Seattle Game Developers and Startups Go Social and Mobile, As Industry Shifts
Heading into the holidays, it seems like a good time to look at what’s going on in the gaming space around Seattle. While the core gaming giants like Xbox, Nintendo, Valve, and Bungie are gearing up for a busy shopping season, the mid-size casual game makers and publishers are actively trying to broaden their audience. Meanwhile, smaller developers and startups are seeing new opportunities in casual, mobile, and social games—especially social games.
Welcome to the increasingly fractured and complicated gaming industry. While the recession has hit everyone, Electronic Arts’ $300 million-plus purchase of London-based Playfish earlier this month was a clear signal to startups that you can build a lot of value around games that are played on social networks like Facebook, MySpace, and Hi5. Indeed, with more than 14,000 games available on Facebook, and more than 20,000 on the iPhone, it seems clear that social and mobile games are a big part of the future.
“Play is transforming,” says Chris Early, the former general manager of Windows Gaming Technology at Microsoft and a veteran of the game industry. “People are looking to a more connected space.” That means not just multiplayer games, he says, but those where you “feel like you’re playing with your friends, in a more social environment.”
So what does that mean for established game companies around Seattle like PopCap, Big Fish, and WildTangent? Last month, PopCap Games raised $22.5 million in its first outside funding round in its nearly 10-year history. The funds are being used to accelerate global expansion and distribution of its games. It sounds like PopCap wants to expand deeper into other platforms and devices—its Bejeweled Blitz is an example of a hard-fought success in the social realm (on Facebook). Meanwhile, Big Fish Games, a leader in the casual space, has revamped its management team, hiring a new chief financial officer and chief technology officer last month.
What these companies—and other prominent players like RealNetworks (RealGames)—are facing is that casual downloadable games on PCs and the Web are not the be-all, end-all for their business. (You can read about RealGames’ recent effort with mobile game developers here.) The gaming experts I’ve talked to say there is increasing pressure to diversify into mobile and social spaces with a variety of distribution methods and game styles. That’s the key to broadening their customer base, especially in the recession.
A company like Redmond, WA-based WildTangent, which has reinvented itself several times since its birth in 1998, may be in good shape, thanks to its diverse strategy of letting some users pay, while others play for free and are supported by advertising—and the company has had some success as of late in distributing games and acting as an ad network for other games. (See the interview I did with founder Alex St. John here.)
There are two main opportunities for startups in all of this, says Early, who is leading the Founder Institute in Seattle, a mentorship program for entrepreneurs. One is pure game development. It has become easier than before to create a game and distribute it through existing social and mobile channels. “If you make a great game, it could take off and go,” he says.
The other opportunity is in game infrastructure and services—the technological plumbing that allows games to be developed, played, and shared across different platforms and devices. One example in Seattle is Z2Live, which has developed a free, multiplayer platform for social and casual games on mobile devices like the iPhone, and has raised $4 million from Madrona Venture Group.)
But lately I haven’t seen much investment in gaming from locally-based venture capitalists, with the exception of Madrona and Vulcan Capital, which has funded Bellevue, WA-based Smith & Tinker. Early suggests that may be changing. “There is interest from investors,” he says. “I have to explain myself a lot less these days. Familiarity breeds desire and investments.”
“The quick, easy-to-play games are one of the things that will pull the game development market and industry out of the economic crisis quicker than anything else,” Early says. “You can get in and get active with a small group of people, host it on virtual servers, and have a better-than-average shot at making a great business.”