Marketing expert Eric Seufert discusses predictions for mobile marketing, Microsoft's potential future plans for a standalone mobile gaming app network and search ads, regulatory challenges for a Unity-Microsoft partnership, the impact of the DMA Act on game monetization in the EU, analyzing game revenue and trends, and the challenges faced by lockdown mobile gaming studios in fundraising.
Mobile gaming studios founded during the lockdown periods may struggle to secure further funding and meet expectations due to a lower quality bar for investment and increased competition.
Early stage gaming startups face challenges in raising funds due to higher standards, increased uncertainty in the mobile gaming space, and cautious venture capitalists.
Deep dives
Prediction: Fundraising Reckoning for Studios Founded During Lockdown
The prediction is that mobile gaming studios founded during the lockdown periods of 2020-2022 will face a reckoning in terms of fundraising. During this time, there was a frenzy of investor activity, with teams being able to raise substantial amounts of funding quickly. However, many of these teams may not have had the necessary qualifications or experience to successfully develop and launch a game. The lower quality bar for investment during this period means that some studios may struggle to meet expectations and secure further funding. Additionally, the market has become more competitive, making it harder for these studios to stand out and attract investment. This prediction highlights the challenges that these studios may face in scaling their businesses and securing the necessary funding to sustain their operations.
Reasons for the Fundraising Reckoning
One of the main reasons for this reckoning is the lower quality bar for investment during the lockdown period. Many teams that would not have been able to secure funding in previous years were able to do so during this time, resulting in a higher number of less qualified studios in the market. Additionally, the increased competition in the industry makes it more difficult for these studios to differentiate themselves and attract investment. This, coupled with potential struggles in meeting expectations and scaling their businesses, creates a challenging fundraising environment for these studios.
Challenges Facing Early Stage Gaming Startups
Early stage gaming startups are facing challenges in raising funds due to higher standards and increased uncertainty in the mobile gaming space. The standard for raising money has become higher, with companies needing to demonstrate their ability to ship a game and gather data for iterative improvements. VCs are being more conservative and skeptical, making it difficult for startups with only a prototype or no significant metrics to secure additional funding. The uncertainty surrounding the future of mobile gaming, including privacy restrictions and deprecation of G.A.I.D., has further contributed to VC caution.
The Issues with High Valuation and Down Rounds
High valuations in early stage funding, particularly in the pre-seed stage, have become a challenge for startups. If a company raises a significant amount in the pre-seed round, it can lead to a higher valuation, which may not be sustainable if the startup fails to show traction. Down rounds, where subsequent rounds are raised at lower valuations, can dilute existing investors' shares and incentivize founders to a point where they may no longer be able to justify doubling down on the venture. Optically, down rounds may not be favorable, but if a startup believes it can deliver on metrics and milestones, it may be a better option than risking further investment without significant progress.
Eric Seufert is a one-of-a-kind marketing expert. He has headed marketing at Rovio, Wooga, and N3TWORK. He has built Mobile Dev Memo into the leading site for marketing professionals. He became a venture capitalist after founding Heracles Capital.
In this podcast, Eric Seufert returns back to the podcast to discuss predictions for mobile marketing. A must-listen for all of us!
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