We last polled our investor network last May about gaming infrastructure startups just as it became clear what epidemic opportunities there are for gaming startups. Accel’s Ami Kumar told us at the time that “the broader social and interpersonal levels across these games” expected to be big winners, highlighting his firm’s investment in startups like Discord and Mayhem. In December, Discord announced that it was raising $7 billion in valuations, and this month Pokémon Go creator Niantic announced that it was buying Mayhem.
After following my story about investors ’perceptions around the evolving opportunities of social gaming this week, I dug into gaming tools and emerging platforms and tied up a handful of VCs to hear their thoughts in that market. Extensive market trends over the past several months have dashed expectations, even in the early stages of the gaming world. This week, Roblox announced that it was valued at $29.5 billion – and increase from $4 billion in February last year. Game makers across the board, including Roblox, continue to acquire gaming infrastructure startups of late. I talked to investors about what else they want to see in space. “We want to see more innovation in the gaming infrastructure, which allows game development to democratize and clever indie to compete with Riot and Epic,” he told TechCrunch.
They highlighted numerous areas for new opportunities, including specialized engines, next-gen content creation platforms, and tools for porting the desktop experience to mobile. The VCs we chatted with were encouraged by the latent opportunities presented by the big platforms for embracing cloud gaming technology. The overall trend was to promote accessibility, a desire to provide a more casual experience for platforms that typically provide a “strong” audience.
It was also clear from the conversation that Roblox is significantly changing the attitude of investors towards potential growth opportunities and problems in the entire gaming industry, VCs can follow a similar recipe for success with those who are not interested in spreading their success and betting on a nearby player or one.
Responses have edited for length and clarity. We talked:
- Hope Cochran, Madrona Venture Group
- Daniel Li, Madrona Venture Group
- Ethan Kurzweil, Bessemer Venture Partners
- Sakib Dadi, Bessemer Venture Partners
- Alice Lloyd George, Rogue VC
- Gigi Levy-Weiss,
Hope Cochran and Daniel Li, Madrona Venture Group
Cloud game-streaming networks are exciting but do not seem like a sure bet quite yet, how do you feel about them?
DL: I think the real story behind cloud gaming is “play anywhere” and its cross-platform nature. Gaming is very different from Netflix; it not your choice that you want to keep an endless library of content. When I am playing a game, I always want to play Overwatch and I do not need access to the other 1,000 games. I think the approaches that cloud companies have taken have gone beyond this thinking what do we have and what can we create for gamers with it? What do gamers want and what more can we give them. It certainly has that trend with things like giving away two free games per month, but really I think the long-term thrill for cloud gaming is to play your game anywhere and with your friends anywhere.
