Jack Tretton ran Sony’s game division in the U.S. for many years, and he helped the PlayStation 4 become ascendant in this generation. Then he left the company in 2014 and became an investor in game companies.

After 19 years at Sony, Tretton was on his own, and he formally announced his venture capital fund, Interactive Gaming Ventures, last year.

Tretton focuses on emerging indie game makers who have had commercial success in the past. He is looking for teams that need help scaling up and more capital and experience to hit the big time. But Tretton isn’t taking a cookie cutter approach. No two developers are alike, just like no two snowflakes are alike, he said.

He has received more than 500 submissions for funding, but has only invested in 10 deals in the past few years. Of the 10, most are PC game makers, while one is focused on mobile. None are in virtual reality. But he sees a bright outlook for game studios because so many platform owners are seeking to recruit the developers to their platforms — like Google’s new Stadia cloud gaming platform.

Tretton will speak at the Casual Connect Europe game event in London.

Here’s an edited transcript of our interview.

Above: Jack Tretton is managing partner of Interactive Gaming Ventures.

Image Credit: Interactive Gaming Ventures

GamesBeat: It looks like you’re going to make it to Casual Connect. What will you be talking about there?

Jack Tretton: I’m talking about the indie scene and the relationship between the big corporations and the indies. I have a lot of experience on the corporate side, obviously, and I’m about five years into the indies. Just comparing and contrasting there. The emphasis will be on the indie scene. The other attraction for me at the conference — it’s in L.A. and London, and the London event was a good one timing-wise, as well as with the exposure to a lot of the European developers that I don’t interact with as much, being located in the states.

GamesBeat: What have you noticed after immersing yourself in the indies in the last few years? What are some of the interesting opportunities?

Tretton: The things that are interesting to me — you now have beyond a generation of people who have grown up with gaming being integral in their lives. Many of them have focused on it all through high school and college, getting degrees and becoming independent developers. There’s more talent out there than there are opportunities to apply it.

The other trend is that this generation of developers is a lot more comfortable and has a lot more opportunity to be independent. Back in the day you had to go to work for one of the big publishers in order to ply your trade. Nowadays not only is there the opportunity to be independent, but a lot of the younger developers prefer to remain independent. I like to work with as many of them as I can, to try to help them get their products to market and have them be as successful as possible.

GamesBeat: Are you looking toward the bigger indie folks? I wrote a story today about Lorne Lanning and his latest Oddworld game, Soulstorm, and he was using the phrase “triple-A indie.” Is that on your radar?

Tretton: The term I would use is “emerging indie.” Not guys who are working on their first project, who’ve just put their development team on, but teams that have had some degree of commercial success. They’ve published a game. They have a degree of experience. But they haven’t scaled to the level they would like to. They need more experience and more capital. They need more time under their belts. That’s the sweet spot for us.

The Lorne Lannings of the world, the triple-A indies, have probably scaled past the point where they’re in our wheelhouse as far as the degree of investment we’re comfortable making, and there’s less we can pass on to them with go-to-market strategies and fundraising. They’ve probably learned that along the way. It’s that middle ground between first-time developers and seasoned, experienced developers that’s the sweet spot for us. That’s where we think we can lend the most assistance and find the most potential in the short term.

"Seed Stage Investing for Games" with Charles Hudson, Ed Fries, David Gardner (from left to right) David Gardner of London Venture Partners, Ed Fries of 1Up Ventures, and Charles Hudson of Precursor Ventures and moderated by Eric Goldberg - Details - Hero Stage

Above: “Seed Stage Investing for Games” with
Charles Hudson, Ed Fries, David Gardner (from left to right)
David Gardner of London Venture Partners,
Ed Fries of 1Up Ventures, and Charles Hudson of Precursor Ventures and moderated by Eric Goldberg – Details – Hero Stage

Image Credit: GamesBeat

GamesBeat: I worked with Eric Goldberg from Crossover on the panels we did for investors at our conference. A couple of years ago he had real trouble finding any active game VCs, but this time out he had no trouble at all. People were fighting to get on the two panels we had. It seems like in the U.S. now there are quite a few game investors again.

Tretton: Absolutely. I saw that trend emerging. There’s always been interest in the industry because of its size and success and scale, but for people that don’t have a lot of experience in the industry, they have money to spend, but they don’t know where best to put it. They’re not comfortable with the degree of risk in their minds, because they don’t understand the development process all that well.

It’s a great time in the industry in general, because as you point out, there are more and more dollars flowing in. There’s almost an endless supply of talented developers out there. It’s a matter of matching up people’s investment philosophy with people’s publishing philosophy. They’re like snowflakes. No two are the same. There are enough investors and enough developers that it’s a matter of just matchmaking the right people.

That’s been one of the big challenges for us. We’ve had more than 500 submissions to our game fund, and a lot of them aren’t a fit right off the bat, but even once you whittle it down to the ones that have potential, it’s probably less than 10 where there’s a match for what their goals are and what our goals are and what our philosophy is and what their philosophy is. That’s okay, because you find them, and quite frankly we find more than we have the time or the money to invest in. But it’s important to go through that process and make sure you’re aligned. If you’re not aligned going in, you’re certainly not going to be aligned coming out. That’s the big key.

GamesBeat: When did you start cutting checks? How many investments have you made?

Tretton: I was just counting that. We’re involved in about 10 different games that are either on the market or in development. We started developing and funding back in 2015. We’re coming up on four years of projects I’ve been involved in. There’s been M&A. There’s been new checks written on projects that are just kicking off. I’ve done something for every platform, every active console on the market. Certainly a lot of PC, and even one mobile project. I don’t personally gravitate toward mobile or VR, but we found a good project in the mobile space we’re working on. To date I just haven’t found anything that interests me on the VR side. Never say never, but that’s not a focus of our fund.

GamesBeat: We had an interesting conversation more than a year ago about the big platforms, talking about the intentional game companies – Sony, Microsoft, Nintendo – and then unintentional ones like Google or Apple. I wonder what you think about that now given that Phil Harrison is up and running at Google.

Tretton: I’ve yet to see the business model at Google. To me that’s the big determining factor in a streaming service. But I’m bullish about next-generation platforms from Sony and Microsoft. This generation remains very healthy. PC is integral to not only PC development, but also to console development. It’s a very fertile market, and I’m optimistic about Google and any other new players entering it. It’s just that I know what the profit potential and the revenue streams are for PC and console. I don’t personally understand or know what the business model is for publishing something on the Google platform.

Depending on how that fits into the platforms that we’re currently involved with, that could be a great opportunity. It could be a deviation from the existing business model. It could be something that just doesn’t fit into the strategy. That’s going to depend on every publisher, every game, and everybody’s publishing philosophy.

Azure is bringing together a lot of gaming tools in one place.

Above: Azure is bringing together a lot of gaming tools in one place.

Image Credit: Microsoft

GamesBeat: We can now expect a new competition, with Microsoft and Amazon responding to Google and things like that.

Tretton: It’s a great opportunity for anybody that’s involved in gaming. I’ve always said that a rising tide lifts all boats. More people entering the industry means more choice for gamers and more opportunities for developers. It certainly raises the bar as far as what a console publisher needs to do to have a leadership position. It’s good for everyone in the business, whether they’re a consumer or a hardware company.

GamesBeat: Does it make you think about investments in a particular way? It looks like the new platforms will also be throwing money at developers.

Tretton: Absolutely. Any development decision or publishing decision is based on, number one, whether that helps tap into your passion for game development and allows you to put a better product on the market, and number two, not only do you want to achieve artistic success, but you want to achieve commercial success. Every relationship, if it’s complementary or it’s incremental, that’s a good thing. If it comes at the expense of other opportunities, then you have choices to make.

As you said, there’s a lot of interest at the platforms in developing relationships with individual developers. As long as that doesn’t come at the expense of other opportunities, that’s great. To me that’s one of the interesting things about a streaming model. If I’m going to make my game available to some type of subscription service, what does that do to the potential for me to sell the game on other platforms at the same time?

That’s been one of the big challenges for streaming services. People are certainly willing to make their catalog games available to streaming services once they’ve run their course, but unless it’s developed exclusively for the streaming service by the platform holder, most people are resistant to bringing frontline software to a streaming service that’s subscription-based, prior to having every opportunity to monetize it through individual sales.

GamesBeat: How do you look at other opportunities like Apple Arcade?

Tretton: Apple Arcade, to me, is a great opportunity if you have a game that’s mobile-focused, iOS-focused, and Apple decides it’s key to their offering and their collection. If that fits the bill, that’s great. There used to be a very strong business at physical retail in selling catalog games at reduced prices. Of course that model has dramatically shifted, with so much product being sold digitally versus physically. The catalog business is being replaced by opportunities to be part of subscription services or catalog offerings from the hardware platforms.

At the end of the day, once you’ve invested heavily in your development and you’ve created an IP that you’re proud of, you want to protect that IP. You want to maximize the revenue from the existing IP and build the audience for sequels. You don’t want to oversaturate the product to where you damage the perceived value. It’s all about managing a product life cycle. Things like Apple’s service, Microsoft’s, Sony’s, and ultimately Google’s, it adds to the exposure for an IP and the opportunity to monetize it.

GamesBeat: If you look at Apple, do you see this as a defensive move on their part, because of something like [Google’s cloud gaming platform] Stadia?

Tretton: No. Apple is iOS-focused. It’s mobile games. To me, I think Google is going after more of a console model. Apple is talking about all the games available on the iOS service being put together in a collection for a price that, to me — it’s a mobile-based model. It’s not really a new platform launch. It’s more of a bundle offering on iOS products that would be sold individually for, conceivably, a higher price than you’d pay for the collection. To me that doesn’t resemble what Google is trying to do with Stadia.

GamesBeat: As far as Europe goes, what’s intriguing to you about meeting some of those developers and getting more involved in that market?

Tretton: There was a time when there were games that had global appeal, that could come out of any one region, and then there were games that were region-specific. That’s still the case, but to a large degree in particular in the west, games that are commercially successful in North America are also commercially successful in Europe and vice versa. There’s a host of developers scattered around Europe that may not have the exposure to the North American market, or more personally, I may not be as familiar with them as with developers in North America. It’s an opportunity to get more exposure to a market that, on the corporate side, I didn’t spend as much time in as I did in North America.

Above: Sony at E3.

Image Credit: Sony Interactive Entertainment

GamesBeat: How do you feel about Sony right now? It looks like another cycle is about to come around.

Tretton: I think they’re very well-positioned. The leader of the prior generation is always in a good position going into the new generation. From what I’ve read about the specs of PlayStation 5, it sounds impressive. Their business model obviously worked well for them the last time around, and it doesn’t look like they’re going to deviate from that. They’ll be well-positioned. But I do think they’ll face exponentially more competition than they did the last time around.

Microsoft should give them a better run for their money, and Stadia is a new wrinkle in the market that didn’t exist in 2013. Nintendo is more relevant this time around. It’s going to be a much more competitive market. There are new players. But they’ve learned some valuable lessons in this generation. It should be great for everyone in the business, whether you’re a developer or a gamer. It’s going to keep everyone on their toes.

A horde of Freakers chases Deacon St. John in Days Gone.

Above: A horde of Freakers chases Deacon St. John in Days Gone.

Image Credit: Sony

GamesBeat: I just finished playing Days Gone. Those load screens just killed me. Mark Cerny was talking about having SSDs in the next console to cut down those kinds of things. More than anything, I think that made me feel like I was ready for a new generation.

Tretton: That’s the key. When I’ll be worried about the industry is when you can look at two generations side by side and not really perceive a significant difference. Whether it’s sound or graphics or load times, there should be something that feels like an improvement on the prior generation. Hopefully we’ll see that. You don’t realize what you’re dealing with until it gets improved on. Then you really appreciate the difference.

GamesBeat: Is it a difference pace for you now, in the investment world compared to Sony.

Tretton: Definitely. You’re a true free agent. You’re able to gravitate to wherever your interests lie. On the corporate side, when you’re working with one company and physically charted in one direction, you don’t really have that opportunity. Now I’m able to gravitate wherever there’s the greatest amount of traction. It’s the buffet of the industry. You can pick and choose what interests you instead of being force-fed whatever’s on the menu tonight. I like that.

Different things come at different points in your career. I enjoyed all my time on the corporate side, but I definitely enjoy where I am now. It’s where I wanted to be for a long time, feeling the confidence and being at a point where you can dive off the deep end. I’ve never looked back on the decision. I feel great about where things are right now. There’s more opportunity than there’s ever been before, no shortage of things to get involved in if you have the time and the interest. I’ve enjoyed what I’ve done for my entire career, and I’m glad to be a part of what’s coming in 2019 and beyond.

GamesBeat: How do you view some of the controversies that have come up over things like crunch time and labor unions and sexist cultures at developers? A lot of workplace issues seem to be common in the news now.

Tretton: I’m in a position now, being independent, that it’s really not a part of my life. I’m certainly aware of it. When I was chairman of the ESA and CEO of Sony, that was at the forefront of what I did on a day-to-day basis. Now I just go about my business. I observe what’s going on out there just like everyone else, but it’s not something I actively participate in. It’s going on outside my world these days.

GamesBeat: Do you have ideas about making game studios run better? Can they pace themselves so they don’t run into these kinds of issues?

Tretton: It depends on the company. It depends on the time and the situation. As a general rule, if you focus on talent, if you allow yourself to be open to new ideas and give people an opportunity to voice their opinions, give people an opportunity to show what they can do, things have a way of working out. When people get myopic, they start to get narrow-minded about the way to do things and the types of people who are most qualified to do things. That’s when bad decisions are made and opportunities get lost.

It’s important to be open, to not be narrow-minded in the way you approach situations. If you do that, you’re going to invite change. You’re going to invite creativity. You’re going to invite diversity. It all comes down to being open-minded.

Fortnite booth at E3 2018.

Above: Fortnite booth at E3 2018.

Image Credit: Dean Takahashi

GamesBeat: I’m about to start another set of meetings leading up to E3.

Tretton: I went around and around that cycle from the very first E3 until today. Trade shows, conferences, everything else. They’re all wonderful things. But after 30-plus years of them, there are some things I don’t always miss as much as others.

GamesBeat: Do you get to skip E3 this year, then?

Tretton: It’ll be opportunistic. If there’s a reason to be there, I’ll be there. But when you have big companies pulling out, to me that’s disappointing. E3 is the showcase for the industry, and it’s up to the large companies to put the industry on their backs and showcase the industry to the outside world. For independents like me, it’s a matter of whether it makes sense. If it makes sense I’ll be there. If I don’t have enough things going on, I won’t.

Ironically, the last several E3s I’ve been to, I spent very little time in the convention center. I spent most of my time in meetings outside the halls. That’s the case more and more. But you need E3 for that reason, for everybody to come to L.A. at the same time and hold meetings. I wasn’t a fan of it being downsized to the point of almost complete elimination back in the mid-2000s, and I hope that doesn’t happen again. It seems like a lot of people are going their own way. That will force the smaller guys, the independents like me, to attend multiple events to accomplish what we did at E3. If that’s the way it goes, that’s the way it goes. It’s no longer my concern.

I’m looking forward to Casual Connect. You have to pick and choose your spots. Things aligned well for me at this event, and I’m looking forward to attending.