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Traditional game publishing is no different than newspaper publishing, Gus Tai of Trinity Ventures said at a panel discussion held at the GamesBeat conference today in San Francisco. They are broken from a content standpoint, and they are broken from a distribution standpoint. It is the […]

Traditional game publishing is no different than newspaper publishing, Gus Tai of Trinity Ventures said at a panel discussion held at the GamesBeat conference today in San Francisco. They are broken from a content standpoint, and they are broken from a distribution standpoint. It is the companies willing to step in and disrupt the status quo that Tai and his fellow venture capitalists want to invest in.

Yes, despite the recession, money is still being made investing in the gaming sector. As Tai disclosed, he’s looking to invest between $2 million and $10 million in companies during their formation stage — particularly those that are bringing new content, distribution, or monetization angles to the industry. “Companies that are easy to invest in have a first-play advantage,” says Tai.

That $2 million-$10 million range is popular among VCs. Benchmark Capital’s Mitch Lasky is searching for companies in the social space to drop a few million into during their first and second rounds of funding; he’s also interested in payment systems. While Janice Roberts of the Mayfield Fund, which has invested in the likes of casual portal PlayFirst and free-to-play game company Acclaim, is more interested in targeted demographics than a particular game category — she’s chasing after women and kids across platforms.

But Lightspeed Venture Partners’ Jeremey Liew says you can’t make money investing in a single game, that you need visionaries who can crank out multiple projects and find ways to expand upon their successful titles with new levels and content. His focus, subsequently, is on gaming factories.

“The traditional game company is dead,” Gus Ta said simply. “Five to 10 years from now, they will be where newspapers are today.”

  1. “The traditional game company is dead”

    Which does raise the question, “Why is it covered in GigaOM?”

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  2. “The traditional game company is dead”

    Which does raise the question, “Why is it covered in GigaOM?”
    P.S. – Sorry, forgot to tell you great post!

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  3. it would be good if you could provide more of gus’s argumentation rather than just the soundbite

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  4. Mark,
    I’ve just come across this and I wanted to thank you for the comment and request. My points on the panel are that first, there are exciting areas for innovation in the gaming ecosystem, and that second, I would focus on the issues the industry has today with distribution and content. My observation is that the current major model of game publishing, which is what I call “traditional” is facing the same challenges that newspaper publishing has faced over the last 10 years.

    Newspapers deliver the digital good of information. For consumers who want this information, they increasingly want it anywhere at any time. Companies who can provide this type of good in easier to obtain formats have an opportunity to build new businesses. Regarding gaming, much of the activity talked about at the conference related to newer forms of distribution: social networks, iPhone, and OnLive as examples. These innovations in distribution are quickly growing and are becoming better understood.

    The area that I believe that is less understood and hence may provide greater opportunity is the transformation of content that takes place in conjuction with the evolution of distribution. As consumers become accustomed to anytime, anwhere access to what they want, their consumption patterns change. What consumers predictably want is more frequent novelty, otherwise they become bored faster. In the case of newspaper publishing, that model of daily information began to lose out to hourly information provided by blogs or online news organizations. Those sources themselves are beginning to feel pressure from Twitter and Facebook, where information is provided on a per second basis.

    The question I think that is relevant and provocative is “What is the Twitter or blog form of content innovation for game companies?” Clearly, there is already an impulse from consumers for dynamic, refreshing content. The two methods for content innovation are 1) using the community to provide the novelty and surprises; and 2) releasing content on a faster pace. Using WoW as the example, perhaps that title had 60-100 hours of individual innovative game play. Beyond that, the experience remains fresh for x00 more hours because of the social element of it. Beyond that, Blizzard publishes expansion packs on an x month basis to refresh the experience for the dedicated players. But how will expansion packs evolve, and how will community engagement mature to have a bigger, more persistent impact on the experience, even more persistent than Second Life, as a possibility?

    My thought experiment for entrepreneurs, whether at the conference or not, is to visualize where these trends will be in 5 to 10 years. How can they help lead these trends rather than be the last person shutting down the printing press? Where will these trends wind up? While there will still remain the opportunity for a couple of companies to maintain the current model, just as the New York Times and the WSJ remain strong businesses in print, most other game companies will radically change their distribution and content strategies from what’s done traditionally today. Hence my point that the traditional game company is dead.

    I hope this provides more color to the sound bite.

    Thanks,
    Gus

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  5. [...] state of investing in games. All see the market as increasingly crowded and fragmented, but still ripe with potential. One main interest that I’ve been able to glean from other coverage is in the social and [...]

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