Zigging While Others Zag

1. Zigging While Others Zag Andrew Sheppard, Chief Product Officer March 1, 2011

2. Who is this guy (Andrew Sheppard)?

3. Who is Kabam? • Leading developer of massively multiplayer social games • 10mm monthly active users across 3 games • Offices in San Francisco, Redwood City and Beijing • 300+ employees

4. How is Kabam different from Zynga?

5. "I have played role playing and strategy games all my life and Kingdoms of Camelot for Facebook is as good if not better than many of the consoles games on the market.“ Gamezebo, September 12, 2010 • Launched in Dec. 2009 • First massively multiplayer social game on Facebook • Received the IGN Reader’s Choice Award for Facebook Games in 2010 • The largest strategy game on Facebook • Currently running at 400k DAUs "It's well worth checking out if you've been waiting for a Facebook game that involves more than farming." IGN, April 16, 2010

6. How did a small web startup build a game that would win an IGN Readers’ Choice Award?

7. Let’s start from the beginning.

8. The Facebook Ecosystem in 2009 • The advertising market was reeling from the economic crisis • Facebook revenues were rumored to be $700mm • Facebook hit 250mm MAUs in July and 350mm MAUs in December • Zynga revenues rumored to be $200mm • Zynga’s footprint rumored to be 100mm MAUs in November

9. Kabam (Watercooler) in 2009 • $8.5mm raised from Betfair and Canaan Partners • Leading developer of Fan and Entertainment Community Applications • 26mm MAUs across 800+ applications on 6 social networks • Fundraise used to pivot in fantasy sports and games • 100% advertising supported revenue model

10. How We Selected Kingdoms of Camelot Step 1: Believe in the Power of Facebook Step 2: Understand the Target Audience Step 3: Deconstruct the Competitive Set Step 4: Anticipate the Competition Step 5: Execute

11. Step 1: Believe in the Power of Facebook • Social functionality redefining web services • MySpace had proven that a social network could power content distribution • Believed Facebook was fast approaching a tipping point in adoption Development Begins

12. Step 2: Understand the Target Audience • 83mm Facebook users in the U.S. • 43% of U.S. Facebook users were Male • 90% of U.S. Male Facebook users were old enough to have a credit card • Farmville was the largest application with 62mm MAUs • Mafia Wars was the 3rd largest application with 26mm MAUs

13. Step 3: Deconstruct the Competitive Set • Product launches driven by ‘massive’ marketing investments • Cross promotion bars used to amplify the optical footprint of game developers • User interfaces designed to drive virality • Game designs tailored for quick, short gameplay sessions • Monetization focused predominantly on selling aesthetic virtual goods

14. Step 4: Anticipate the Competition 2009 Mar Apr May Jun Jul Aug Sep Oct Nov Dec ??? ??? ??? CORE ??? ??? CASUAL ??? Development Begins on Kingdoms of Camelot

15. Step 4: Anticipate the Competition 2009 Mar Apr May Jun Jul Aug Sep Oct Nov Dec CORE CASUAL Happy Aquarium Happy Pets Happy Island

16. Step 5: Execute

18. Blazing a new trail isn’t easy.

19. Biggest Challenges • Significant uncertainty over core games on Facebook • Doubts about mass market appeal • Concern over team size and experience • Worry over the inevitable next round of platform changes • Fear over ever-climbing customer acquisition costs

20. We did well, but not without some hard learning along the way.

21. Team Formation • A small, tight-knit cross functional team was absolutely the right way to go • Project benefitted greatly from having core gamers on the team • Team would have benefited greatly from having more QA and Art

22. Team Structure • Executive Producer, Art Lead and Development Director are peers • Each function is responsible for driving decisions within their area • Producers ultimately have the tie-breaking vote • EPs/GMs are expected to be excellent at: • Strategy Planning • Product Management • Project Management • Game Design • Creative Direction • We have no Product Managers or Game Designers (gasp!)

23. Game Development • Should have allocated more time to prototyping • Did a good job of scoping our MVP • Should have included more robust instrumentation in our MVP • Did a reasonable job of balancing speed and quality... It’s hard! • Correctly assumed that virality would be irrelevant

24. Game Design • Introduced a novel approach to managing status/progression • Launched with a totally imbalanced resource economy • Should have prepared users for frequent, thoughtful change

25. Merlin

26. Character Illustration

27. City 1

28. City 6

29. Battle Reports

30. Service Operations (1/2) • Listen to your users • Be honest and transparent about mistakes • Never underestimate the importance of staffing ahead of growth • Value experience – it is valuable when things go wrong • Regularly establish reference points for core flows and KPIs

31. Service Operations (2/2) • Use promotions to force-multiply the value of content releases • Leverage every messaging channel possible • Keep a close eye cheating and abuse • Invest in communicating business goals across the team • Don’t underestimate the importance of community

32. Summary • We are glad to be different from Zynga • We learned an incredible amount from Kingdoms of Camelot • We are incredibly excited to be at the forefront of MMSGs • We are honored that IGN readers gave us an award (Awesome!) • We look forward to pushing the envelope in 2011 • 100% focused on massively multiplayer strategy and role-playing games • 9 games planned to launch this year • Aggressively staffing up our San Francisco, Redwood City and Beijing offices Thank you for your time!

33. http://careers.kabam.com