April 27, 2012 – As an early investor in social gaming, I’m often speaking on panels to audiences of gamers, investors, and game company execs. At one such event — the Future of Media conference hosted by Stanford’s Graduate School of Business — the opening question was why gaming is relevant to people who are not gamers. The panelists — folks from IGN, Activision, GaiKai, and Riot Games as well as myself — gave some interesting reasons for why non-gamers should care about the game market:
Gaming has gone mainstream: Many sub-two-year-olds have played with a touch screen, and games are the No. 1 form of entertainment for the under-25 crowd.
Discoverability is still elusive: There is at least one game that is relevant to each of us, whether Call of Duty, League of Legends, Words with Friends, or whatever your taste might be. And many of the hidden gems on platforms like social, browser, and mobile are still hard to find.
Gaming has become a conversation: With the onset of cloud gaming, the activity has gone beyond an isolated, immersive experience to a dialogue between players themselves, as well as between the player and the game developer/publisher (with ongoing content and item additions as iterative weekly “expansion packs,” as well as games operators studying emergent player behavior and quickly productizing around unexpected use cases). The freemium business model accelerates the need to shift from a priced, pre-packaged offering to a free2play service that’s server-driven, and terrific companies like Gaikai, Riot Games, and Kixeye have taken established genres and evolved them with new formats (in-browser, on Facebook, digital download) and new business models.
Mobile is the new creative playground: With consoles, TVs and set-top boxes opening up platform and network APIs and becoming increasingly cloud-connected, and with the ubiquity of mobile devices, gaming can still create “indie” sleeper hits vs. the Hollywood model of four dominant studios with a handful of tentpole blockbuster franchises – look at the success of Angry Birds as a starting point. Tablets are especially ripe for richer game experiences, including “midcore” gaming with RTS and RPG genres.
Gaming pushes the boundaries of technology and spurs innovation: The gaming industry has piloted tech innovations like IM, gesture control, and 3D graphics, which are being used by mainstream consumers. One of our companies, Couchbase, recently provided the noSQL database platform that supported the rapid growth of OMGPOP’s Draw Something from zero-25 million users in six weeks.
Gamification – leveraging game mechanics for non-game purposes — will disrupt many industries: The era of gamification tools, such as badges, leaderboards, levels, “missions,” and scores, is going to turbocharge end-user acquisition, onboarding, engagement, retention, and conversion in fields ranging from health, wellness, fitness, and nutrition to financial services, HR, and customer support work. And gamification will provide game designers with new professional opportunities and creative outlets to make a big impact by applying their gaming chops outside of the games industry. As an investor, I’m excited about the potential of learning from gaming to design microtransactions and freemium conversion models (leveraging behavioral economics, social psychology, and the 7 Deadly Sins as a design framework) that help us monetize other media like movies and music. This is what led me to invest in enterprise gamification companies like Badgeville, which is killing it as a SaaS company (much like Salesforce.com did for CRM systems, Omniture for basic web analytics, and Mayfield SaaS portfolio companies Gigya and Marketo are doing for social infrastructure and marketing automation, respectively).