There is always a tremendous buzz whenever anyone talks about investors in the video game industry. For a good reason, it’s a hot topic—the gaming industry is a burgeoning global enterprise featuring billions of players. Based on data collected by Exploding Topics, the gaming industry is currently valued at approximately $282 billion, with expectations of hitting $363 billion by 2027.
Currently, there are 3.32 billion active video gamers worldwide, compared to just 2.03 billion gamers in 2015. This rapidly growing industry is teeming with players, game creators, designers, and developers, which means lots of money is being pumped into the global gaming market. Hence, the mega-money valuations listed above.
When most people contemplate investments needed to make strategy games good, the focus invariably shifts to financial assets. Truthfully, these games require significant time, effort, and ideation to manifest the ultimate strategy-based attraction. While financing is a prerequisite to provide the necessary cushion, investment in entrepreneurial talent is far more important.
Everybody understands that games are inherently risky investments. Many financial gurus believe that games are riskier than stock investments. Why? Because they tend to rely on entertainment and creativity – two elements that are incredibly difficult to forecast. That’s where the investors need to look beyond the ideas and the entertainment value to the teams of talented individuals putting the game together. A well-crafted strategy game resonates with its audience. Players appreciate these thought-provoking, action/reaction entertainment attractions.
Whether it’s an independent gaming studio or part of a corporate conglomerate, game creation, development, and distribution are as difficult as engineering a real-life product. Gaming is not only about whether the game works; it’s about the players’ experience. The mechanics have to be fun. Implementing tactics and strategies to achieve desired outcomes needs to be well-constructed, challenging, and rewarding.
We now know that strategy games improve intelligence because every decision must be carefully thought out beforehand. Every action taken by players reacts to the gaming metaverse. Players need to be able to interpret, anticipate, and contend with every possible eventuality carefully. Lady luck plays a small part in the outcomes of strategy-based games. Focus is sacrosanct.
Consider the example of a game that didn’t cost very much but went on to make a fortune – Angry Birds the worldwide phenomenon cost $140,000 to create. Or consider that Zynga cobbled together the first FarmVille rendition in 60 days. Today’s investors are looking to dramatically cut down development times while slashing production costs across the board. It’s less an issue of financial investment and more about investing in the right people (creative talent) to bring strategy-based games to life.
Types of Financial Investors for Video Games
Rocket Brush Studio published a report on the game industry, investors, and funding on June 28, 2022. Several notable takeaways can be gleaned from the report:
Equity crowdfunding initiatives are geared towards people who want to invest funds in exchange for equity/shares in a company. This can be great for gaming developers needing to raise funds from large numbers of people. Granted, it’s a less common method than the rewards-based crowdfunding options. Equity crowdfunding initiatives seek a nominal percentage ownership share of the gaming company. Therefore, given the high risks of these types of investments, it’s a regulated market.
Angel investors are the super-wealthy folks who invest small amounts of money into a brand-new startup. They invariably have a personal connection with the company and its founders. It’s usually a hands-off investment, but they have in-depth gaming industry knowledge and provide invaluable mentorship for startup companies. There are many examples of Angel investors in the gaming industry, including Shervin Pishevar, Andrew Goldman, Chamath Palihapitiya, Greg Richardson, and Ray Muzyka.
Venture funds comprise the next group. These organizations collect pools of money from scores of mobile game investors. They use these funds to invest in bigger companies. Their goal is to generate ROI for shareholders. Venture funds plow large amounts of cash into gaming startups – significantly more than angel investors. Foremost among the venture fund giants are the Griffin Gaming Partners, Galaxy Interactive, London Venture Partners, and Makers Fund.
Given this backdrop, it’s abundantly clear that investments in gaming have a long-term focus. With enough resources and the right people in charge, magic can happen. But the ultimate litmus test is how the games play out with their intended audience!
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