The Video Game Industry An Industry Analysis, from a VC Perspective Nik Shah T’05 MBA Fellows Project March 11, 2005 Hanover, NH The Video Game Industry An Industry Analysis, from a VC Perspective Authors: Nik Shah • The video game industry is poised for significant growth, but
[email protected] many sectors have already matured. Video games are a large and Tuck Class of 2005 growing market. However, within it, there are only selected portions that contain venture capital investment opportunities. Our analysis Charles Haigh
[email protected] highlights these sectors, which are interesting for reasons including Tuck Class of 2005 significant technological change, high growth rates, new product development and lack of a clear market leader. • The opportunity lies in non-core products and services. We believe that the core hardware and game software markets are fairly mature and require intensive capital investment and strong technology knowledge for success. The best markets for investment are those that provide valuable new products and services to game developers, publishers and gamers themselves. These are the areas that will build out the industry as it undergoes significant growth. A Quick Snapshot of Our Identified Areas of Interest • Online Games and Platforms. Few online games have historically been venture funded and most are subject to the same “hit or miss” market adoption as console games, but as this segment grows, an opportunity for leading technology publishers and platforms will emerge. New developers will use these technologies to enable the faster and cheaper production of online games. The developers of new online games also present an opportunity as new methods of gameplay and game genres are explored.