“I guess he’s an X-box, and I’m more an Atari, but the you play the game ain’t fair.”
Cee-Lo Green, “Forget You“
Many people in the investment world are negative on the gaming sector due to the over-promises and under-deliveries of companies such as King and Zynga — what I call the “King-Zynga Effect.”
The mobile casual game market is arguably the hardest segment in which to make money, unless you have a movie-style blockbuster “hit.” However, to put things into perspective, mobile casual games are only a small segment of the overall $60B+ gaming market. Doubters have thrown the baby out with the bath water, letting the King-Zynga Effect overshadow the successful mega-deal acquisitions and returns that brave investors have enjoyed over the past four years.
In this contrarian market, I have certainly enjoyed being one of the most active venture investors in gaming. While one could argue that it’s in my best interest not to share this secret, I love gaming and am a champion of the industry. So let the games begin!
Here it is: the state of gaming investments thus far in 2014, from Q1 through Q3.
SanFranciscoVC 
Phil, what criteria do you & your partners use in selecting an IP to back?
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generally the game licenses that our companies license have at least 3-5M viewers/players and sometimes as many as 20M monthly viewers.
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Some people say “Games are the new Movies”. I think that’s an oversimplification – Games are on track to transcend the motion picture medium entirely.
Here are 3 factors I see growing the Gaming space:
1. Mobile, As a direct effect of the iOS/Mobile market explosion in 2009 we’ve seen a huge increase of the potential number of “Gamers”, even if they are “just” casual gamers.
2. Tools, “A craftsman is only as good as his tools”. we’ve seen a huge number of cross-platform game creation tools, from Unity 3D, GameSalad, Unreal, and generally a more well rounded Game Developer ecosystem.
3. Un/Underemployment, specifically in the demographics that the most popular titles are being released for, like kids.
Additionally we notice a cultural change and acceptance of what was once called “Video Games” or “Computer Games” case in point. This cultural change has opened up additional revenue channels in the retail space, eg. Angry Bird’s themed merchandise.
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Great post Phil! I obsessively watch people use their iPhones on trains, buses, and at bars, coffee shops and the like. 25-50% of people using their phones (which seems to make up about 50% of all people in these environments, often more), are usually playing some form of a game or another of all types. We have turned social media into a game / contest with http://www.spotlight.is, but it’s still in beta as we come out with a full release in November. Hope to have a chance to show it to you for feedback. Take care, Kevin
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