EGD News #44 — EGD Manifesto
It’s Joakim here. This week has been great! I started putting all my notes, research and writing into Roam Research and it’s been a joy to use all the systems that have been lacking in Evernote (my previous writing tool). There’s a bunch of Youtube videos available that show the power of Roam. If you’re at all interested, it’s worth the time investment.
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On to this week’s news.
📝 Elite Game Developer’s Manifesto
Just this week, Unity filed to go public on the NYSE. The numbers on the S-1 are staggering: every month, half a million new projects get created with a Unity license.
This week, IGD reported that in mid-2020, we have 3.1 billion people worldwide, actively playing video games.
These are huge numbers, and they point out that the industry is continuing to grow. But still, the games industry is strongly influenced by a power law curve. A power law curve shows that at the top of the curve are Epic with Fortnite, Playrix with Gardenscape, King with Candy Crush, etc. Then you have a long middle section of this curve, consisting of games companies who are barely profitable or barely managing to break-even. Then, as you move to the right on the curve, you follow the endless tail of unprofitable, barely-making-a-dime games companies.
The power law is evident in gaming: most of gaming revenue is made by a small portion of the developers. This ratio can’t be healthy for the industry when so many developers struggle to make ends meet.
With Elite Game Developers, I want to create more value for the long tail of gaming companies. Here’s how:
1. Defy the hit-driven nature of gaming
I often get asked if I can spot a hit game. Like if I could pick the winners when founders come to me with their ideas. I say that it’s impossible, and no one can spot a hit game early on. Even when it’s a playable prototype, it’s still hard to say how the game will work in the market. Once you get to soft launch a game, you start knowing the potential, as you see real, unbiased players playing the game.
Making decisions at the concept or prototype stage is a coin toss. But that is not where we should focus on if we want to defy the hit-driven nature of the games business. The focus should be on the systems that the developer relies on, how the systems reveal insights and how they support our discussions, and how they make us take quick actions and experiments.
That’s how you do it. Not in getting wowed by insanely cool graphics or charismatic pitches. It’s all in the systems.
2. Accelerate first-time founders
We need more people helping first-time founders. Especially people who have expertise in games company building should be supporting. It is not just intros and leveraging their network, but assisting the founders in identifying the failure situations they might face.
Then, as those failure situations have been identified, founders will need support in navigating past the failure situations. There’s also a reality check involved: Founders need to know that there’s no quick way to an exit, no success overnight.
Accelerating first-time founders, to help them see what matters, goes a long way in helping them.
3. Keep successful and wealthy founders active in the games industry
I’m currently writing part two for the angel investing article, which came out in October 2019. In part one, I wrote about the ways I’m doing angel investing. In part two, I’m writing about how more people could get into angel investing and how founders should utilize angels.
I believe that more people angel investing in gaming is the most effective way to scale the games industry. My goal is to educate people, who want to work with founders, who want to be involved in gaming startups and who’ve maybe done an exit, to make them see the benefits of angel investing.
Capital at all stages of building games companies is essential. Let’s all put effort into keeping all the wealth generated from exits, bonuses, and well-paying salaries, flowing back to the small upstart.
4. More game developers should start game companies
There’s more opportunity in gaming and startups than there’s ever been. More and more people are willing to invest in startup founders, and a dozen VC funds, specializing in gaming, have been formed in the last few years.
Still, entrepreneurship has been on the decline. In the US, in 1983-87, 490k new companies got started, whereas, in 2010-2014, only 104k new companies were founded.
Reasons?
- People have more options for a career than starting their own business
- Entrepreneurship perks are not short-term gratifying
- Media doesn’t talk about the founder who took $250k as debt from the bank to get their company off the ground
Some ways to turn this trend around?
- First, build an audience. The presentation I did in this week’s EGD webinar was all about how you could start a business as an audience-building effort, without financial risk, but still show traction with every step you take.
- Start as a side project. Don’t leave your day job yet, but start building something on the side, which will eventually turn into something extraordinary. I wrote about side projects earlier this summer, and I know lots of game devs who’ve built big side projects, including Miska with Deconstructor of Fun.
- You can always go back. The day job will always be there. If you know how games are made and have the resume, you’ll still get back that well-paying job. I think we’re more scared of being perceived as failures than failing.
Now, let’s get to work.
📄 Double Loop Learning in Game Development
“As I’ve spent more time on the concepts of learning from experience, I believe that many game developers utilize ineffective ways of learning. The concept of double-loop learning is a step towards breaking existing habits and finding better ways of making games.”
Read the full article on EGD.
🎙 Team Building In Gaming
In this podcast episode:
- I go through how to start building a founding team
- I cover the example of myself putting together my founding team back in 2012, then on the example of Supercell, and how I solo founded my first games company
- I’ll talk about the dream team in gaming, what that means, and how new founders should think about the hiring, to build the best team that builds the best games.
— EGD Special: Teams and Team Building In Gaming
🎙 Rahul Vohra on Twenty Minute VC Podcast
Check out my notes from this fascinating discussion on creating games, from Rahul Vohra, a game designer turned Silicon Valley entrepreneur. He breaks down game design in ways that not a lot of people in gaming can.
Rahul says that “when you make a game, you don’t worry about what users want or need. You obsess over how they feel. When your product is a game, people don’t just use it. They play with it, and they’ll find it fun. They’ll tell their friends, and they’ll fall in love with it.”
📹 Webinars
There’s two webinars that I want to mention, both valuable for gaming people.
1. On September 7th, I’m hosting Julia Palatovska, the Co-Founder and CEO of Dorian, and we will be talking about “How To Raise A Seed Round From VCs In Gaming”. Previously, Julia was an investor at London Venture Partners, and before LVP, Julia was Head of Biz Dev at G5 Games.
2. Check out the recording from the “Audience-first game development” webinar, where my guest was Mitchell Smallman, Co-founder and Chief Product from Netspeak Games, based out of London UK. We talked about game development where you’ve first made a decision on an audience that you’re game will target, and not the other way around.
🌟 InvestGame.net launches its beta site
The folks from MRGV are at it again. In EGD News #30, I wrote about Ilya from MRGV and the Perfect Games Company Pitch Deck.
Now, a few people from his team have launched a site which shares details into gaming investments, gaming M&A, IPOs and other financing news.
I’ll write more about InvestGame.net in future EGD News, but I would like you to take an early look. For example, the Deals page looks amazing and is valuable for everyone in the industry.
🗓 Last week
If you missed out on the EGD news last week, I talked about how I see the situation with Epic Games, and their crusade to rid game development of unfairness, and how we should reflect on what has happened before.
— EGD News #43 — Epic the Usurper
📃 Articles worth reading
+ Unity Files For IPO — Many people posted an analysis on the Unity IPO this week. I suggest you check out their prospectus, which was shared by our friends at the SEC. The MRGV guys wrote a blog post and asked me and Eric Kress to share some thoughts on the IPO. You can read that post by going here.
+ IDFA, what you needed to do yesterday — I really like the work that DoF has put into explaining the impact of Apple’s decision to depricate the IDFA. This article includes a checklist for developers who are still trying to figure out how to react to iOS 14.
+ Turkey’s Gaming Startups Have Attracted $2.4 Billion in Investments Since 2015 — “Coupled with lower development costs and a large base of software developers in Eastern Europe and in the Middle East relative to Western Europe and North America, this is leading many Western companies to step up their interest in acquisitions in the region, and in countries such as Turkey.”
+ Build your own mental gym — “Building your own mental gym takes time to figure out exactly what works for you. The most important aspect is to stay aware of our mental wellness, and to keep our brain stimulated with activities that improve our creativity, productivity, and ultimately, our happiness.”
💬 Quote that I’m thinking about
“If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast endless sea.”
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That’s it for this week. Stay safe and don’t forget wear a mask 😷👍
Joakim
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