This is posted on behalf of Joshua de Larios-Heiman.
I was at a venture capital cocktail reception at Zibibbos in Palo Alto last week hosted by the Hina Group, a venture capital and investment banking specializing Chinese technology investment. I was there at the behest of a client, a venture capital group, who is currently investing in Massive Multiplayer Online (MMO) Games.
Around six o’clock, I ran into an Internet analyst for a rather well known investment bank. We began talking tech development and current trends, basically feeling each other out for our knowledge in the space. I asked him about what he thought of Wikipedia's efforts to commoditize its services without alienating its users. He asked me about what I thought of the iPhone copyright controversy between Apple and Cisco. It was a fine conversation, until I brought up MMOs.
I mentioned that the MMO niche looks to be growing at amazing rate, expected to be in the $14 billion ranges by 2011, the long tail business models, and the vertical and horizontal market potentials. So what did he think?
The Internet analyst, a man with a degree in computer science from a good school, who spends hours on Bloomberg every day ostensibly reading about all things internet, answered: “I cover the internet, dude. Not online gaming.”
This answer both delighted and frustrated me.
It delighted me because it means that for the short term, I get to cherry pick MMO funding deals. Despite the well-publicized success of titles such as World of Warcraft, the analyst’s view of MMO sector is commonplace in the western VC and I. banking communities. Funding access to MMO developers in America from these two sources has been paltry at best, and non-existent at worst.
It frustrated me because the MMO development as a whole suffers from the scarcity of funding. Since I consult for one of the few venture groups that actually funds MMOs, I get a chance to talk to MMO developers. Specifically, I spend a lot of time hearing one thing: “VCs and I.Banks don’t get us.” I am a gamer. I want people to understand the industry. I want my colleagues to get the MMO industry, so they fund good games.
So, fellow TNers I post two questions to you:
1.) Why don't western venture capitalists and investment bankers get the MMO space?
2.) What can/ is the MMO industry doing to change this?
Josh de L-H