Big Fish, Big Funding — But For What?

When I first squinted at this morning’s news that casual game company Big Fish had landed $83 million in funding (from Balderton Capital, General Catalyst Partners and Salmon River Capital), I could have sworn there was a decimal point missing somewhere. Big Fish reported $50.8 million in revenue in 2007, a figure that’s grown 100 percent a year over the last three years. That’s great, but when you look at the larger competitive space, the economics, and the broader Internet trends, the numbers are hard for me to understand.

I agree with Benchmark’s Mitch Lasky, who just told me that, “We are on the verge of a casual games backlash,” since ,”the space is so ridiculously over-funded.” Because while casual games are enormously popular, attracting up to 400 million players, the revenue streams are comparatively modest.

What’s more, casual game budgets are also small, in the low six figures. This translates into a vast library of games already on the market, and while the $83 million is aimed at expanding Big Fish’s global footprint (they launched a Japanese portal last week), we’re already near a point at which the world is inundated with casual games. Looking at the bigger picture, there’s a number of Web 2.0, build-your-own-casual game platforms out now (such as Playcrafter) or in development. When we reach a point where anyone can make and upload a halfway decent casual game from their basement, will we really need 57,000-square-foot headquarters along the Seattle waterfront anymore?

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