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The European equation: How Kabam plans to ride the Berlin boom

Andrew Sheppard talks up the firm's quest for continental glory
The European equation: How Kabam plans to ride the Berlin boom
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For a company that pitches itself as one that does things a little differently, there's nothing unusual about Kabam's decision to open an office in Berlin.

The German capital has long been a hot spot for developers and a combination of the wealth of talent in easy reach and its geographical proximity to the rest of Europe means it's the perfect base for Kabam to launch its assault on the continent.

And, speaking to Kabam Game Studio president Andrew Sheppard during the opening of the firm's Berlin base, that appears to be exactly what it is: a launch pad to enable to reach the parts of Europe that US-focused outfits simply can't hit.

We sat down with Sheppard to ask how the firm plans to engage with the scene in Berlin, whether 'mid-core' is something of a myth, and whether Kabam's move on mobile has delivered the fruits it anticipated.

Pocket Gamer: What brought about this move on Berlin?

Andrew Sheppard: This location is brand new and is the official location for Kabam here in Germany. Our overall push into Europe started in Strassen in Luxembourg, and this offices is one of our key operative centres.

The overall push to establish and expand our footprint in Europe started maybe 12 months ago with a pretty in depth look at our accounting, tax, and most importantly human resources for the entire region.

There's one thing that I'm really excited about in the context of Kabam and my professional views on it and, that's we tend to do things rather differently and we tend to do them for good reasons and after much contemplation and research. It's kind of one of the core values of the company.

So our European push is based less on what American thinks works in Europe and much more on having spoken to a number of leading game companies in the region, talking to a lot of people at some of those companies and, reflecting back given the way that we build games, what's the best way to approach the market.

So, I think it was 10 months ago, we opened up a very small office in rented space here in Berlin and some of the core members from our Luxembourg office came over to help expand its functional footprint and we quickly grew up from 4 or 5 people to 15 people and now 80 people as we open in this new location. The office itself is perhaps best qualified as a sales and marketing office, so we do partnerships and marketing out of this office, customer support, but also what we call live operations.

Sheppard opens Kabam's new Berlin office
Sheppard opens Kabam's new Berlin office

The live operations component is basically the team that runs all of the in-game events and promotions, the customer support team is the one that's providing feedback to the dev team about what this specific region is looking for and increasing output in each country.

So, this week – the party tonight and we also had an internal party on Thursday – it is the culmination of a lot of work and effort and care. For the folks that are working in this office, it's a very big deal for them.

So, when you say Americans think of Europe in one way and Europeans think of it in another, what do you mean by that? What are the differences?

You know, I was talking with some folks last night at a matchmaking dinner for the gaming industry, and I was sharing my perspective with someone from the Government and someone from another gaming company based out of Berlin, and my point was, American companies design for scale because they think of the world as one market.

The US market was large enough in and of itself that you can form a company simply and not worry about distribution, localisation or even basic translation. But with European companies, if you want to maximise the full potential of your capability within the span of Europe or, speaking even more practically, the span of time zones that are on the same wave length if you will, you have to design for true translation. You have to prepare yourself for all of the various complexities that come from running your business out of multiple different regions and marketplaces.

“American companies design for scale because they think of the world as one market, but Europe is more complex.”
Andrew Sheppard

And then, on top of that, the cultural similarities are much less than in the United States. So, I'm from New York and, though Los Angeles is very different culturally, we all speak the same way I think.

So, European companies tend to be very very strong at managing distribution complexity and marketing complexity. So, a lot of the European outfits tend to have much stronger customer support teams, and then the products are built to be more accessible to different types of folks.

As a company we were actually the first to actually translate our games – the first core player on Facebook to translate our games. Then we were the first ones to move towards a regional presence structure, and the first ones to spin up localised live operations. I actually think that's only just becoming table stakes for a lot of our competitors.

We already looking to the future as to how do we continue to invest in Berlin and, hopefully, other countries to get down to that perfect pairing of working with locals to make games as successful as they possibly can be, but also still maintaining the benefits of the American structure, which is globally centralising all of the development.

Do you think that complexity has put off a lot of American companies from taking on Europe?

Well, it is difficult, yeah. For an American company, there are two things that prevent them from approaching the European market. One is just lack of knowledge and experience – I mean, another consequence of being an American is that most Americans never leave the continent. [Laughs]

I mean this is Steve's [Swasey, company VP] first time to Germany... I'm kidding. [Laughs]. He's more well travelled than I am. But it's this lack of familiarity and context with the specifics of these markets and the opportunity. Having not designed for that associated complexity up front, it becomes incredibly expensive to add it in later.

So, as a company we aim to launch in 11 languages across 90 countries. We're one of the only companies that does that, certainly in the free-to-play space. And it ties in with all the trends. I think the American market is growing – especially on tablet – but the European market, and soon the Russian, South American and Turkish markets, they're really growing in smartphone and tablet adoption.

This is kind of where it is happening. If you get stuck in the US, you're missing out on all this growth potential in this space.

Specifically in relation to Berlin, we spoke to Wooga back at GDC and they said all the companies coming here are increasing the talent. Will you be mopping up talent from around the city?

So, we have been fortunate to have attracted some folks from other companies in the area. If you look at the back drop of what's happening in Berlin – and bear in mind this is secondary knowledge from me checking with people within the office – the city feels like Silicon Valley to me twenty years ago to me. And I'm not really old enough to say that. [Laughs]

You know, twenty years ago in Silicon Valley, the story I've been told is you had an enormous amount of energy, talent and creativity coming together underneath an infrastructure of investment to be a catalyst for change. It feels like Berlin has a lot of those qualities – a market that relative to other parts of Europe is low cost coupled with the amazing up surge in creativity that is like an aftershock or pendulum swing off of the reunification of East and West Berlin.

Coupled with its geographical proximity to all of these other European countries and its timezone similarity, you just have this enormous influx of amazing technical talent and functional talent into the region, which really means that it's not as if it is it's own proposition. That means we're really pushing to attract and retain the best talent from all of Europe.

Now, there's a degree of industry specialisation – especially with free-to-play – in that, yes, there are a small number of people that have that capability, but that shouldn't be an issue as time passes and already for us most of our hires. And we've been engaging well with the developers already over here – I was over at Wooga just the other day.

Yeah they seemed really positive about it – their attitude was the more the merrier. It raises the bar for everyone.

That's another aspect that I like versus the more aggressive nature of the games industry in the US at least. There's a degree of collaboration here that's different. It's a little more...civil, if you will.

You've had your mobile push in recent months – you've laid people off and you've made acquisitions. It seems like it has been a really tricky time for the company. Why do you think mobile requires that kind of effort? Why is it so difficult?

That's a great question, and that's something that we continue to wrestle with. So, starting first with our web business, it's as healthy as it has ever been.

If you look across both publishing and studios, we've had phenomenal success on the web in the last few years. We are able to run our games better than anyone else can, and it reflects not just the way we operate and think and make our relationships with our customers, but it also reflects the way we design our games.

And we design our games to be more like television shows. So, the traditional arc – the pre-production, production, alpha, beta, launch – well, for it's much more like a concept pitch, or a pilot development. So you launch the show and then you have a refinement of the first season based on the feedback - that is the definition of the second season.

“We design our games to be like television shows - you have a refinement of the first season based on the feedback.”
Andrew Sheppard

The game that actually brought me to Kabam – Kingdoms of Camelot – was a game we were actually able to run steady from a business perspective and that enabled us to maintain our customer base in a way that very few folks can.

In respect of investing resources against our growth, we have run the company to current the 800 person size that it is by either migrating people from web to work on mobile products, acquiring companies that have mobile experience, and to each of those there are strengths and weaknesses to the approach.

To answer your question directly, mobile development is very different than web development. Web development benefits from the ability to push releases as quickly and frequently as you'd like, and that means the level of QA you require up front is slightly less, and the ability to adapt to consumer feedback is higher. In other words, the feedback is so tight you can perfectly triangulate your development to what the customer wants.

On mobile, you can push out updates once or twice a week. So, that means up front you have to be much much more strategic, you have to do much more analysis to ensure the design makes sense, much more balancing of it, you also have to invest more to make sure the initial bones are strong. You have to make sure your QA team is really addressing everything. You can't have any surprises. And that is a subtle but significant shift.

So we find people that come from console or PC are much more able to adopt the mobile release process. For some of our functions that are part of game design, that free-to-play heritage from the web side carries over perfectly, with some tweaks. It's all been pretty effective. I'd say our largest blunders were assuming that we could change too much at once from a team perspective – like, "hey, lets do mobile with a new genre and a new direction that's never been done before." That just compounds the complexity and makes it far harder to do well.

And were these surprises? Was Kabam aware of the kind of challenges it would face taking on mobile?

You know, I'd love to say that we knew everything, [laughs], but we most certainly did not. There have been things that, if we could go back in time, we'd have chosen not to do, or to approach differently on a different timeline.

What I talked about at DICE a little while back was, in retrospect we've come to realise there are essentially three types of things; known knowns, knowns unknowns, and unknown unknowns. It comes from a Donald Rumsfeld quote – I'm always a little bit embarrassed to be quoting Donald Rumsfeld.

The wine flowed at Kabam's Berlin launch party
The wine flowed at Kabam's Berlin launch party

But, one of the values that I think is true for anyone working at Kabam is humility, and the unknown unknowns and being respectful of the fact they exist, well that's the essence of humility. It's not believing that you have the answer to everything or that your first approach will be perfect. So, a lot of what we do, while it times it can make us a little slow from a market stand point, is we're very mindful when we approach different opportunities just how we do it.

We're always very critical of ourselves – did we do a good job? How could we do it better? This company is so young and the market experiences so vast, for us to continue the growth rate we've had – 70 percent two years ago, last year 100 percent in a market that's increasingly large and complex – we always have to push ourselves into the unknown unknowns.

I went to a talk at GDC by Steve Martin from your Vancouver office and he was talking about the increased competition in the mid-core space. How are you finding that competition?

I'm personally not a fan of the 'mid-core' term. The term 'mid-core' to me is a term that was defied by traditional gamers to explain a pocket of innovation that they did not understand.

What is mid-core? Is it free-to-play? Is it long sessions or is it short sessions? Is it a cartoony art style? It's none of those things and it's all of those things together. So, for me, if you step back and say 'what is gaming today', I think the answer to that question is gaming is the most diverse it has ever been. Gaming more so than ever before is a loose case that fits. People love games and they're looking games to fit their lives not choose their lives to fit games.

You and I are probably very similar in generation. So, when I was young, I played games for about 4-5 hours a day, and my friends would play with me. Nowadays my friends have kids, and all we have is 30 minutes of Call of Duty on Xbox Live. [Laughs]. More often than not, I'm on my mobile phone and I'm at work playing games. I think this whole mid-core thing is kind of silly – it's just non-console or non-PC gaming.

There are just a ton of games that make sense on mobile today, and they look significantly better than they did a year or two ago. We have, you know, Clash of Clans, Candy Crush, Puzzle & Dragons – they were the big games of 2013. Our game Kingdoms of Camelot was the top grossing game of 2012. If you go back, you had simulation games.

The games that were built in 2013 and 2014 look a lot closer from a gameplay perspective to console than you'd expect from mobile, in part because we're focusing so much on tablets and expanding the footprint of that device and the deeper engagement that goes on there.

Certainly with the success of games like Puzzle & Dragons – a company that wasn't even around a year or two ago – it shows that there are more people focused on mobile, but at the same time, there are less people that are able to compete at the level of product quality that the consumer expects.

In that GDC talk Martin referenced the notion of 'chasing whales', and he suggested it's up to developers to determine their own morality on that. Where do you – or Kabam as a company – stand?

Well, we've had a lot of discussion about whales, although we actually try not to use that term internally...

I think every one tries not to these days.

[Laughs] Yeah, so we have a 'VIP classification' – we think of our paying users as customers as our non-paying users as players. So, at the highest level, as a company we aspire to deliver the great gameplay experiences to both, recognising that people who pay for a service expect more.

“We aim to meet our customers' needs, but we never design things just to please those people.”
Andrew Sheppard

If a set of users that are alliance leaders that are VIPs at the highest level are asking for things in our games, we definitely listen to them and involve them in the process. We aim to meet our customers' needs, but we never design things just to please those people.

To put it another way, our games are incredibly social on pretty much every dimension, but the quality of the social experience is not determined by the one guy in the club – we're there to keep the dancefloor packed with people. We try to balance it all.

From a design standpoint, it actually makes sense to start with the 'whale' and go back, because you're designing for that use case, and then you're saying how can we make this work for everyone.

Do you think there's a snobbery about all of this? There seems to be a group of developers who almost have a problem with making money from consumers who want to spend it. Is this a hang over from the paid era?

Absolutely. Absolutely. I mean, I try not to talk all too much publicly about this, but there are three major stages of gaming.

The first stage was coin-op. People going to an arcade, putting quarters in machines to play games – inherently short gaming sessions by nature. Then console came about and it changed both the platform and the business model; suddenly you could pay 50 bucks for a game and then play it forever for free.

And now we're talking about mobile devices – phones or tablets - with the free-to-play model. If you think about from the first to the second stage – well, how many companies actually made it from the first to the second? And so, of course the traditional industry, which is the scale we're at now, controls the dialogue and the definitions that we use to describe the mobile space now.

So, when the next model comes around, we can make up the terms we use to describe it. [Laughs].

I'm tempted to ask you what that fourth stage might be, but I suspect that would be too big a question...

Yeah, and I suspect I'd be wrong. It's just too far out.

Thanks to Andrew for his time.