In a panel moderated by Mofactor’s John Szeder, a group of investors which included Richard Moran from Venrock, Richard Wong of Accel Partners, Mitch Lasky from Benchmark Capital, and Brad Farkas from i-Hatch Ventures discussed the unique environment that mobile gaming presents for venture capital firms.
John Szeder got things started by asking the panel what attracted them to the mobile game market. “I was an early investor in Glu Mobile. When I invested in Glu Mobile as a personal investor, I never thought it would grow to the size it has,” Moran said. Lasky said he looks for experienced developers as well as untapped markets. He was an early investor in Lime Life pointing out “about 50 percent of mobile gamers are women.”
Szeder then asked the panel to describe the most unpleasant thing they learned as investors in the mobile industry. “Less money has been generated for share holders than has been invested by venture capitalists,” Lasky said. Farkas was concerned that the shelf life for mobile games was very short, that even good games could not expect to last much longer than six months on the market.
All on the panel felt that the mobile industry was at a transitional point and that its future success was uncertain. Farkas was concerned that carriers were becoming more and more difficult to deal with and that there were too many development studios with not enough access to deck space to support all of them.
Lasky was also unwilling to sugar coat the business prospects for mobile. “We’re in the midst of a multi-year transition. If you have to find an exit in the next two years, it’s going to be tough.”
Moran was equally bearish on the investment opportunities for mobile. “Analysts are not even sure if this is a market. There’s not enough market to sustain the business,” he cautioned. “We’re sort of stalled right now,” he added.
Apple’s iPhone and Google’s Android platform for mobile have stirred up a lot of recent interest but the panel was skeptical that either would provide the disruption needed to bring the mobile market out of its current stagnation.
“Everyone watches them carefully, but I for one don’t know what they’re going to do,” Moran said regarding Apple. “Dealing with Apple makes dealing with carriers look like fun,” Lasky said. Android was dismissed as well. Wong said, “I’m personally skeptical of Android,” and Farkas added, “Android is a long way off. I don’t think the world needs another mobile phone operating system.”
When the subject of social gaming came up Lasky made a clear distinction between mobile and internet-based businesses. “The door is not open for mobile to tackle an existing web success such as Facebook or Youtube and put it on mobile. Mobile needs to innovate,” he urged developers.
