Thompson: Big brands and well-known IP certainly have an advantage in discovery. There’s no doubt about that. The pressure to create that new IP, though, is something that larger companies have to be feeling from smaller companies. A lot of the creativity and innovation comes from smaller companies. That’s one of the things that keeps us excited and gets us out there.
GamesBeat: How do you look at the activities of the big companies out there now? What do their actions tell you about where things are going, like with EA as an example?
Thompson: We do see an increased commitment to mobile. That includes tablets as well as phones. We’re seeing a lot of support.
GamesBeat: Warner Bros. decided to open their own digital games studio here in San Francisco. It’s one more interesting sign. It seems to run against the trend of the larger companies shutting down a lot of studios now.
Thompson: Yeah. Warner Bros. has amazing IP. If they can create quality games around that IP, they should do very well. That’s the thinking around bringing Batman to the App Store. It would get millions of downloads simply because it’s Batman. If it’s a good game it should do extremely well. I’m very much looking forward to seeing that quality of IP come into mobile gaming.
GamesBeat: As far as how well they’re going to offset the cycle of the consoles and the revenue decline there with the rise of digital games, do you think that digital games are rising fast enough to help them out there?
Thompson: The challenge in a changing market is to get on the new horse and get up to speed as the other one starts to wear down. That certainly creates pressure on companies. The good news is that people are spending a lot more time gaming than they were previously. As the industry moves forward, some of the monetization does fall off, though, and that does create some short-term pain.
GamesBeat: I don’t know if you’ve gotten lonelier as an investor as a VC in games, now that some of the other guys have gotten out. Why do you think it’s wiser to stay in and stay very close to game investing?
Thompson: I think it’s a much better investment market right now than it was a year ago, when there were, frankly, a lot of tourists in the space. It’s very difficult to successfully do a one-game investment or a two-game investment. To understand the space it requires four or five or six investments. Competency and experience does pay off. As you know, of course, things go in cycles. This may very well be a hot space in another year.
GamesBeat: What do you think might lift it up and make it a hot space again?
Thompson: There are some very profitable growing companies that are able to show predictable growth. They’ll get people’s attention. We see some of those companies coming into the market just now. Also, to the point earlier about additional platforms arising on mobile, that has the potential to set things back on fire. It’s probably six months until we see any of those platforms start to show meaningful traffic, but platforms on mobile through which publishing and distribution can be handled, they can be extremely interesting businesses themselves, and they can also open up a lot of opportunities for new companies, just like Facebook did in 2008-2009.
GamesBeat: Are you staying focused on certain regions right now?
Thompson: We’re primarily invested in the U.S., but we have some investments in China, Finland, and Germany. It’s a global business. The opportunity to reach larger markets has never been easier. We’re working where we find talent.
GamesBeat: If there are going to be big exits like the ones we’ve seen in the last five years or so, where do you think they’re going to be?
Thompson: We’re going to see a new social graph on mobile, and a publisher that’s able to create a platform that can go across iOS and Android and possibly Windows 8 to publish games across each of those platforms and integrate the social graph, much like Facebook did on the web.
GamesBeat: Are you very interested in investments related to the new generation of console games — the PlayStation 4 and Wii U and whatever they call the next Xbox?
Thompson: No, that’s outside of our interest right now.
GamesBeat: Is that simply the domain of giant companies, then, or is that something you think is going to be a smaller part of the business going forward?
Thompson: We’re investing in small teams that can be very capital-efficient and hit home runs with fairly modest investments. That’s why we’re focused on mobile. That’s also leading us to other investments in mobility, including other apps, enterprise, and business models that are enabled through mobility.
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