Venture Capitalists Bypass Strong Videogames Market
The videogame industry is booming, but venture capitalists aren't playing.
VC investments in games-related start-ups have been sporadic, even as sales of videogames are surging. One factor is the broader downturn in VC activity since the late 1990s, which has hit start-ups in most categories. But a specific obstacle has been the videogame industry's hit-or-miss nature, VCs say.
"Historically, in the games business, a lot of companies really succeeded by hitting it big with one blockbuster," says Jon Callaghan, managing director at Globespan Capital Partners in Palo Alto, Calif. "As a VC, it's very hard to invest in that."
Only $37 million was invested in games-related firms in the U.S. during 2002, down from $66.9 million the year before and a peak of $295.3 million in 1999, according to Thomson Venture Economics, which tracks VC data.
At the same time, U.S. sales of videogames and consoles jumped 10% to a record $10.3 billion in 2002, according to NPD Group, a consumer market-research firm. Titles ranging from "Grand Theft Auto" to "Madden NFL" to "Super Mario" led the way.
The videogame market is dominated by established players such as Electronic Arts Inc., Sony Corp. and Microsoft Corp. Electronic Arts is a venture-capital success story, but it has been around since 1982, and its VC backers, including Ben Rosen, the co-founder of Compaq Computer, have long since cashed out.
These market leaders dominate the shelves of retail stores, making it hard for start-up publishers and developers to get attention. Also, for every top-selling game there are dozens that don't catch on, making the business a low-margin proposition for many firms.
Even online and downloadable games, which independent developers have had some success with, aren't drawing a lot of VC interest. Independent developers that aren't controlled by leading publishers have a tough time getting funding because VCs want to see a meaningful revenue stream and a track record of titles that sell.
"The whole gaming area for VCs hasn't been a big item for them in a while," said Jesse Reyes, vice president at Venture Economics. "The barriers to entry are too low and it's a fairly low-margin business."
There have been some bright spots. Sorrent Inc., a San Mateo, Calif., publisher of games for wireless devices, raised $5.5 million in Series B financing in April. The round was led by Globespan Capital Partners, with Mr. Callaghan taking a seat on Sorrent's board. Previous investors New Enterprise Associates and Sienna Ventures also chipped in.
Some investors see a lot of potential in cellphone gaming because the wireless distribution is inexpensive, leading to higher profit margins. Also, the market is still small enough that it hasn't prompted the industry leaders to make a big push into wireless.
"It's a big market for a nice little start-up," Mr. Callaghan said.
Sorrent develops and publishes games that wireless carriers sell to customers for anywhere from $2 for a 30-day license to $8 for permanent ownership, said Chief Executive Scott Orr . Games like basketball and football can be played on phones with color screens.
Globespan typically doesn't invest in entertainment firms. But Mr. Callaghan said he was drawn to wireless gaming because it could be the first big premium data service for cellphones, which aren't just for talking anymore.
Mr. Orr said Sorrent had an easier time raising money in the Series B round than the first round in 2001. But the hunt for VC funding remains difficult for most games start-ups. Just ask Adeo Ressi, chief executive of Game Trust, a New York developer of software used to run multiplayer videogame tournaments on various devices.
Formed in February 2002, Game Trust is still running on angel and management funding. Mr. Ressi has spent much of his time searching for VC backing, including a public pitch at a business forum sponsored by the MIT Enterprise Forum NYC.
So far, Game Trust hasn't raised a penny, although Mr. Ressi said some term sheet offers are pending. "I would say by far it's the most difficult financing market I've ever experienced," said Mr. Ressi, who previously raised financing for other start-ups.
Mr. Ressi thinks some segments of the gaming market, particularly on the infrastructure side, have higher potential to draw VC interest than other industries. It's just that few VCs are pulling the trigger on deals.
"The VCs are waiting for demonstrable results," he said.
风险资本远离视频游戏
视频游戏行业正在蓬勃发展，但风险投资家们却无意介入其中。
风险资本一直很少投资与游戏产业相关的新兴企业，即使在视频游戏销量激增的时候也是如此。原因之一在于自从20世纪90年代末以来，风险投资活动普遍下降，对多数新兴企业的投资都受到影响。但是，风险投资家表示，除此之外，视频游戏行业可控性很低的特性也一直是个障碍。
位于加州帕洛阿尔托的公司Globespan Capital Partners的董事总经理琼?卡拉甘(Jon Callaghan)表示，从历史上看，在游戏行业，的确有许多公司通过一种拳头产品一炮而红，取得巨大成功。对风险投资来说，投资于这样的行业实在太难了。 据追踪风险资本数据的公司Thomson Venture Economics称，在2002年，美国风险资本仅向与游戏产业相关的公司投资了3,700万美元，低于上年的6,690万美元，更是低于1999年2.953亿美元的高峰水平。
然而，根据消费市场研究公司NPD Group的调查，美国2002年视频游戏和游戏机的销售额飙升10%，达到创纪录的103亿美元。《侠盗车手》(Grand Theft Auto)、《劲爆美式足球》(Madden NFL)、《超级玛丽》(Super Mario)等款游戏销量居于榜首。
视频游戏市场一直被发展成熟的公司占据，比如电子艺界(Electronic Arts Inc.)、索尼(Sony Corp., 又名：新力)、微软(Microsoft Corp.)等。电子艺界是风险投资成功的一个典范，但该公司自1982年就活跃在视频游戏市场，而包括Ben Rosen在内的风险投资商早已撤资。
这些龙头公司垄断了零售市场，让新兴的游戏制造商和开发商很难引人注目。另外，对每一款热销的游戏来说，都有数十种不怎么流行的类似游戏竞争，这使得游戏行业对许多公司而言利润低微。即便是独立开发商曾经有过一些成功销售先例的网上游戏和可下载游戏也无法引起风险投资家太大的兴趣。
不受大型游戏制造商控制的独立开发商在寻找资金方面步履维艰，因为风险投资希望销售的游戏实现较好的收入流并不断创造纪录。 Venture Economics的副总裁杰斯?瑞伊斯(Jesse Reyes)表示，一段时间以来，整个游戏产业对风险投资来说一直不是个大项目。进入该行业的门坎太低，并且又是个利润率很低的行业。
当然，其中也不乏一些亮点。位于加州圣马特奥的无线游戏制造商Sorrent Inc.在4月份通过发行B系列股票融资550万美元。在这轮融资过程中，由Globespan Capital Partners领衔，卡拉甘先生在Sorrent的董事会内获得席位。另外，公司先前的投资商New Enterprise Associates和Sienna Ventures也参与了融资。
一些投资商认为手机游戏的投资潜力巨大，因为对无线游戏的投资并不昂贵，能够带来较高的利润率。而且，这个市场仍然很小，尚不足以吸引业内巨头公司大力介入。卡拉甘表示，对小型的新兴企业来说，无线游戏是一个大市场。
Sorrent的首席执行长斯科特?奥尔(Scott Orr)表示，该公司开发和研制无线运营商出售给消费者的游戏产品，包括从2美元购买30天权限到8美元永久性拥有的各种游戏，篮球和足球等游戏都可以通过彩屏手机来玩。
Globespan一般并不投资娱乐业公司。但卡拉甘表示，他对无线游戏很感兴趣，因为无线游戏可能成为第一种高利润数据服务，而不再让手机仅仅用于通话。 Sorrent的奥尔认为，该公司这次通过发行B系列股票融资比2001年的首轮融资更为容易。但对于大多数新创的游戏公司来说，追逐风险资本仍然颇为艰难。关于这点，可以问一下Game Trust的首席执行长阿迪奥?雷西(Adeo Ressi)。
Game Trust是纽约一家软件开发商，其产品可用于各种游戏机供多个玩家进行视频游戏比赛。该公司成立于2002年2月份，目前仍然依靠天使基金和管理层资金运营。雷西花费了很多时间寻求风险资本的资助，包括在一个商业论坛上公开招募资金。这个论坛是由麻省理工学院(Massachusetts Institute of Technology)校友建立的MIT Enterprise Forum of New York City Inc.资助的。
迄今为止，Game Trust还没有筹集到一分钱。但雷西表示，公司即将获得一些有期限的贷款。有为其它新创公司融资经验的雷西表示，目前融资市场正处于他所经历过的最困难的时期。
