Kristian has been at the forefront of the rapidly transforming game industry since 2001. After serving as Electronic Arts’ executive vice president of digital, he left three months ago to focus on startups. Today, he leads seed-stage investments with Initial Capital and serves on the board of Supercell, the #1 iOS grossing game company in the world. Before that, he co-founded, ran and then sold social gaming pioneer Playfish to Electronic Arts for $400M in 2009. He was also a co-founder of mobile gaming pioneer Macrospace – today Glu Mobile (Nasdaq: GLUU) in 2001 through the successful IPO in 2007.
TechCrunch writer Kim-Mai Cutler and Benchmark Capital general partner Mitch Lasky recently wrote two insightful pieces on venture investment in games (here and here) – both expressing some degree of skepticism of venture capital models for funding game startups. I agree venture funding is not for every game startup, and certainly not every game startup makes for a great venture investment. However, I would argue the case for venture funding for games is today stronger than ever.
Here is why:
Why game startups are better off with venture investment than publisher funding
There are broadly speaking three models available for a game startup today: bootstrapping (including crowd-funding), publisher financing and venture financing. For those who can afford the risk and have cash readily available, bootstrapping always trumps the other two. It comes with maximum freedom, control and upside in a success case.
But the risks are very real and significant. Those unable to bootstrap because of the risks or ambitions of the project should in my view consider venture investment over publisher financing models.
Publishing as an idea for digital pure plays is simply turning out not to work very well. Many have tried it with very little to show for it. This is because the typical publisher value-add of financing, marketing, technology and distribution through retail channels doesn’t translate well to the digital world. It says something that not a single game in today’s iOS top-25 grossing has been “published” by a third party as far as I can tell.
While developers continue to need financing, the rest of the “publishing services” have become obsolete in four key ways:
Venture financing from a specialist fund that understands games should therefore be seen as a compelling alternative for game startups. It provides the financing value add, typically at far more flexible terms, without any of the restrictions to value creation that lower margins or complicated IP terms can create. And you could even get good folks around the table for advice how best to build for long term success and shareholder value. It should be no surprise that today’s most promising game companies including Supercell, King, Kabam, Rovio and Kixeye are all venture-funded.
What about the case for investors – does it still make sense to invest in games?
The digital pure play market growth has recently been characterized by the rapid rise and occasionally fall of new entrants. Zynga is cited as the key example by both Cutler and Lasky. A thoughtful article by Tadgh Kelly about “Peak Mobile” further highlights the cycles any individual platform tends to go through. In a world of few game acquirers and a troubled IPO market, does the venture model therefore need a re-think?
Even though some VCs are shying away from games, here are five reasons why I and Initial Capital are doubling down on games:
The next few years for games will be choppy. But the fundamentals for gaming investments are stronger than ever. As Lasky says, you have to be building a game company and not just a game for venture funding to make sense. And for a venture fund to consider gaming investments, you need to understand the sector.
But neither of those mean that venture investments in games aren’t alive an well. In fact, the team at Initial Capital remain as bullish on the sector as we led the seed round into Supercell. We continue to seek out the very best, most inspired design and coding teams who want to define where games will go next and help them get started with capital, advice and structure.
See the rest here: Why Gaming Is Still A Great Bet For Investors
I get as excited as anyone thinking about the upcoming 49ers season. Quite a bit has happened since we were five yards from winning the Super Bowl. The stadium was branded with the Levi’s logo, we got Anquan Boldin from the Ravens for pretty much nothing, and Michael Crabtree suffered a hefty injury. Yahoo!, while on a purchasing spree of startups, decided to align themselves with SF’s most beloved football team (sorry Raider fans) by inking a 10 year deal that makes them the 49ers exclusive partner for online digital content.
Levi’s stadium has been called the “smartest” stadium ever built. With a focus on mobile, the 49ers took into account that nearly everyone who attends a game will be bringing their own smartphone. The stadium will be able to provide Wi-Fi to nearly 70,000 people on any given Sunday. Fans are said to be able to interact with other people in the stadium, watch replays from different camera angles, and possibly order food directly to their seats so they don’t have to miss a down of football. One of the most attractive highlights is being able to upload a photo to Flikr, and possibly be shown on the stadium’s jumbotron. That’s assuming, like me, you’ve always wanted to be on a jumbotron.
As part of the partnership, Yahoo! will be the exclusive digital content, social network, and online photo/video partner for the San Francisco 49ers. Expect to see lots of Yahoo! branding around the new stadium as they’ve been given rights to the Fantasy Football Lounge, along with logo placement inside and outside the stadium.
Partnerships like this are becoming more commonplace in the sports world. Big brands have been buying naming rights to stadiums for decades now. Tech companies have been no stranger to those deals. Oracle Arena and Overstock.com Coliseum are two such names bought by their respective companies for naming rights in Oakland.
Financial terms for the Yahoo! agreement weren’t revealed, but one can assume that such a high-profile stadium set to host the Super Bowl in three years can charge quite a premium. It’s also good to know Marissa Mayer wears red and gold on the weekends.
The rest is here: Yahoo! Becomes Exclusive Partner Of 49ers Online Content
Yahoo! has disclosed the number of government requests for data it has received over the past 18 months, becoming the latest tech company to do so after the fallout from the NSA spying scandal.
In a statement co-signed by CEO Marissa Mayer and Yahoo! general counsel Ron Bell, the company said that Yahoo! received 12,000 to 13,000 requests from FISA (Foreign Intelligence Surveillance Act) and U.S. law enforcement agencies during the period between December 1, 2012 and May 31, 2013.
Like other tech companies that have recently disclosed the number of U.S. law enforcement requests for data they have received, Yahoo! used its press release to reiterate that its commitment to user privacy, despite being implicated in PRISM.
“We’ve worked hard over the years to earn our users’ trust and we fight hard to preserve it,” Mayer and Bell said in the statement.
Facebook said on June 15 that for the six months ending December 31, 2012, it had received between 9,000 to 10,000 requests for data from U.S. law enforcement agencies. During that same period Microsoft received between 6,000 and 7,000 requests.
Google, on the other hand, has asked the U.S. government to be allowed to publish more information about national security requests it has been given. Google and Twitter (which have not yet revealed their data request numbers) have both criticized other tech companies for disclosing the number of data requests they received because their numbers do not break down the types of request made by type or government agency.
Yahoo!’s statement noted that “like all companies, Yahoo! cannot lawfully break out FISA request numbers at this time because those numbers are classified; however, we strongly urge the federal government to reconsider its stance on this issue.” The company said that most of the requests it received concerned fraud, kidnappings and other criminal investigations.
Yahoo! also stated that it will issue its first “global law enforcement transparency report” later this summer, which it will refresh with current statistics twice a year.
January 1, 1994
December 4, 1996, Nasdaq:YHOO
Yahoo was founded in 1994 by Stanford Ph.D. students David Filo and Jerry Yang. It has since evolved into a major internet brand with search, content verticals, and other web services. Yahoo! Inc. (Yahoo!), incorporated in 1995, is a global Internet brand. To users, the Company provides owned and operated online properties and services (Yahoo! Properties, Offerings, or Owned and Operated sites). Yahoo! also extends its marketing platform and access to Internet users beyond Yahoo! Properties through its distribution network…