The Video Game Industry
An Industry Analysis, from a VC Perspective
The video game industry is poised for significant growth, butmany sectors have already matured.
Video games are a large andgrowing market. However, within it, there are only selected portionsthat contain venture capital investment opportunities. Our analysishighlights these sectors, which are interesting for reasons includingsignificant technological change, high growth rates, new productdevelopment and lack of a clear market leader.
The opportunity lies in non-core products and services.
We believethat the core hardware and game software markets are fairly matureand require intensive capital investment and strong technologyknowledge for success. The best markets for investment are those that provide valuable new products and services to game developers, publishers and gamers themselves. These are the areas that will buildout the industry as it undergoes significant growth.
A Quick Snapshot of Our Identified Areas of Interest
Online Games and Platforms.
Few online games have historically been venture funded and most are subject to the same “hit or miss”market adoption as console games, but as this segment grows, anopportunity for leading technology publishers and platforms willemerge. New developers will use these technologies to enable thefaster and cheaper production of online games. The developers of newonline games also present an opportunity as new methods of gameplayand game genres are explored.
Mobile gaming is projected to be a large market inthe coming years and this has led to its identification as a “hot” VCsegment. It has seen a lot of financing and consolidation activityrecently, so while we still see opportunity, we believe that it may beapproaching the saturation point of initial funding and should beentered carefully. A follow-on investment in a market leader is likely
March 11, 2005Hanover, NH
Tuck Class of 2005
Charles.Haigh@Dartmouth.eduTuck Class of 2005