I think well of VCs, but it's appalling what they've done to the videogames space. Firms like Lightspeed and Andreessen Horowitz realized that a meaningful percentage (~10%) of unicorns launched in the last two decades were games companies and jumped in with both feet. This despite AAA game development (think Grand Theft Auto and Call of Duty) being antithetical to the way VC works.
In the VC world, investors place small bets on founders with ideas. Some of those founders (now teams) gain a basic level of traction and new investors place larger bets on them because the risk is reduced. Some of those teams (now companies) gain even more traction and even different firms make even larger bets and so on and so on, until a handful of those companies go public, or at least get acquired for tons of cash.
In the AAA world, publishers greenlight game concepts. They invest enough money for a team to enter pre-production and build a prototype to test basic gameplay. If the game seems promising (i.e. fun), the same publisher invests more money to move from pre-production to full production. The team likely swells in size and creates loads of content to flesh out an entire game in a process that can take years and cost tens of millions of dollars. During this process, the publisher will evaluate the game and occasionally, simply loses faith and shelves the game.
Both of these models have their unique problems, but the VC model simply does not work and was never going to work. AAA game development is fundamentally about seeing an early prototype and then committing a metric ton of money to fund the game through launch. The VC model is about giving a company just enough money to become materially less risky and get to the next stage gate, where it becomes someone else's responsibility.
For the vast majority of AAA titles, there simply is no opportunity to derisk during the entire production process. It's build, build, build, build, launch and then succeed or fail in literally just a few weeks. It's a leap of faith that the vast majority of games VCs never had any interest in making.
And now, in a year of record breaking videogame revenues, VCs are walking away en masse from dozens of AAA studios they empowered to set up shop and get 50% through dream projects. Real people are getting laid off, because, suddenly, money is once again expensive and no one wants to pay to see these games through.
I don't know Brian and I'm sure he's a great guy. But VCs should have had these "lean gaming studio" epiphanies about five years ago. I'm tired of seeing friends getting laid off and shutting down studios because investors had no idea how games were made and now feel no obligation whatsoever to the companies they funded.
This is 100% a rant. I have no constructive suggestions. Just maybe please stop trying to signal expertise when an entire generation of investments are still on fire.
#getoffmylawn