With cross-platform experiences like Fortnite and PUBG, in-game socializing environments, and subscription-based cloud gaming services from Playstation, Google, Amazon, and others, the gaming industry is entering a new era beyond mobile.
These days, the industry is at the center of social media and entertainment trends; gaming is expected to earn $152 billion in global revenue this year, up 9.6% year over year.
Given my recent writing on Unity, the most-used game engine, and ongoing research into interactive media trends, I wanted to find out how top gaming-focused VCs are assessing the market right now. I asked ten of them to share which trends they are most excited about when it comes to finding investment opportunities:
- David Gardner, Partner at London Venture Partners
- Henric Suuronen, Partner at Play Ventures
- Samuli Syvähuoko, Partner at Sisu Game Ventures
- Jay Chi, Partner at Makers Fund
- Peter Levin, Managing Director at Griffin Gaming Partners
- Gigi Levy-Weiss, Partner at NFX
- Ethan Kurzweil, Partner at Bessemer Venture Partners
- Jonathan Lai, Partner at Andreessen Horowitz
- Blake Robbins, Partner at Ludlow Ventures
- Jon Goldman, General Partner at GC Tracker & Board Partner at Greycroft Partners
Amid the mix of predictions, there were several common threads, such as optimism about the rise of games as broader social platforms, opportunities to invest directly in new studios, and skepticism about near-term investments in augmented or virtual reality and blockchain.
Here are their responses.
David Gardner, Partner at London Venture Partners
“PC Games are back. Great place to start new IP to then migrate a success to multiple platforms. There is more innovation in business models and more open distribution on PC to facilitate audience growth without the punishment of mobile CPIs.
VR & AR remain out. We stood away from VR in the beginning and extend that to AR while the user experience for games remains a disappointment. Let’s hope those new Apple glasses do the trick!
Crypto remain a theological war zone, but honestly everything on offer has been available in the cloud world, but the real consumer benefit isn’t showing up.
We love games that are expanding audience demographics and are sensitive to less hardcore audiences. For example, women players are estimated to account for 1 billion gamers.”
Henric Suuronen, Partner at Play Ventures
“At Play Ventures, we believe we have just entered the golden era of mobile gaming. Who would have believed 10 years ago that Nintendo and games like Fortnite and Call of Duty would all be on mobile. Mobile is not just a games platform anymore, it is THE games platform of choice for casual and core players alike. Consequently, in the next 2-3 years we will invest in 30-40 mobile games studios across the globe.”
Samuli Syvähuoko, Partner at Sisu Game Ventures
“We at Sisu Game Ventures have been investing in many sectors since 2015 including free-to-play mobile games (especially big here in Finland), VR, AR, PC, console, instant messenger, hypercasual, audio and most recently cloud-native games as well. In addition to game studios, around a third of our investments are into games related tech/infrastructure.
We’ve so far not dipped our toes into blockchain or eSports and our appetite for doing more investments in VR and AR is nil. To me, the most interesting mega trends lie with the promise of cloud gaming when utilized to its full potential. Another term that encapsulates my excitement is games-as-a-social-hobby. Put this and the extreme accessibility of the cloud together and you’ll have a game with revolutionary potential.”
Jay Chi, Partner at Makers Fund
“We are looking closely at ‘Gaming as Media’ related content and platforms — the emergence of new interactive experience centered on ‘viewers as participants.’ Gaming as social media falls under this thesis. We are also looking for MMO and Metaverse enablers given increased demand for specialized, scalable and affordable technologies that empower lean startup teams to create and operate large-scale worlds and novel gameplays.
We also see potential for new start-ups to emerge in hypercasual games with midcore/social meta — no one has truly cracked this genre yet.”
Peter Levin, Managing Director, Griffin Gaming Partners
“The move to cross-platform interactive gaming continues to accelerate and opens up new deeply immersive and highly social experiences for players. The recent and enormous success of Call of Duty Mobile, PUBG Mobile, and Fortnite highlights just how powerful a trend this is.
We believe Call of Duty Modern Warfare’s release on console and PC will demonstrate the ability of publishers to ‘bear hug’ audiences with each platform’s release strengthening their relationships with players and enhancing the resonance of new launches.
Mobile version of key AAA franchises are a dream come true for publishers and an incredible tailwind for the industry. Developers & publishers that are bolstering their capabilities and DNA to address innovation in this emerging vertical of gaming are of great interest to us.”
Gigi Levy-Weiss, Partner at NFX
“Given that a gaming company requires today not just great creative capabilities but also strong technology and analytical skills, we’re focused on experienced founders who have helped build or run a top tier game. For such teams, we are open to invest in any game that has a novel ideas on genre, theme and/or audience or a new convincing manner to monetize their game (on top of in-app purchases and ads). We are also open to looking at eSports-related platforms if they serve a core need for the eSports community.
As for new platforms — we are constantly monitoring their evolution and waiting for the right moment when they become ubiquitous enough to generate enough gaming potential. For now, we are still not going after VR and AR games (waiting for the devices to evolve) though longer term we are believers that VR and AR gaming will be huge. Voice is a new platform where we are starting to see signs of success, though these are still early days.”
Ethan Kurzweil, Partner at Bessemer Venture Partners
“We’re spending most of our time looking in three spaces: social identity, infrastructure and new studios. Gaming is now one of the largest forms of entertainment in the United States, with more than $100B+ spent yearly, surpassing other major mediums like television. Gaming is a new form of social network where you can spend time just hanging with friends/family even outside of the constructs of ‘winning the game.’
In social identity, we’re looking for companies building expressive feeds and social platforms that cultivate the rabid gaming fandom we already see on some generalist platforms like Reddit, Instagram, and Twitter. In infrastructure, we’re always interested in talking to companies looking to innovate on gaming engines and in new, emerging platforms like AR/VR. And in the studio world, we’re very excited to continue to invest in interactive content and new verticals in online, cross-platform, multiplayer games.”
Jonathan Lai, Partner at Andreessen Horowitz
“Next-generation games will be bigger than anything we’ve seen yet. Forget 100M MAU, tomorrow’s MMO will target 1B+ MAU (Facebook scale). A few reasons:
- Games are the new mall. Fortnite looks more like Facebook than it does a traditional FPS: millions of players just hang out in squads and custom games. Huge communities form around esports and in-game events like Marshmello’s concert (~11M attendees) and #fortniteblackhole
- Platform convergence will create massive hits. As mobile/PC/console cross-play becomes standard, multiplayer games will grow faster and larger due to network effects
- The next Marvel universe will be born from games. Players today spend thousands of hours immersed in game worlds. The next big movie franchise or theme park will likely come from original game IP.”
Blake Robbins, Partner at Ludlow Ventures
“Fortnite changed the industry forever by releasing a free-to-play cross-platform game. This is now the bar for every new multiplayer game released, and my thesis is that the major developers will struggle with this transition. This leaves a massive opportunity for new game studios to emerge.
I believe that game studios will be the next major area that VCs start to invest heavily in. It’s becoming increasingly clear that gaming is more analogous to social media than the movie industry. With that being said, it is very difficult to break through and I think we will see most early-stage studios opt to create three to five games with early funding instead of just one. I am also a very big believer in the future of mobile gaming (and esports).”
Jon Goldman, General Partner at GC Tracker, Board Partner at Greycroft Partners
“Videogaming is the largest and most exciting part of the entertainment and media landscape. GC Tracker looks broadly across the sector, but is particularly bullish on game development studios. This is where the value is created to drive everything else. With the rise of new distribution platforms such as Epic and subscription-based services from Apple and Google, gaming content is becoming more and more valuable.
We’re spending a great deal of time on the “interactive narrative” genre, as the lines between traditional media and video games begin to blur. As the average gamer continues to age (currently in the mid-30s), we believe that many players will look for experiences that are less about twitchy gameplay and more about deep and engaging plots. According to Superdata, one of the critical factors for gamers is “experiencing the story.” We’re here to help make that happen by supporting talented game teams with the resources they need to entertain the rest of us. ”
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