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Y Combinator forged a long-term, high-trust ecosystem to the benefit of all tech founders. The video games industry needs to do the same.
by spacemarine1 9mo ago
Y Combinator forged a long-term, high-trust ecosystem to the benefit of all tech founders. The video games industry needs to do the same.
- daedrdev 9mo agoI feel like this is impossible given how many games flop each year.
- psawaya 9mo agoAs a YC founder turned gamedev, I can tell you that failure is the norm in both pursuits. As with YC, the question is: can we create more outsized outcomes when we succeed?
- daedrdev 9mo agoGreat point, I think I'm just being overly pessimistic Related, I find it interesting is that gacha games seem to ahve the highest possible returns but almost none are made by western game companies.
- trueismywork 9mo agoYou're right though. Industrial software/hardware in general always has money in all times. But gaming is essentially entertainment and people only spend on entertainment last. So gaming industry has a lot of failure but even if you're successful in a huge way, you won't earn huge money. There's a big cap there.
- awkward 9mo agoGames are a zero marginal cost industry driven by hits. The cap is pretty high. The floor is what you should be worried about.
- dpoloncsak 9mo agoAren't games like CSGO, FIFA, and Overwatch almost exclusively run on gacha-profits?
- jsheard 9mo agoYes they are. The implementation tends to differ from how eastern-developed gacha games work, but they're making billions from virtual slot machines nonetheless.
- dpoloncsak 9mo agoYeah, I still indulge in video games, and understand that on the surface CSGO skins feel different than Genshin summons, but from 100 feet up it's all the same crap, imo I do kinda get what you mean, though. Gacha mechanics feel expected in anything western, while 'loot boxes' are still a 'feature' of some games in the east. Eastern studios have definitely noticed, though, and are running the same playbook.
- dpoloncsak 9mo ago...I think I mixed up East and West oops
- modwilliam 9mo agoOverwatch is not
- dpoloncsak 9mo agoDidn't they bring back loot boxes?
- deleted 9mo ago[deleted]
- modwilliam 9mo agoYes, but you basically can't pay for them. Revenue is basically all from direct cosmetic sales or the battle passes
- chrisweekly 9mo agoFTR, A "gacha" game is a video game that uses randomized rewards and in-game currency to encourage players to spend money or time. (Sharing to help others bc I had to look it up.)
- Analemma_ 9mo agoI don't think that's possible and frankly I'd much prefer capital not even try. To the best of my knowledge, the only games which generate the really outsized outcomes you'd need for a VC portfolio do really gross, anti-player shit (gacha, lootboxes, whale fishing, etc.) to get it. Or they become distribution monopolies like Valve, which is fine-ish when Valve is private but would be a ongoing catastrophe if it had been VC-funded. I'd rather not encourage that.
- mikepurvis 9mo agoI agree. I'm not the moral police, but video games ultimately have to walk a line where they serve up entertainment that is engaging/addictive without being all-consuming and abusive, and do so for an amount of money for which there is general consensus is "reasonable". Trying to ride that to the moon is a very different proposition from a B2B play where you sell some service that concretelt delivers $X/mo recurring value to each customer for a $Y/mo price tag, and X > Y, but Y - your costs still turns a healthy profit. If you do that right, everyone is winning and the economy as a whole grows, not at all the same as the zero-sum game that is soaking a few whales and ruining their lives.
- 7777777phil 9mo agoI appreciate this perspective.. but I think there might be a false dichotomy here. Some of the biggest gaming success stories didn't rely on exploitative mechanics - Minecraft, Among Us, even Fortnite's initial success was based on solid gameplay before the monetization kicked in. The question is whether you can build sustainable platforms that create genuine value rather than just extracting it. Steam takes 30% but provides real distribution value. Maybe the trick is focusing on companies that help other developers succeed rather than trying to create the next Genshin Impact
- jsheard 9mo ago> Fortnite's initial success was based on solid gameplay before the monetization kicked in. Fortnite is a bit of weird backwards example because the early PvE iteration had paid lootboxes, but they were scrapped in the Battle Royale spinoff which actually got popular, and eventually removed altogether. They still do things like engineering FOMO to drive sales but ironically the games monetization was the most exploitative when nobody was playing it. But now the siren song of lootboxes is calling to them once again... https://kotaku.com/fortnite-loot-boxes-gambling-roblox-2000642980 https://kotaku.com/fortnite-loot-boxes-gambling-roblox-20006...
- mikepurvis 9mo agoOn some level it's the role of the publisher to pick winners and guide them over the finish line. See for example the hit machine that is Devolver: https://www.devolverdigital.com/games https://www.devolverdigital.com/games I'm not an indie dev, but if I was I would happily give up a chunk of my potential profit to be listed on there, knowing the size of the market that says "oh yeah... a Devolver title, I would blind-buy this, it's probably pretty good."
- mrdataesq 9mo agoI suspect games are like movies: for every 100 movies, around 20 of them make enough money to cover the losses of the other 80. But predicting which movies those will be is extremely difficult (Goldman's Law: Nobody knows nothin'). Any studio / label / distributor which can do better than the average is probably headed for greatness.
- guywithahat 9mo agoMy thought too, the bar is higher and the rewards are so much smaller. People don't appreciate how incredibly difficult it is to make a mediocre game
- seizethecheese 9mo agoVC math follows a power law and expects almost all investments to flop, and the one winner to pay for it all. The question here is not about the flops it’s: are the winners big enough?
- conartist6 9mo agoAnd now that they're eliminating diversity in their investments are you still certain they will pick the next generation's winners? All they're investing in are AI companies... Once upon a time someone like me for whom engineering competence is a core aspect of my identity would have never considered turning my back on YC. But now I'm just embarrassed by them. The things they now think are the only things worth investing in mostly make me want to vomit, like the vibe coding casino-IDE startup. As someone who still espouses their old values rather than their new ones, I'd rather succeed on my own.
- csa 9mo ago> All they're investing in are AI companies... Genuine question… Do you not think that a large percentage of (random cut off) $1b companies over the next 10 years will be AI? And/or do you not think that the next $100b+ company will be AI-centered?
- conartist6 9mo agoOver the next 10 years, no, I think the market will course correct within that time frame. AI is the sauce that's being slathered on everything right now and demand for it is driving record valuations, particularly for AI startups and their founders. That demand is all investor-driven though: investors are falling over themselves to make AI investments, while consumers are not actually especially eager to have all human contact progressively stripped from their lives.
- csa 9mo ago> That demand is all investor-driven though: investors are falling over themselves to make AI investments Largely true. > while consumers are not actually especially eager to have all human contact progressively stripped from their lives Hmm… I agree with this sentiment, but I think it’s mostly a straw man. There are many things that AI can do well that people will end up embracing directly or indirectly. Medical scans is one big one, imho. Mundane but important legal services is another. Skillful mediation of scutwork is definitely embraced. Good and fast simple customer service via phone or text will end up being very welcome (at least in some contexts). I realize that most people will prefer superlative human customer service, but that’s currently not a widespread available reality, especially for simple tasks. All sorts of learning (great and essentially free tutors). All sorts of practice (e.g., language, speeches, debates, presentations, etc.). All of the above (and more) are things that people are using AI for right now, and they seem to be loving it. I realize that some folks use AI tools in regressive and sometimes dehumanizing ways, but that’s not the fault of the tool, imho.
- bob1029 9mo agoMaking a game that will sell well on Steam is typically much harder than finding a bunch of boring business leaders and pitching them a SaaS or consulting package. On the surface it might seem simpler to do a game, but once you get into the mechanics of building, testing and publishing something for the masses, the fear of cold calling or emailing total strangers begins to evaporate quickly. About 99% of the work you do on a game will wind up in the trashcan. Doesn't matter what kind of work it is. Code, audio, textures, models, map layouts, multiplayer balancing work, etc. are all susceptible in the same way. No one is safe from the chaos. It takes a lot of human energy and persistence to produce sufficient 1% content to fill up a player experience. I'd estimate for a B2B SaaS product, the ratio is approximately the same, however you don't need such a broad range of talent to proceed. One developer with a desire to do the hard things constantly can be all you need to make it to profitability. Going from one employee to N employees in a creative venture is where things go bananas. If you absolutely must do an indie game and you need it to succeed or your internet will get cut off, you will want to strongly consider doing it by yourself. Figuring out how to split revenue and IP with other humans when you can't get the customer on the phone is a nightmare.
- spacemarine1 9mo agoMany people agree that being a video game founder is harder than being a tech founder. Staying small and being as resourceful as you can is a good way to mitigate risk.
- kjkjadksj 9mo agoThe thing is when a game flops it can be popular in the future. It is still a game that does game things. When $dumbapp flops though, it is a stronger signal that whatever it is trying to do may have no market at all. Like giving a fish a skateboard.
- jacquesm 9mo agoNo fewer than the number of start-ups that flop each year, so that's not a hindrance as far as I'm concerned.
- deleted 9mo ago[deleted]
- WhereIsTheTruth 9mo agoYC works because B2B can survive early with a few paying customers Gaming is pure B2C: hit driven, capital intensive, and unforgiving
- spacemarine1 9mo agoFair point though Humble Bundle was B2C. There are clever gaming platforms out there and the best games seem to turn into platforms effectively.
- doctorpangloss 9mo agoIt’s a little more nuanced than that. B2B offerings cost money, video games cost time haha
- api 9mo agoB2B isn't as hit driven as gaming but it's still hit driven. Most startups fail.
- FloorEgg 9mo agoThat doesn't sound right to me. A lot of b2b comes with high barrier to entry. Also I know of many successful indie games, some of which were built by one person. I can think of so many exceptions to your point on both sides that I question your thesis as a rule.
- rapidfl 9mo agoThat's a good point. Some of the (many) B2B companies in YC also get a decent start by selling to the other YC companies.
- deadbabe 9mo agoThe game industry needs no such thing. You can make profitable games very cheaply, and business models are simple and well understood. It’s a matter of just making a good game and getting it good exposure to customers.
- throw-12-16 9mo agoYou should check out BigMode. Dunkey is building a game incubator of sorts and there are some interesting titles coming out of it.
- duped 9mo ago> The video games industry needs to do the same. Video games are a subset of entertainment which is capped in TAM by the population the game reaches, the amount of money they're willing to spend per hour on average, and average number of hours they can devote to entertainment. In other words, every dollar you make off a game is a dollar that wasn't spent on another game, or trip to the movies, or vacation. And every hour someone plays your game is an hour they didn't spend working, studying, sleeping, eating, or doing anything else in the attention economy. What makes this different from other markets is that there is no value creation or new market you can create from the aether to generate 10x/100x/1000x growth. And there's no rising tide to lift your boat and your competitors - if you fall behind, you sink. The only way to grow entertainment businesses by significant multiples is by increasing discretionary income, decreasing working hours, or growing population with discretionary time and money. But those are societal-level problems that take governments and policy, and certainly not venture capital.