Kabam's Pivot: A Case Study on Business Model Transformation

This case study examines Kabam's strategic pivot, focusing on its transformation from a social networking platform to a gaming company. The assignment analyzes the company's shift in business models, marketing strategies, and revenue generation, particularly in response to market changes and challenges like the impact of recession and Facebook's tax policies. It explores how Kabam adapted its approach to remain competitive, including its move to developing its own games and competing with established gaming companies like Zynga. The study also discusses the concept of a 'pivot' in business, emphasizing the importance of understanding customer preferences, adapting marketing strategies, and understanding product lifecycles. The analysis highlights the factors that influenced Kabam's decisions and the ultimate sale of the company, providing insights into the challenges and strategies involved in business model innovation and sustainable growth.

Introduction
One of the contemporary ideas in management is known as pivot that helps a company in
focusing on the strategically development within the company on a repeated manner. It allows
the company in selecting a better model of business, so that the products and services can be sold
in the market at an increased rate. It helps in changing the viewpoint of the company towards the
existing products or services with a help of a new business model, so that it can gain the
maximum attention of the customers. This affects the level of profit for the company in a direct
manner as well. The channels of distribution and marketing also change due to the introduction
of new products and services inside the organization (Francopoulo 2013).
Overview
The Kabam case study shows that the company in its early stage was platform for social
network that turned its business into a sport company followed by a gaming company at a later
period. After these changes were made, the company was eventually sold off for $800 million, as
it was incompetent in gaining an advantage in the market. The interview has been given by
Kevin Chou who was one of the founders of the company, which highlights the steps that the
company had taken up, so that it can survive in the market.
He had stated that the profits of the company started by making application for the online
social media Facebook. The profits decreased due to the impact of recession, as the
advertisements that were being done by the company could not earn a high level of income. This
made them change their business model and shifted their business towards the development of
strategy game called ‘Kingdoms of Camelot’, so that it can help in increasing the revenue
generation. The change in the business model had allowed the company in changing its strategy

from an advertising firm to an in-app gaming company. The other issue that affected the
company was that after the game was developed, the company was unable to sell it among the
customers. Instead of laying off their employees, they decided to sell their strategic game
applications to Facebook (firstround.com).
Issues and concepts
The major issue with the company is that the sustainability in the market had decreased to
a great extent with respect to the manufacturing of the products and services. Due to the effects
of recession, the company being an advertisement firm suffered a decrease in their profit levels,
which made them shift their products and services. Furthermore, Facebook levied an additional
rate of 30 percent of tax that led to the company in changing their strategy again. The company
started to become a gaming studio and focussed more on developing their own games rather than
the in-app purchases for Facebook. This helped the company in competing with Zynga, which is
a popular gaming site that resulted in increasing its level of profit. The change in the rate of tax
by Facebook made them in shifting their model of business so that the product can be changed.
This increased the rate of growth for the company, which allowed them in competing with the
companies present in the market (Spieth, Schneckenberg & Ricart, 2014).
What is a pivot?
It is important for the company in understanding the necessary changes that needs to be
done in the marketing strategy, which will help the business to be successful. The first thing that
the company needs to understand tastes and preferences of the customers need to be taken in to
consideration. The customer’s preferences are changing on a constant manner, which needs to be
understood by the company, so that the development of the product can be done in accordance to

it. The surveys that will be done by the company will allow them in understanding the change in
their preferences, so that the products can be developed properly (García-Gutiérrez & Martínez-
Borreguero, 2016).
How does a company know when to change its marketing strategy?
The use of the pivot framework will help the company in taking up the competitive
strategies so that the competitive advantage can be increased in the market. The use of proper
strategies can be used by hiring employees and engineer who are highly skilled, as it will help
them in changing the product portfolio. It will result in manufacturing the products with a higher
quality so that customer attraction can be increased. The other major factor is that it is necessary
to understand the lifecycle of the products. The saturation of the product will help in bringing out
new ideas so that it can be developed newly (Lucas & Rawlins, 2015).
Conclusion
Therefore it can be concluded that the pivot framework is important in business, which
allows the senior management in taking up new strategies for the company to be sustainable in
the market. The changes in the products and services will also take place due to the application
of pivot framework within the company.

References
- Francopoulo, G. (Ed.). (2013). LMF lexical markup framework. John Wiley & Sons.
- García-Gutiérrez, I., & Martínez-Borreguero, F. J. (2016). The Innovation Pivot
Framework: Fostering Business Model Innovation in Startups: A new tool helps
entrepreneurs design business models by identifying the sources of competitive
advantage embedded in an innovation. Research-Technology Management, 59(5), 48-56.
- https://firstround.com/review/pivot-survival-tactics-from-kabams-3-near-death-triumphs/
- Lucas, K., & Rawlins, J. D. (2015). The competency pivot: Introducing a revised
approach to the business communication curriculum. Business and Professional
Communication Quarterly, 78(2), 167-193.
- Spieth, P., Schneckenberg, D., & Ricart, J. E. (2014). Business model innovation–state of
the art and future challenges for the field. R&d Management, 44(3), 237-247.