The big gaming companies all struggle with the challenge of how to create the next hit IP. But it might be perfectly fine for an established company because they don’t need to do the marketing, they have the audience already. Therefore, you’re looking at similar content risk with reduced upside, which makes that equation less attractive for venture capital. So it’s almost impossible to achieve King-like scale today. It is hard to reach the same scale when it costs you $5.00 to acquire a user today, whereas when Candy Crush launched, it was $0.05 per user. At the same time, what you’ve seen is the odds of winning are lower. Murphy: It’s possible in mobile gaming still but it’s really, really hard now. To your point, it’s tough for a small startup to compete entirely on its own. They get a strategic investment from Supercell or another company. Peckham: New mobile game studios that are launching all seem to fall under the sphere of influence of these bigger companies. We’re betting that this great product will fit into a large inventory ecosystem. So we don’t have to take any content risk. Their product allows you to do live video and audio on top of mobile games. We’re looking at infrastructure: different platforms that enable mobile gaming, like Bunch which we invested in.
Where I’m spending most of my time is not on content, it’s on components within mobile gaming. So while the prize for winning in mobile gaming content big, the likelihood is smaller. And so it’s very, very difficult for someone to enter with new content and build a business that’s as big as Supercell or King, regardless of how good their content is. The challenge is you don’t really have a rising tide moment anymore. So those are things that are very positive.
There’s a whole generation of people that have been trained to play games on mobile phones. Paul Murphy: I’m bullish on mobile gaming–the market is bigger than it has ever been. Are you still bullish on investment opportunities in mobile gaming or do you think the market has changed? Below is the transcript of the conversation (edited for length and clarity):Įric Peckham: You co-founded the hit mobile game Dots before moving to London and joining Northzone last year. TechCrunch media analyst Eric Peckham recently sat down with Paul Murphy, Partner at European venture firm Northzone, to discuss Paul’s view of the market and where he is focusing his dollars. Most of the value is accruing to the large incumbents in a space, however, and the entrance of Google and other big tech companies makes it difficult to identify where there are compelling opportunities for entrepreneurs to build new empires. As the gaming market continues to boom, billions of dollars are being invested in new games and new streaming platforms vying to own a piece of the action.
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