While Zynga works on building volume, rolling up hundreds of millions of players a month, niche developers like Kabam are showing that "it's possible to do very well with a smaller number of players," Smith said.
Chou said Kabam was profitable in 2010 but declined to elaborate. The company is privately owned and does not release its financial data. He also declined to discuss whether Kabam plans to go public or is interested in being purchased, saying: "We're focused on being the best company, long-term."
Other companies are pursuing a similar niche strategy, rather than going head-to-head with Zynga, which has declared its intent to sell its shares on the stock market in an initial public offering later this year and has been on an acquisition binge, snapping up 15 companies in the last 14 months.
Ubisoft Entertainment, based in France, has released a number of social games aimed at a targeted audience, including Assassin's Creed Project Legacy and Crime Scene Investigation: Crime City. Later this year, it plans to release Tom Clancy's Ghost Recon Commander, based on its stealth shooter franchise.