5 years ago I would have agreed, VCs invested in games, rather than studios and most games never get released, let alone be successful if they are released. Rovio is a good example of that time period. But so many games people have exited and formed their own VC studios, or hired people who get games, and the focus has switched to investing in teams which is way better.
So while it's true that "games don't need VC", yeah there is a huge market for smaller games, and what success means for 1-4 person team is vastly smaller than a big game, there is also a place for large VC funded teams. I think this article is really saying "games shouldn't be funded by VC" which I think is just wrong.
Just like any VC, you want the VC to understand your industry, which games is hugely misunderstood by people who haven't worked in games. The VC has to understand what's valuable, which is a team that ships and works well together, not a particular game idea. Alternatively invest in a technology that is being built for the game, which is the Tencent approach and either use buy the tech if it works out or sell it. Either way, don't invest in a particular game product. Failures don't mean the model doesn't work, and successes without it doesn't mean it's not needed. VC is one of many ways to get from point A to point B and if depends on the project - if you have an idea that needs rocket fuel and you're willing to take the risk that rocket fuel entails, then it can make a lot of sense. But it's def not the only way.
A VC is an extractor. From the point of view of someone who wants the thing they invest in and the people building that thing, they are a net negative. Literally the only situation in which they're even remotely desirable is if you can't eat at all. And then you accept them with the understanding that they're taking something away from you.
Wouldn't the traditional publisher model somewhat modified be reasonable solution? They have been around for decades and they know the industry, have the connections and so on. Just have to leverage it right way.
Real issue with VC money in games is that returns most of the time just aren't big enough. And picking the winners is very hard.
that's a good point. i was at a large dev for a while myself and a fair number of coworkers have gone on to start their own studios, taking VC money in the process. a second dinner or theorycraft does need deep pockets, and the teams themselves bring most of the execution expertise needed
> the all-time concurrent user (CCU) record on Steam was just claimed by Palworld
Was it? PUBG had > 3.2 millions concurrent players at the peak, and it's about 1.3M for Palworld. Sure it's growing faster but it's still nowhere near that.
you're correct, this was a basic error on my part - it's #5 all time (https://steamdb.info/charts/?sort=peak). apologies / thanks for the catch, and i've fixed the text
This is ancient Internet history at this point but does anyone remember Rovio? In the early days of the iPhone/iPad they made a large amount of money with the Angry Birds franchise, even licensing the IP to a movie (or was it 2?). In 2011 Rovio took ~$40 million in VC funding and I distinctly remember thinking "well, that's over".
Creative ventures don't scale. You cannot reduce them to a magic and infinitely-repeatable formula no matter how hard people try. People try and that's why we get the exact same summer blockbuster movies every year, 20+ years of superhero movies just rehashing old IP, endless sequelss, annual Call of Duty releases, FIFA/Madden annual micro-transaction hell and so on.
VC funding works what you're doing is repeatable otherwise it doesn't.
I think you actually can reduce a lot of it to a formula. Most major games that come out are basically a modern remake of something that already exists and was popular.
Just rehashing the same concepts and improving them is a pretty solid strategy.
This strategy won’t create the Minecrafts and Stardew vallies, but it covers the bulk of game development.
> You cannot reduce them to a magic and infinitely-repeatable formula
The formula is:
> blockbuster movies every year, 20+ years of superhero movies just rehashing old IP, endless sequelss, annual Call of Duty releases, FIFA/Madden annual micro-transaction hell and so on
These are very successful businesses. You might not like them as a gamer, but I don't know why you said it like they're some failures. They're not OpenAI but clearly are printing money. From an investor's point of view that's what matters.
I’m not sure I agree. Disney and Pixar lives and dies on being able to repeat success. And both have lived for quite a while now.
Rovio was extremely conscious about not building an empire on top of angry birds, as that dad would eventually fade and they needed a new thing. They were aiming to be the next Disney, but of games and smartphones, not cinema and tv.
I’m surprised they took $40 million in VC as that sounds like it must have been Pennie’s to Rovio during angry bird mania.
Just sharing, as I just looked it up: Rovio was bought by Sega last yeae for $776m. They've had over $300m yearly revenue in 2022, though not profitable.
Games in this day and age ideally need generous government subsidy to be successful.
I feel we're a long way off universal basic income worldwide so at the very least, something like an artist's living wage provided by the government is a necessity to produce good independent video games. Most professional indie developers tend to survive rather than thrive, barely kept afloat by money from publishers who also have their own interests and influence which affect the final result.
There would be kinks to iron out in terms of who gets the wage and how it's kept and so on, but the funding really needs to come from an entity that is largely divorced from the "success" of the game. Bit of a pipe dream, but it's nice to think about.
Quite the contrary, the world you envision isn't nice to think about at all. It's impractical, inefficient, wildly haphazard, and, worse than that, would produce the exact opposite of what you're looking for. The profit motive might not be aesthetically pleasing to you but it provides the vibrant indie marketplace we see today.
Why would you want it to be divorced from success? Seems like popularity/commercial success is the best measure of "being good" societally that we have for art.
People making art/games only for themselves is fine of course, but I don't see why society should subsidize it (as long as we have finite resources - beyond that everything goes of course).
This article is a bit stating the status quo because games have largely not been funded by VC for most of their lifetime. Although saying that I’ve worked at three venture backed studios in two decades. Although these have all been focused around ‘bigger ideas’ rather than a single game.
I would say the days of crowdfunding being a sensible strategy for early stage funding isn’t true anymore. Rather it’s a great way to spend money to help build a community early on. You need a lot of work and good production value to attract attention.
Games funding itself feels like it’s in a tricky place. Even “indie” titles are getting up into budgets of $1-2 million and obviously on the other end of the scale there’s non-stop complaining about how AAA costs are out of control versus the money consumers are willing to spend. Then there feels like a scattershot of smaller publishers that are to an extent preying on starry eyed kids making their first game where budgets offered are unsustainably small and promises to help with discovery never happen.
From a developer perspective VC seems a lot more attractive as well. Typically less onerous to get, different kind of working relationship, doesn’t eat into revenue and the numbers are higher! But you have to be making something very specifically interesting to the people investing and have a team pedigree they recognise.
hiya, author here. Palworld is a wild, wild game (think pokemon meets ark:survival evolved, or simply pokemon with guns), and it follows a number of other super-successful indie games that got made with no VC funding. i myself work heavily within the VC ecosystem, so it got me thinking about how games and VC tie together. while the article is written in an opinionated manner, i don't mean to present it as fact - more some musings and steelmanning of why VCs aren't needed
Palworld is an extreme lightning in a bottle and is not a consistent model for game development success.
For every Baldur's Gate 3 and Among Us, there are thousands of games that never reach that level of popularity. It's a similar survivorship bias as typical VC.
Having worked in games for 10+ years, and having recently joined a more traditional VC-backed startup outside of games, I think you are 100% on the money.
The VC model doesn't make a lot of sense for games. So many outsiders come into games thinking they know what they're doing and they learn some hard (and expensive!) lessons fast. Thanks for writing this.
Isn't the traditional publishing model essentially same as VC? Publishers invest in game projects, acknowledging that many will be duds but some will be hits?
The significant difference is the way the investment is recouped. Publishers take revenue directly whilst VCs take equity in the studio. VCs also expect a much larger return so they’re primarily interested in finding the next “forever game” like League or WoW and money printing businesses like F2P mobile studios.
They need something. I've been trying to crack into this space for a better part of a decade. Ideas that come naturally to me that I spend hundreds of hours on end up being limited by ludicrous amount of art requirements to be considered acceptable in my mind to the public audience. I'm not interested in releasing an 8-bit (but looks worse somehow) pixel art clone of a popular genre. I want to make something truly interesting. Well, do you have a studio of artists ready to work for the next year or two? No? Well, good luck then.
I never did any game development but I feel the same way. I never pursued this path but I kinda wish I did in some way and the idea that maybe it's not too late to switch comes back every so often but the scope feels impossible. I wonder if AI tools making the art would be a big enabler for small indie studios. Still, it does seem like 10 - 100x effort required to make a good 3D video game that sells vs. making an even somewhat complex app.
> ludicrous amount of art requirements to be considered acceptable in my mind to the public audience
Do you want to do the next Carmack game? Not even Carmack is doing Carmack games any more :)
> releasing an 8-bit (but looks worse somehow) pixel art clone
Good pixel art is harder than it looks and I'm not sure it takes less time. But there is a middle ground between fake 8 bit and high budget with hundreds of artists.
klik99|2 years ago
So while it's true that "games don't need VC", yeah there is a huge market for smaller games, and what success means for 1-4 person team is vastly smaller than a big game, there is also a place for large VC funded teams. I think this article is really saying "games shouldn't be funded by VC" which I think is just wrong.
Just like any VC, you want the VC to understand your industry, which games is hugely misunderstood by people who haven't worked in games. The VC has to understand what's valuable, which is a team that ships and works well together, not a particular game idea. Alternatively invest in a technology that is being built for the game, which is the Tencent approach and either use buy the tech if it works out or sell it. Either way, don't invest in a particular game product. Failures don't mean the model doesn't work, and successes without it doesn't mean it's not needed. VC is one of many ways to get from point A to point B and if depends on the project - if you have an idea that needs rocket fuel and you're willing to take the risk that rocket fuel entails, then it can make a lot of sense. But it's def not the only way.
krageon|2 years ago
Ekaros|2 years ago
Real issue with VC money in games is that returns most of the time just aren't big enough. And picking the winners is very hard.
kyriefh|2 years ago
that's a good point. i was at a large dev for a while myself and a fair number of coworkers have gone on to start their own studios, taking VC money in the process. a second dinner or theorycraft does need deep pockets, and the teams themselves bring most of the execution expertise needed
orbital-decay|2 years ago
Was it? PUBG had > 3.2 millions concurrent players at the peak, and it's about 1.3M for Palworld. Sure it's growing faster but it's still nowhere near that.
kyriefh|2 years ago
jmyeet|2 years ago
Creative ventures don't scale. You cannot reduce them to a magic and infinitely-repeatable formula no matter how hard people try. People try and that's why we get the exact same summer blockbuster movies every year, 20+ years of superhero movies just rehashing old IP, endless sequelss, annual Call of Duty releases, FIFA/Madden annual micro-transaction hell and so on.
VC funding works what you're doing is repeatable otherwise it doesn't.
Gigachad|2 years ago
Just rehashing the same concepts and improving them is a pretty solid strategy.
This strategy won’t create the Minecrafts and Stardew vallies, but it covers the bulk of game development.
raincole|2 years ago
The formula is:
> blockbuster movies every year, 20+ years of superhero movies just rehashing old IP, endless sequelss, annual Call of Duty releases, FIFA/Madden annual micro-transaction hell and so on
These are very successful businesses. You might not like them as a gamer, but I don't know why you said it like they're some failures. They're not OpenAI but clearly are printing money. From an investor's point of view that's what matters.
wodenokoto|2 years ago
Rovio was extremely conscious about not building an empire on top of angry birds, as that dad would eventually fade and they needed a new thing. They were aiming to be the next Disney, but of games and smartphones, not cinema and tv.
I’m surprised they took $40 million in VC as that sounds like it must have been Pennie’s to Rovio during angry bird mania.
tasn|2 years ago
hresvelgr|2 years ago
I feel we're a long way off universal basic income worldwide so at the very least, something like an artist's living wage provided by the government is a necessity to produce good independent video games. Most professional indie developers tend to survive rather than thrive, barely kept afloat by money from publishers who also have their own interests and influence which affect the final result.
There would be kinks to iron out in terms of who gets the wage and how it's kept and so on, but the funding really needs to come from an entity that is largely divorced from the "success" of the game. Bit of a pipe dream, but it's nice to think about.
bhb916|2 years ago
ImprobableTruth|2 years ago
People making art/games only for themselves is fine of course, but I don't see why society should subsidize it (as long as we have finite resources - beyond that everything goes of course).
bidder33|2 years ago
and given the endless stream of indie games government funding doesn’t seem to be a necessity.
hiAndrewQuinn|2 years ago
Like buying everyone in the CCP a copy of FTL: Faster Than Light? (Apparently the team behind FTL was operating out of Shanghai.)
spacemarine1|2 years ago
OfficeChad|2 years ago
[deleted]
meheleventyone|2 years ago
I would say the days of crowdfunding being a sensible strategy for early stage funding isn’t true anymore. Rather it’s a great way to spend money to help build a community early on. You need a lot of work and good production value to attract attention.
Games funding itself feels like it’s in a tricky place. Even “indie” titles are getting up into budgets of $1-2 million and obviously on the other end of the scale there’s non-stop complaining about how AAA costs are out of control versus the money consumers are willing to spend. Then there feels like a scattershot of smaller publishers that are to an extent preying on starry eyed kids making their first game where budgets offered are unsustainably small and promises to help with discovery never happen.
From a developer perspective VC seems a lot more attractive as well. Typically less onerous to get, different kind of working relationship, doesn’t eat into revenue and the numbers are higher! But you have to be making something very specifically interesting to the people investing and have a team pedigree they recognise.
kyriefh|2 years ago
minimaxir|2 years ago
For every Baldur's Gate 3 and Among Us, there are thousands of games that never reach that level of popularity. It's a similar survivorship bias as typical VC.
raincole|2 years ago
For most people $6M budget means VC.
larsiusprime|2 years ago
The VC model doesn't make a lot of sense for games. So many outsiders come into games thinking they know what they're doing and they learn some hard (and expensive!) lessons fast. Thanks for writing this.
candiddevmike|2 years ago
zokier|2 years ago
meheleventyone|2 years ago
unknown|2 years ago
[deleted]
Madmallard|2 years ago
mckravchyk|2 years ago
nottorp|2 years ago
Do you want to do the next Carmack game? Not even Carmack is doing Carmack games any more :)
> releasing an 8-bit (but looks worse somehow) pixel art clone
Good pixel art is harder than it looks and I'm not sure it takes less time. But there is a middle ground between fake 8 bit and high budget with hundreds of artists.
spacemarine1|2 years ago
https://www.elbowgreasegames.com/
meheleventyone|2 years ago
unknown|2 years ago
[deleted]