Above: Chris Dixon
Image Credit: Chris Dixon
GamesBeat: Did you have any reaction to the King IPO filing and some of the details in there?
Dixon: It’s astounding how much money you can make off of in-app purchases. [Laughs]
GamesBeat: I didn’t realize they were so much larger than Supercell, too. Almost twice the size in revenues.
Dixon: Five years ago, if you said that people with phones were going to be buying enough virtual goods to bring $2 billion in revenue to one game from one company, I don’t think anyone would have believed it. I don’t know the company that well and whether they’ll be able to sustain that, to what degree their susceptible to the hit-driven nature of the business. But it certainly is impressive.
GamesBeat: What’s your own view on how frequently you’d like to invest in game companies? A lot of game VCs might do one investment a year or so, just to feel like they’ve got their fingers on the pulse.
Dixon: We don’t really have a rate we stick to. We’ll invest in something great if it comes along. If I had a guess, it might be about once a year. That’s been the historical pattern, when some big idea comes along. But we don’t have a quota or anything like that.
GamesBeat: I also see the formation of a lot of these middle-man companies – the monetization firms, the ad networks, the middleware guys, cross-platform tool makers. Does anything in that area seem attractive?
Dixon: We’ve met with some of them. If you look at the future big franchise technology companies, those historically haven’t fit into that. They’ve been smaller companies that are acquired by larger companies. For the most part, we’ve stayed away from the area for that reason.
GamesBeat: I also noticed that Anki was one of the companies that you’ve put money into, with the Anki Drive.
Dixon: Anki’s first products are these robotic toys, and part of our excitement there is around the current product. But also, there’s the idea that you could use robotics technology in more ways. We see that as a first step in a broader robotics plan. One idea could be exciting is this notion of video games meeting the real world. There’s a whole bunch of interesting things there.
GamesBeat: Do you also have some view that maybe games are useful in the larger tech space? Do you think they can teach something to the larger world? We have things like the gamification of education going on. And the business models that are working in some new areas of mobile — like, in South Korea, 90 percent of the Google Play revenue there is in games.
Dixon: Games are one of those areas that have been on the cutting edge of a lot of these things. In-app payments are a good example. You’ll see that model apply to more and more non-gaming types of software. In fact, we’re investors in a company called FiftyThree, which makes an iPad app called Paper. It’s a drawing application. They took, from the gaming world, the idea that you get the application for free, but then you buy new brushes and other things the same way you would in games. It’s as if Photoshop were free, but you pay for the tools you want.
Another great example is Duolingo. It’s a popular language learning application. A lot of the elements in there are very clearly taken from games. They’ve taken some of the best ideas from games and applied them to language learning. So yes, games in general are thought leaders in a lot of new software design techniques that you’ll see applied in other areas.
GamesBeat: You guys seem very excited about Bitcoin. I wonder if there’s an angle there for games as well.
Dixon: I think so. One of the things that’s been brought up with Bitcoin is that you can have in-app payments outside of the closed ecosystems of iOS and Android. There’s also the possibility to do interesting things where you have some in-game currencies that link to real-world currencies through Bitcoin. There’s a lot of overlap between game enthusiasts and Bitcoin enthusiasts. I think you’ll see more experimentation there, just because they’re personally excited by it.
GamesBeat: It seems like reducing the friction for game purchases is one advantage there.
Dixon: Yeah. You can start introducing more economic elements into games. You win a battle in League of Legends and get two Bitcoins instead of some in-game virtual currency.
GamesBeat: Some people on the investment side are very excited about social-casino games and online gambling with real money. I don’t know if that’s caught your attention as well.
Dixon: I don’t think it’s something we would invest in, for a variety of reasons. We certainly follow it. But for legal reasons, we wouldn’t be direct investors in companies like that. There are a lot of issues around regulation, depending on if the U.S. changes its policies.
GamesBeat: Beyond games, what else is most interesting to you right now?
Dixon: You mentioned Bitcoin. That’s very interesting. Crowdfunding in general — obviously we invested in Kickstarter, but just generally, that idea of replacing some of our traditional financial institutions with these internet methods is very exciting. I’m an investor in a company that makes drones, flying robots, for commercial purposes, like agriculture. They’re not military, just commercial. That’s exciting. All the stuff around wearable computing and the internet of things is interesting.
It’s still early, but I’m generally excited by what’s going on in hardware right now. The cost of very high quality components has gotten so low that you can start embedding computers and internet connectivity all over the place. That seems like it’ll open up a lot of possibilities.
GamesBeat: When you think of some of the tech giants, what do you think of them relative to gaming? Whether it’s Google or Apple or Amazon, do you think any of them has a particularly savvy approach toward games?
Dixon: Apple might have the best model of all, where they let King.com come up with all the creative ideas and they take 30 percent. [Laughs] Amazon, I guess, has mostly stayed out of it, although maybe with the Kindle, the Kindle Fire, they’re going to start doing more on the Android side. And of course the console stuff is always interesting, especially as they move more into TV and living-room experiences. I do worry that the phones and tablets are getting so powerful – they’re going to be how many times more powerful in five years? – that I wonder whether you’ll really need a stand-alone device anymore.
GamesBeat: I tend to think of the big guys as accidental game companies. They may not care so much about it, but they’re the most influential anyway.
Dixon: [Laughs] That’s probably fair, yeah.
Andreessen Horowitz is a $950 million venture capital firm that was launched on July 6, 2009. Marc Andreessen and Ben Horowitz are the general partners of the firm.... read more »
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