Next generation game start-ups, Bigdog Games and Areae, raise millions

D2C Games (also known as Bigdog Games) and Areae are two of the latest game start-ups boasting “next generation” technology, and they’ve just raised millions of dollars in venture capital.

D2C, of San Mateo, has raised $1.5 million in a first round of funding (Dan Primack broke the news), but there’s no sign it is moving in the direction of the more recent start-ups, Red 5 (see our story here) and the just-announced Areae. Both of these aim to merge multi-player games with the Internet and its full Web 2.0 glory. For now, D2C doesn’t specify what exactly about it is “next generation.”

D2C is is run by Madden Football architect and Glu Mobile founder Scott Orr, and is backed by new Silicon Valley firm Rubicon Ventures, which earlier invested a seed round of $1 million into D2C. All we know is that it is focused on “casual games for a variety of platforms.” It also is a licensed Sony publisher, and plans to offer at least two games next year. (More background on backer Rubicon, its partners Mark Wilson, Paul Sherer, potential partner Ravi Chiruvolu and their apparently tortured efforts to raise $30 million for an inaugural fund, can be found here.)

gaming.bmpAreae, of San Diego, is also being cagy, but it is overtly trying to merge Web 2.0 with games, just like Red 5. Chief executive Raph Koster told VentureBeat last weekend he has raised a fraction of the $18.5 raised by Red 5. From the sounds of it, Areae got in the low digit millions, though Koster hasn’t confirmed. Investors are Crescendo Venture and Charles River. Koster says he’s working in the virtual world area, but cautions that its different from Second Life. He distances himself from Red 5, saying Red 5 appears to be like a traditional game development studio, allocating most of its capital to developing a single (or perhaps a couple) of titles. While Red 5 says it will take years to develop its games, Koster says we’ll be hearing from Areae in 2007.

koster2.bmpKoster is a pioneer in the multiplayer online gaming space. He was lead designer of Ultima Online and the chief creative officer of Sony Online Entertainment, and wants to merge the Web 2.0 and multiplayer game worlds from the outset — but apparently wants to invest a lot of cash into developing a few titles. Koster shares some of his views here.

Here are a few questions we asked Raph and his responses:

VentureBeat: If you’re not developing games like Red 5, what *are* you going to do? Where are you on the spectrum between Red 5 (on the game-making side, with Web 2.0 baked in) and Shawn Fanning’s Rupture (on the full Web 2.0 side, with games backed in)?

Koster: Oh, we are firm believers in entertainment and in games. But as I have said many times before, games fit inside virtual worlds — not the other way around. I think that’s a difference from Red 5, probably. The straight-up games business carries with it so many assumptions about production styles, scope, approach, and so on, all of which are in fact already disproven by the indie games movement. The largest game world today, Runescape, is an indie, not World of Warcraft.

I would describe it as marrying the Web 2.0 elements to the game elements, rather than saying that these things are on a spectrum. Rupture seems like it’s a business layered on top of existing games, and we’re definitely interested in the games themselves as well.

VentureBeat: Where do you plan to monetize?

Koster: We’re staying quiet about that right now.

VentureBeat: If you’re opening up to Web, you’re even more vulnerable to a CopyBot, no? Where is the value?

Koster: I think I hinted at this even in the original article I did for you, in the concluding paragraph. Anything that streams is vulnerable to CopyBot. But there’s a host of things that aren’t: server-side content and value, service-level value, and so on.

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