least in the Western markets.”
Asian and Western gaming markets will converge within 5 to 10 years
“I think in another five to 10 years, you're going to see, you know, games cross kind of east to west a lot more.”
Top esports players have careers lasting only a couple of years
“The biggest challenge right now is that the longevity of an esports player is not very long. So meaning that the careers of these players are just a couple of years because a lot of the, at the Very highest. And, you know, you have people who could do, you kno…”
Kevin Chou: Strategy-focused, non-fast-twitch esports games will proliferate
“There's a new game that's a relatively new game that's come on the scene called Hearthstone, which is by Blizzard. And that's become a really interesting eSport because it's a card-based game. It's not a fast Twitch game, meaning you don't need 250 actions per…”
Kevin Chou: Esports needs 5-to-10-year player careers to build fan loyalty
“What'll make this industry really take off is that you need the longevity of the players to be in the five, ideally 10 year long sort of time frame, because people love, you know, having a favorite athlete, right? Like if you're a huge LeBron fan, or if you're…”
Chou: VR content companies will struggle until installed base hits 10M-20M
“Until there's 10 to twenty million of installed base, you know, I think the content companies are going to struggle.”
Console game companies trade at 12-14x EBITDA; mobile trades at 5-6x
“When I look at the EBITDA, you know, the trading multiples of the traditional console gaming industries, they're trading at, you know, 12 to 14 X EBITDA. And then you have the mobile gaming companies like, you know, King, for example, got sold for five X EBITD…”