Investing in games has often been an occasional preoccupation for venture capitalists, who are wary of trying to pick the hits in a hit-driven business. But at our GamesBeat Summit 2018 event, we had a panel of seasoned game investors who are charging into game investments.
Eric Goldberg, managing director at Crossover Technologies and a 35-year veteran of games, moderated our session, entitled, “Skating to Where the Puck is Going to Be: The games VC forecast for the next 12 months. The panelists — all of whom have multiple investments in games — included Nabeel Hyatt, general partner at Spark Capital; Greg Milken, managing director at March Capital Partners; and Gordon Rubenstein, managing partner at Raine Ventures.
Goldberg noted that “games are back in fashion” and five subsectors are candidates for the next big thing. Those include intelligent assistants, blockchain, augmented reality, virtual reality, and esports. The panelists addressed whether VR was a “smoking ruin,” or if it is worth looking at for investments in the next 12 to 18 months.
“At Spark, we are very excited about virtual reality, and it is folly to try to time a market,” said Hyatt, whose firm led the Series A investment in Oculus VR, which Facebook acquired in 2014 for nearly $3 billion. Hyatt believes that this coming holiday season will be a big one for VR. Rubinstein said his firm invested in four VR companies, and he thinks it will take 36 months for the industry to come to fruition, and that companies should adjust their burn rates accordingly.
“You have to be patient,” Rubinstein said. “Hopefully we’ve learned a lot of lessons as investors.”
Milken said he hasn’t been as enthusiastic about the pitches he has received about blockchain game companies, as those startups haven’t shown that they’re solving market problems.
Hyatt said, “Gaming has always had a slight ambulance chaser mentality where every single year there is a new hype cycle … chasing after that new thing. Gaming is secondarily at the forefront of a lot of new amazing trends over the last 40 years.” He said decentralization could be a big opportunity that blockchain enables, loosing the tight relationship between publisher, developers, and consumers.
Rubinstein said he is bullish on how augmented reality can improve games over time, thanks to technologies like ARKit and ARCore from Apple and Google, respectively. Pokémon Go is an anomaly in that it is a rare gigantic success, but other AR successes have yet to play out. Hyatt believes we won’t have more huge successes until AR glasses take off.