August 24, 2016 / capital, financing, funding, gaming, video games

Corporate Investment Fuels Game Development

As gaming continues to see explosive growth in console and PC, mobile, and VR, evident in the shocking explosion of the E3 Conference (Electronic Entertainment Expo) – it’s the entities from other major industries to which we should be turning for resources and opportunity.  It’s no secret, though it still confounds many, that the audience for gaming is an astoundingly large but distinct niche – appealing as such to marketers moreover as it’s increasingly easy to reach, by way of events and various engagement channels.

E3 infographicAccording to the Entertainment Software Association, total revenues for the gaming industry in the U.S. hit $23.5 billion in 2015 and industry performance helped make 2015 a “banner year for video games” according to NPD President, Joanne Hageman.

So why look to non-gaming brands and corporate sponsorship, endorsement, and even investment for game development?  These companies are seeking that enormous younger audience as well as the surprising 40% of those 50+ (affluent) who game.  And the implication of gamers is that they’re slightly more tech savvy than otherwise; familiar with mobile apps, social media, and other ways in which companies can connect with consumers.

Indeed, various industries have strategies specifically designed to attract the gaming audience, Red Fox Insights has aggregated some insight that will spark your thinking with regard to the automotive industry, beverages, and even more of our peers in broadcast/media from the likes of Time Warner, ESPN, and CBS:

Consider what’s been happening in technology and media throughout the past decade.  While revenues have soared, we’ve seen production of not just games but music, film, and other content, constrained on one end by increasing costs, as new platforms proliferate (mobile, VR, etc.) while on the other end, revenue streams have shrunk, e.g. mobile gaming has driven consumer expectations to $.99 to buy.   Sure, other forms of monetization from subscription to the ever-hated pay-to-win have emerged but the bottom line remains the same, traditional sources of funding (production investment) have been able to excuse their risk aversion under a guise of encouragement to make money in these many new ways.

But that adds complexity to what you’re building.  So do you simplify and focus on a specific platform such as the hot mobile game market or might funding be found more prolifically when endeavoring to reach everyone?

Dave Their, a brilliant columnist on the gaming and technology convergence, points out in Forbes how many are missing that implication of mobile by focusing on mobile.

For some reason, people continue to view gaming as some sort of monolith, even though it’s pretty obvious to anyone with eyes that Candy Crush is filling a slightly different need than Bloodborne.

This is far from a zero sum game. Gaming has been exploding in the past decade or so (really, the past three decades), and it’s been doing so through a wide range of platforms.

The future of gaming isn’t mobile any more than the future of gaming is console or PC: the future of gaming is gaming.

Is he making my point or refuting it?  Frankly both, what he’s touching on is how the future is both diversified (which is costly to develop) and yet far more reaching as, he adds, “Devices that are getting increasingly good at talking to each other and developer tools that work across different platforms are only going to further unify what currently feel like disparate markets, and the games will follow.”

Developing games then, ask what creates the value for investors and you can appreciate why Corporates are worth a seriously.  Funding a game for only PC, or Console, or Mobile, or VR is costly and limited both in terms of monetization and market size but embracing what the Corporate Brands seek, broad reach into their valued demographics, and endeavoring to reach them is both possible and vastly more appealing to investors.

Paul O'Brien

Paul O'Brien

Director at MediaTech Ventures
Long time Silicon Valley technology and startup veteran, Paul O'Brien is affectionately known as SEO'Brien for an extensive past in the search industry.
Now Texan, O'Brien works in Venture Capital Economic Development, serving the investment and venture capital economies directly, through thought leadership, consulting, and startup development.He's the founder of MediaTech Ventures, a founder and managing director of the Texas Technology Council, and partner in 1839 Ventures.
Paul O'Brien

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One reaction on “Corporate Investment Fuels Game Development”
  1. Red Fox Insights says:

    Thanks for the feature!

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Corporate Investment Fuels Game Development

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