Blog Post

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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4 Responses to “Big Fish, Big Funding — But For What?”

  1. I think you’re right that the growth of the casual market is going to level off soon, but what’s left after that adjustment will still be a very significant sector that will be carved up by a few large players. In that regard $83m to help improve the chances of Big Fish being one of those players doesn’t sound too excessive.

    Your ‘Playcrafter’ angle is piffle, of course. Analogous to suggesting that toy manufacturers should just quit because you can build simulacra of anything with enough Lego bricks (if you ignore cost, time, practicality, etc.).

    Anybody with a bit of money and skill can already develop a decent casual game (unless you’re going to seriously argue that gimpy Web 2.0 Game Construction Kits make professional development practices obsolete), but most don’t have the resources and expertise to market their games effectively, which is why a lot of the better ones hook up with publishers like Big Fish.

  2. John Falconne

    Big Fish equals big hype. I will never understand how they managed to convince these VCs to fund them for so much. Do they think they are going to take on the likes of Electronic Arts with their hidden object games? This company is ruthless in terms of how it treats developers and capitalizes on other people’s good ideas. They’re going to have to step up their game considerably in order to spend that money wisely.

  3. I would have to agree with you Wagner. I can only suspect that the company will be branching out into other market areas with this type of capital. Look for them to enter the virtual worlds space, MMOG space, or some other market segment.