Transcript No Slide Title - Lightspeed Venture Partners Blog

Games 2.0
Web 2.0 Expo
April 25, 2008
Jeremy Liew
MD, Lightspeed Venture Partners
www.lightspeedvp.com
lsvp.wordpress.com
[email protected]
Birth of Web 2.0 has been driven by
making costs variable
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Web 1.0
Web 2.0
Build everything from
scratch
Open Source
Marketing
Superbowl ads
CPC and CPA
Distribution
Multi year, multi million
dollar portal deals
Social network platforms
Content
Teams of writers and
editors
User Generated Content
Monetization
Internal sales teams
Ad networks
Development
Outsourcing
Viral growth
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The games industry is starting to feel
the same dynamics
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Development
Games “1.0”
Games “2.0”
Massive development
projections
In browser gaming
Fat clients
Flash and other rich media
improving
Marketing
Offline advertising driving
players to retail
CPC and CPA online
advertising driving online play
Distribution
Controlled by retail and
big game portals
Social network platforms
Content
Teams of level designers
Multi player is user
generated content for games
Monetization
Selling games in jewel
cases
Digital download
Viral growth
Free to play supported by
subscription and digital goods
Advertising
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Development: “Low fi” games
gathering more users
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Development Costs ($M)
Halo 3
Players (M)
10
30
Power Challenge
<8
Zynga’s
Texas Hold’em
<1
Friends for Sale
<1
SGN’s Jetman
<1
1
8
7
3
Sources: Lazard Capital Markets, Adonomics, Press Releases, LSVP Estimates
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Marketing: Online distribution allows
CPC and CPA advertising
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$30M in marketing
- Primarily offline
10M copies sold
- 90+% through retail
5
Distribution: Viral growth and social
networks allow games to grow virally
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New user growth (illustrative)
Marketing campaign
supports big launch,
with sales declining
thereafter
TYPICAL AAA GAME
* Not to scale
Friend invitations
drive increasing
growth curve as user
base grows
SOCIAL GAMES
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Content: Multiplayer is user gen
content for games
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Single-player games
-Need new levels to keep player
interest
-AI for NPCs to maintain
challenge
-vs.
Multiplayer Games
-Each game is different, keeping
player interest
-Other players have real
intelligence, not AI
Source: Ian Bogost, Lightspeed analysis
Asynchronous Play
- Large pool of other players
- Easier to play against friends
- Players playing in sequence, not
in tandem.
- Requires persistent state which
all players affect, and which in
turn affects all players.
- Breaks between players are the
organizing principle
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Monetization: Online games market growing
as revenue sources become more variable
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ONLINE GAME REVENUES
$11.7B
 Sale of downloads
$10.6B
 Advertising
$8.8B
 Digital goods





Self expression
In-game power
Extra levels/content
Attention
Convenience
$6.9B
$5.2B
$3.8B
2006
2007
2008
2009
2010
2011
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If Web 2.0 is the social web, then
Games 2.0 is social gaming
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
MODERATOR
Jeremy Liew:
MD, Lightspeed
Venture Partners
PANELISTS
Siqi Chen:
CEO, Serious Business
(Friends for Sale)
Johan Christenson:
CEO, Power Challenge
Shervin Pishevar:
CEO, Social Games
Network
Mark Pincus:
CEO, Zynga Game
Network
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