Where top VCs are investing in media, entertainment & gaming

Where top VCs are investing in media, entertainment & gaming

12:34pm, 6th May, 2019
Most of the strategy discussions and news coverage in the media & entertainment industry is concerned with the unfolding corporate mega-mergers and the political implications of social media platforms. These are important conversations, but they’re largely a story of twentieth-century media (and broader society) finally responding to the dominance Web 2.0 companies have achieved. To entrepreneurs and VCs, the more pressing focus is on what the next generation of companies to transform entertainment will look like. Like other sectors, the underlying force is advances in artificial intelligence and computer power. In this context, that results in a merging of gaming and linear storytelling into new interactive media. To highlight the opportunities here, I asked nine top VCs to share where they are putting their money. Here are the media investment theses of: (Founders Fund), (Lightspeed), (betaworks), (Sequoia), (Sinai), (Sweet Capital), (Precursor), (GV), and (Lerer Hippeau). Cyan Banister, Partner at Founders Fund “In 2018 I was obsessed with the idea of how you can bring AI and entertainment together. Having made early investments in Brud, A.I. Foundation, Artie and Fable, it became clear that the missing piece behind most AR experiences was a lack of memory.
Esports org OverActive Media gets investment from The Weeknd

Esports org OverActive Media gets investment from The Weeknd

9:11am, 10th April, 2019
, the company that owns esports org and the Overwatch League’s Toronto Defiant team, have announced that (real name: Abel Tesfaye) has invested in the company. In the world of esports, OAM is a big organization — the Toronto-based company, which launched in 2017, has teams in the League of Legends European Championship, Call of Duty World League, Rocket League, Starcraft and Smite. OAM is one of only five esports orgs in the world with permanent slots both in League of Legends and the Overwatch League. If you have no idea what I’m talking about, here’s a look at one of the Toronto Defiant’s recent Overwatch League games. The terms of the investment were not disclosed, but it would appear that The Weeknd will be contributing to some marketing efforts and building brand awareness around Splyce and the Toronto Defiant. “Abel’s standing in the music industry will provide our Toronto Defiant and Splyce brands the opportunity to reach more fans and engage new audiences,” said OAM CEO and president Chris Overholt. The release also mentions that Toronto Defiant fans will see “unique joint efforts” with The Weeknd throughout the 2019 Overwatch League seasons. Here’s what The Weeknd had to say, via the release: As a big esports fan, I am really excited to be involved in this project. I am looking forward to collaborating with OverActive Media in unique and innovative ways. The Weeknd is not the first musical artist to invest in an esports org. Drake and Scooter Braun in esports company 100 Thieves in October of 2018.
Digging into Apple’s media transformation

Digging into Apple’s media transformation

4:29pm, 27th March, 2019
Extra Crunch offers members the opportunity to tune into conference calls led and moderated by the TechCrunch writers you read every day. This week, TechCrunch Editor-in-Chief, Matthew Panzarino, offered his analysis on the major announcements that came out of Apple’s keynote event this past Monday. Behind a series of new subscription and media products, Apple has set the stage for one of the largest transformations in the company’s history. Matthew touches on all of Apple’s major product initiatives including Apple’s new credit card, its push into original content, its subscription gaming platform, and its subscription news service, which features Extra Crunch as one of the debut publications. “I don’t think many of the things that Apple announced here, on an individual basis, are earth-shattering. I think it shapes up to be a really solid, nice offering for people with some distinct advantages but at the same time it’s not breaking huge molds here. I think the same thing applies across all of the offerings that they put out there. I just felt that together, it’s solid but not scintillating and we need to see how they develop, how they launch, and then what they do with these platforms… …Seems relatively straightforward. However, some of the stuff people have glossed over is very intriguing.” Matthew goes into more detail on why he didn’t view the announcements as individually earth-shattering, and why he sees compelling opportunities for Apple to position its offerings as a symbiotic ecosystem. He also goes under the hood to discuss some of Apple’s overlooked competitive advantages in media and to paint a picture of how Apple’s new product lines might evolve in the long-term. For access to the full transcription and the call audio, and for the opportunity to participate in future conference calls, become a member of Extra Crunch.
Media fragmentation is annoying consumers

Media fragmentation is annoying consumers

7:24pm, 19th March, 2019
published its , focused on identifying changes in the ways US consumers engage with various types of media. Led by an independent research firm, the survey had roughly 2,000 consumer respondents across demographics – with the report categorizing respondents based on age (Gen-Z: ages 14-21, Millenials: 22-35, Gen-X: 36-52, Boomers: 53-71, and Matures: 72+). While already accompanied by a succinct , the report can largely be summarized in just a couple of sentences: more people are using streaming or alternative media services than ever before, largely due to more user freedom and customization, though the growing quantity and fragmentation of platforms are becoming more frustrating for users to manage. The survey results directionally echo already well-discussed dynamics, which we’ve previously dug into such as , and . Instead, the most poignant aspects of the report were not the answers or conclusions themselves, but the immense level of support many of them received. Somewhat interesting:
Changing the game? Microsoft’s ‘Xbox One S All-Digital Edition’ may hasten the decline of physical media

Changing the game? Microsoft’s ‘Xbox One S All-Digital Edition’ may hasten the decline of physical media

12:42pm, 10th March, 2019
(GeekWire Photo / Nat Levy) Credible rumors that Microsoft was working on a new, digital-media-only edition of its Xbox One video game console, without a disc drive. This past week, that the project, code-named Maverick, may be in stores as soon as this coming May, as the Xbox One S All-Digital Edition. The new Xbox would be entirely reliant upon Internet access and digital licenses for its software, which would further incentivize customers to subscribe to Microsoft services such as its Game Pass. This is in addition to the second rumored Microsoft project, “,” which is designed to work with Microsoft’s planned game streaming service. This marks another step towards Microsoft’s continued embrace of the concept of its video game division as a service provider, alongside subscription services such as . That, in turn, seems to paint a picture of Microsoft’s current console strategy as working to disrupt the market entirely. Rather than focus on the more traditional route — focusing heavily on must-have games that are exclusive to their platform, thus giving a consumer several specific reasons to own an Xbox over a Switch or PlayStation 4 — Microsoft has been steadily chipping away at several of the accepted pretexts of what a video game console actually is. This has the potential to trigger a lot of knock-on effects. Between the current age of individual games becoming service platforms all by themselves, such as Fortnite or Warframe, and the continuing rise in popularity of digital media across all platforms, physical media has consistently made up less of a share of gaming revenue over the last couple of years. (Reliable market statistics for video game sales are notoriously hard to come by, since companies rarely divulge their internal data, but when they do, there’s towards digital sales matching or exceeding physical media.) While overall revenues , major brick-and-mortar retailers like GameStop are . The original start of the movement towards downloadable content (DLC) in the console market was due to companies like GameStop in the first place, who realized record profits in the 1990s and 2000s by capitalizing on the used-games market. Since DLC can’t be traded in for store credit or lent to a friend, it became standard industry practice to include at least some cosmetic extras as a digital bonus for a physical disc, because that way, a company is at least making some money off of the sale of a used game. With a digital-only Xbox, which is rumored to be shipping at a significantly cheaper retail price than the current Xbox One S, Microsoft is moving towards bringing in a brand-new audience, all of which is paying Microsoft directly. It also puts Microsoft in a role more akin to Netflix or Hulu than a traditional video game manufacturer, complete with a rotating month-by-month lineup via its Game Pass. At this point, it’s too early to say whether this will end up as an optional quirk that’s unique to the Xbox line or a genuinely disruptive influence in the market. As of right now, Microsoft’s primary competitors in the console space, Sony and Nintendo, are doing fine with their adherence to the current model. Sony in particular rode the sales of last year’s PS4 exclusive Spider-Man to a new milestone, marking nearly as of January of 2019. That’s roughly , although Microsoft’s recent decision to does a lot to change that math. There are also a lot of intangibles that may prevent this move from being successful. In the American market, the evolving debate over net neutrality could play a role, as many modern video games clock in at a few dozen gigabytes of data, and rural customers who already won’t find anything exciting about a digital-only Xbox. As the market continues to evolve towards a greater acceptance of games as a service, however, it may be a solid bet to have a console platform that’s pre-positioned as a cheap method of entry for those services.
Strange bedfellows: American Media appears to host the National Enquirer on Amazon Web Services

Strange bedfellows: American Media appears to host the National Enquirer on Amazon Web Services

1:19pm, 8th February, 2019
Amazon CEO Jeff Bezos speaks at the 2018 Air, Space and Cyber Conference in Maryland. (DVIDS / DOD) Here’s a complexifier for you: the parent company of the National Enquirer, under fire from Amazon founder and CEO Jeff Bezos after it mounted an extortion campaign against him linked to nude photos, uses Amazon Web Services for at least part of its technology infrastructure. In the wake of Thursday about his correspondence with American Media, Ryan Huber, a security architect at Slack, that the National Enquirer appears to be hosted on Amazon Web Services. A confirms that “nationalenquirer.com” is registered with “Amazon Technologies Inc.” located at 410 Terry Avenue North amidst Amazon’s sprawling South Lake Union complex in Seattle. AWS representatives, presumably still , did not respond to a request for comment on the breadth and depth of American Media’s spending on the cloud computing giant’s services. (GeekWire Screenshot) It’s not that surprising that AMI would be using the services of AWS, which courts a lot of video publishers through its Portland-based AWS Elemental division and leads the market for public cloud computing services by a wide margin. It certainly would be the least surprising development in this saga, in which Bezos published email correspondence between his lawyers and AMI detailing how AMI threatened to publish nude or semi-nude pictures of Bezos and his girlfriend, Lauren Sanchez, unless investigators hired by Bezos stopped looking into connections between AMI and Saudi Arabia. People will tell you there have been many times to be alive, but folks, this is a time to be alive.
Is PAX still a convention ‘for gamers’? How streamers and media are changing the game

Is PAX still a convention ‘for gamers’? How streamers and media are changing the game

2:45pm, 4th September, 2018
Press Priority Station at Gris booth in PAX West 2018 When co-creator Mike Krahulik announced the first in 2004, he described it as “” A lot has changed since then. For one, the original PAX quickly outgrew its space in downtown Bellevue and has grown from a two-day event attended by around 3,300 people to a four-day show that spills out of Seattle’s biggest convention center and downtown theaters, drawing over 70,000 attendees. Over the last decade Penny Arcade has also launched additional PAX events of similar scale in Boston, Melbourne, San Antonio, and most recently a table-top gaming-focused show in Philadelphia. After so much growth, some are beginning to question whether PAX still lives up to its original promise of being a show primarily “for gamers.” Large swaths of space on the expo hall floor in recent years are dedicated exclusively to streamers. Staff at many of the booths jump at the chance to let yellow-badged media and streaming personalities cut in front of long lines whether they have an appointment or not. I personally experienced this at multiple booths when exhibitors saw my media badge and offered to let me skip the line to play their demo. (I declined.) Streaming pods like these seen in the hallway, Facebook Gaming, Twitch, and Gigabyte were all over PAX West 2018 I can’t believe I need to say this, but if you’re a streamer/influencer at and you cut lines to grab footage you’re showing your community how much more important you are than they are. If you’re a game dev and let this happen Im not buying your game — Logun (@Logun0) In a pair of on Reddit, attendees complained about a gamer being booted mid-demo by a streamer with an appointment at the booth for Gris, an upcoming artistic platformer being published by Devolver Digital. Key details about the exchange were misrepresented by the original poster on Reddit, but the fact that Devolver Digital had a dedicated “Press Priority Station” still rubs many PAX fans the wrong way. Press and streamers aren’t the only thing getting on PAXers nerves. In , gamers vented about exhibitors filling lines at other booths before the Expo Hall even opened to attendees. Every single day I was waiting in the queue line at 4:30-5am to get into the Exhibitor Hall to play Diablo 3 (for the pin) or Resident Evil 2 or Valve’s game Artifact… but no matter what I was always far back in line with everyone in front of me with Exhibitor badges. What’s the point of waiting 5 hours before the Exhibitor Hall opens if you get to wait another 2 because Exhibitor get priority access? If it was only for Friday… sure… but every SINGLE DAY it happened! How incredibly stupid and infuriating to deal with this! Then there are the pins. Penny Arcade , and for many PAX-goers collecting pins has become more important than playing games. Booths that were giving away pins for trying their demo had absurdly long lines that nearly instantly hit their cap… right up until they ran out of pins. After the pins were gone, lines would vanish and the booth would turn into a relative ghost town. See the ID@XBOX booth in the photo below for an example of what a previously packed-to-the-gills booth looked like once the pins ran out. Once the free Pinny Arcade pins dried up, booths like ID@XBOX became ghost towns. Really disappointed/frustrated with how has their booth set up at . I really would have liked to have played Pokémon this weekend, but the line was perpetually capped and full of people that just wanted to get a pin. — Longboy (@Gabers_) I stood at a different booth out of the way of foot traffic for three hours and watched Pokémon booths sit with nobody playing them. Everyone I talked to that was standing in line said they were just in line for the pin and didn’t care about playing Pokémon. — Longboy (@Gabers_) None of these trends are a new phenomenon in 2018, but they have been building over recent years, and may have started to affect demand for the show. Despite one of the smallest ticket price increases in recent years, this year was the first time since 2012 that passes didn’t completely sell out in a day. In fact all the way up through the start of the show you could still purchase passes for Monday—a first since 2009. Past ticket sales have been such a frenzy that the event and . PAX West ticket prices increased just $2 from 2017 to 2018 It was also surprising to see that fewer vendors were at PAX with booths this year. Spaces in the main Expo Hall that were occupied by smaller booths in previous years were used by larger vendors as storage space, and the entire third floor of the convention center didn’t have a single vendor. This could be due to increasing prices for vendors. One exhibitor showing board games on the second floor told us that the cost of their room at PAX has increased 33 percent in the last four years. from discussion . from discussion . Is PAX slowly evolving from a “party for gamers” into a party for streamers and pin-collectors? As a 13-year PAX-attending veteran, I still love PAX and I certainly hope it hasn’t peaked. I’ll keep coming to PAX to witness the spectacle of the Omegathon, pitch my goofy joke games at the Pitch Your Game Panel, discover fun new niche board games, and meet indie developers who come to show off their unique and creative indie games (look for a post about indie game highlights later today), but it’s difficult to deny that the show has a very different “feel” lately than it did back in the early years. (P.S. – ALL HAIL BALL!) We reached out to a PAX representative for comment about these issues and suggested fixes like extending media/creator early access hours, preventing booth staff from giving priority to streamers/media, and restricting cross-booth access by exhibitors. We will update this post with their responses if we hear back.