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What Do Investors Look for in a Game Developer?
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What Do Investors Look for in a Game Developer?

December 6, 2012 Article Start Previous Page 3 of 3

All that being said, we do see a few strategies that work repeatedly for at scale discovery in the current environment. I like to see game companies that are taking advantage of some of these strategies, and preparing themselves to take advantage of more as they grow:

1. Cross-Promotion
Game publishers with a lot of Facebook or mobile install bases are able to make their user base aware of new releases in a free and scalable way. Zynga has repeatedly made use of this approach to launch its new games at real scale. Facebook has now made it possible to cross-promote from a Facebook installed base to mobile. To be able to do this well, you need most of the games in your portfolio to appeal to a similar audience. Building different games for different audiences makes it much harder to take advantage of cross-promotion.

2. Sequels
Publishers with a hugely successful hit game can often milk the IP with subsequent releases. Rovio has done this repeatedly with Angry Birds. With the game market being so noisy and confusing, most players will give a sequel a shot if they enjoyed the first game. It's notable how poorly Amazing Alex did in comparison to the Angry Birds sequels.

3. Borrowing IP
Much like a sequel, players will respond to a brand they recognize. This can be IP from another game platform (Bejeweled Blitz, Zynga Poker, Sonic the Hedgehog, The Sims Social) or another medium (Battlestar Galactica Online, Marvel: Avengers Alliance, Temple Run: Brave).

In the $60 packaged software world, gamers would check game reviews before buying any game, even one with licensed IP, so many games that borrowed a TV or movie brand were not successful because they were not good games. But in a free-to-play world, players are more willing to give a game a try if they recognize and identify with the IP.

4. Paid Acquisition
Smartphone and Facebook both have relatively efficient markets for paid installs at this point. If a game monetizes better than others, it can pay more for a new player than others can, and it can find its audience through paid channels. This requires excellent monetization, which typically means targeting core gamers. Kixeye, a Lightspeed portfolio company, has followed this approach with great success.

5. Get Featured by the Platform
This is hard to do. Infinity Blade benefited from a lot of promotion from Apple, in large part because it changed people's perceptions about what was possible for an iPhone game. This drove a lot of users for the game, despite its relatively high price point. Getting featured by the platform is hard to plan for, and can take a combination of distinctiveness, something in your game that also promotes the platform, business development expertise, relationships with the platform and someone simply taking a shine to your game.

Chair's Infinity Blade

6. The Early Bird Gets the Worm
Zynga did this on Facebook and is still the dominant publisher of Facebook games. Gameloft, EA, Gree and others are frequently in the top games charts for mobile. I think that iPad is the only fast-growing new platform that does not currently have a set of dominant publishers.

There are far fewer games built specifically for iPads. As a result, discovery is substantially easier for iPad than iPhone. It is less crowded, for now. Most tablet games are simply up-rezed mobile games. But tablet gaming has the opportunity to be quite different to phone gaming, with longer session times, more screen real estate for display and the opportunity for co-op and competitive play with another person sharing the same device. Developers are starting to take advantage of this by building tablet first games and having great success. In the short term we may see more winners coming out of the iPad gaming platform than any other.

7. Co-opting a Community
Riot did a tremendous job of this, co-opting the DOTA community to come over wholesale to League of Legends. We haven't really seen this done by anyone else recently, but the tremendous success that Riot had with this approach makes it worth exploring to see if it is repeatable. In the console and PC gaming world this has done this several times, notably with Counter-Strike, co-opting the Half-Life community, for example.

Some of the strategies are more available to larger companies than startups (e.g. cross-promotion or sequels), but they should still be held in mind by startups as they think about their future. Discovery is the problem for many game startups today, and companies should spend real time thinking about discovery and how to prepare for it. You can't just make a game and hope for the best.

Wrap Up

We've seen many false dawns as we've waited for the "Golden Age of Game Developers." Every new console release has offered that hope. But each time it has been the publishers that have benefitted and not the developers. But this time, because developers really can self publish, I think we finally are at a golden age for game developers. I'm excited about this as an investor. If you've got the elements that I've listed above, I'd love to hear from you! In the meantime, let me know what your thoughts are on what game developers need to be successful in comments.

Article Start Previous Page 3 of 3

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