Benchmark’s Mitch Lasky and Blake Robbins on The Art of Business in Gaming
Apr 26, 2023
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Mitch Lasky, a legendary gaming investor with pivotal stakes in Riot Games and Discord, teams up with Blake Robbins, Benchmark principal and co-host of the GameCraft podcast. They dive into the evolution of gaming business models, tracing the journey from niche markets to mainstream dominance. The duo explores the rise of free-to-play games and subscription services, along with the critical role of digital platforms like Steam. They also discuss the impact of AI on game development and the burgeoning landscape of esports as a vivid marketing tool.
The podcast explores the evolution of the video game business models and their impact on the industry.
Steam's success as a platform-based publisher and its role in revolutionizing the gaming industry is discussed.
The challenges and opportunities faced by companies trying to become platform-based publishers are examined.
The growth and strategic decisions of That Game Company and Riot Games are explored as they aim to become successful platform-based publishers.
The podcast discusses the stigma surrounding the gaming industry and the need to challenge stereotypes and recognize its artistic potential.
Deep dives
The Evolution of the Video Game Business
The podcast episode delves into the evolution of the video game business, exploring various business models and how they have impacted the industry. It discusses the shift from traditional package goods to online distribution, the rise of free-to-play games and the impact of game economies. The episode also highlights the concept of 'forever games' and the durability of certain games over time. It also explores the role of platform-based publishers and their success in leveraging their relationships with customers. Overall, it offers insights into the changing landscape of the video game industry and the challenges and opportunities presented by different business models.
The Success of Steam and the Future of Cloud Gaming
The episode explores the success of Steam as a platform-based publisher and how it revolutionized the gaming industry. It discusses the origins of Steam and its incremental expansion of features, including community-building and an app store. The episode also delves into the future of cloud gaming and its potential to change the business model of the games industry. It highlights the demand-driven nature of cloud gaming and its appeal to a broader audience, particularly those who don't want to invest in gaming hardware. It also touches on the challenges and opportunities faced by console manufacturers and the impact of cross-platform play.
The Challenges of Becoming a Platform-Based Publisher
The episode examines the challenges faced by companies trying to become platform-based publishers. It discusses the importance of intentionality and embracing the role of a publisher. The example of QQ and Tencent is highlighted, showcasing their success in leveraging their relationships and investments in becoming a dominant force in the gaming industry. The episode also touches on the struggles faced by companies like Facebook and Google, who have attempted but struggled to become successful platform-based publishers. It raises questions about the viability and future prospects for new platform-based publishers in the industry.
The Growth and Strategy of That Game Company and Riot Games
The episode explores the growth and strategic decisions of That Game Company and Riot Games. It discusses That Game Company's ambition to become a platform-based publisher by creating a digital theme park. It also highlights Riot Games' journey towards becoming a platform-based publisher, with a focus on expanding the League of Legends franchise and later venturing into new games like Valorant. The episode delves into the challenges and opportunities faced by these studios as they navigate the evolving gaming landscape and their ambitions to leverage their audiences and IPs to become successful publishers.
Evans and Sutherland: The Nurturing Ground for Computer Graphics Pioneers
Evans and Sutherland, a Utah-based company, had a significant impact in the early days of computer graphics. The company was instrumental in the development of commercial flight simulators and later ventured into the supercomputer business. They also contributed to the gaming industry, helping develop the bridge racer for Namco. Many former employees of Evans and Sutherland went on to start games companies, making it a seminal technology company in the field.
The Importance of Arcade Business in the Gaming Industry
Arcades played a significant role in the gaming industry, generating billions of dollars in revenue. Successful console manufacturers like Sega wrestled with the risk of sacrificing their coin-op business. The longevity and size of the arcade business are notable, showcasing the enduring popularity of arcade games and their social impact for children growing up in that era.
Evolution of Gaming Machines
The guest's first dedicated gaming machine was an Amiga, a Commodore model purchased in 1987. The Amiga was a prominent device in the gaming industry, providing advanced graphics capabilities. This device fostered countless gaming experiences for the guest and his wife, who both enjoyed playing video games while studying in law school.
Introduction to Video Games: Blake's Experience
Blake's initial gaming exposure came through playing games with his brother on consoles such as the NES and N64. His first personal gaming device was an Xbox, which introduced him to games like Halo and online multiplayer through Xbox Live. Blake's enthusiasm for competitive games and the enhanced experiences they offered remains a significant influence on his journey in the gaming industry.
Transitioning from Law to Game Development
The podcast episode features a conversation discussing a lawyer's transition into game development. The individual and their friend realized their passion for game development while studying law together. Despite working as a lawyer and district attorney, they both felt unsatisfied and decided to pursue their dream of making games. The conversation highlights the lack of awareness and belief in the possibility of making a career in the gaming industry back then. It also emphasizes the importance of following one's passion and the potential career opportunities available.
Stigma around the Gaming Industry
The stigma surrounding the gaming industry is explored in the podcast. Many people still perceive gaming as something for kids or not a serious business. The conversation suggests that this perception stems from the industry's roots in the toy business and the historical association with entertainment for children. However, with the evolution of technology and the increasing social aspects of gaming, the perception is changing. The podcast participants discuss the need to challenge these stereotypes and recognize the tremendous artistic and storytelling potential in games. They also mention the significance of enjoying leisure activities, such as playing games, without judgment or moral judgment.
We sit down Benchmark’s legendary gaming investors Mitch Lasky and Blake Robbins (now also of the excellent Gamecraft podcast fame) to discuss the history and future of gaming business models. This episode is the perfect bookend to our Nintendo/Sega gaming series this season on Acquired — no one is more qualified than Mitch and Blake to breakdown how the business side of the industry has evolved so radically from the Periscope quarter-drop days to the forever games and platform based publishers of today.
Regardless if you’re a gamer, understanding the incredible innovation that’s taken place over the past two decades in gaming and what it portends for other industries is critical for any founder and investor to understand. Tune in!
Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
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