Games Industry Venture Capital Plummets

Thanks to ElectricNews.net for a synopsis discussing the difficulty of raising venture capital for the games industry. They reference a Wall Street Journal article mentioning that only USD37 million was invested in games-related firms in the US in 2002, down from USD66.9 million the year before and a peak of USD295.3 million in 1999. According to the article, apart from the wider downturn in VC activity since the late 1990s: "'Historically, in the games business, a lot of companies really succeeded by hitting it big with one blockbuster,' says Jon Callaghan, managing director at Globespan Capital Partners. 'As a VC, it's very hard to invest in that.'"

Comments

State of the industry

[Jouni]

Greg Costikyan had pretty heavy things to say about the current state of the games industry in his brilliant blog. He also published his thoughts in a PowerPoint after his Digital Genres presentation.

It's a tough time in the games industry, and anyone contemplating getting in should do the research thoroughly. While the risks are high, I believe game development could be refined into long term sustainable, profitable business by re-thinking the process of game creation.

Meanwhile, even government organizations like TEKES in Finland have started to seriously support the development of games and related technology and IGDA has already networked thousands of game developers together. Individual developers may fall, but game development is still a growing industry.

And we all heard about the return of shareware. PopCap's Bejeweled may not turn the heads of VCs with it's content, but a million copies sold is no peanuts.

Maybe if I finally updated my Palm games (/shameless plug) I could get rich quick, too. :-)

Jouni