Gaming is eating the world.
So says a new report issued Tuesday by L.A.-based investment firm MaC Venture Capital.
The report mentions the recent explosion of gaming companies – including Epic Games' $1.78 billion raise that valued it at $17.3 billion, Unity's $1.3 billion IPO that valued the Epic competitor at $13.7 billion and Roblox's $150 million fundraise that valued the kid's gaming "sandbox" at $4 billion — and that was before the pandemic boosted Roblox's user base.
But most of the analysis is devoted to the techniques and tools that gaming has popularized over the years, and that are fast proliferating into areas as diverse as retail, film production, medicine and national defense.
<p>MaC, an early stage firm formed from a merger of Cross Culture Ventures and M Ventures, invests in tech companies it believes will benefit from shifting cultural trends and behaviors. </p><p>Underlying much of the firm's optimism around the gaming industry is its maturity, general partner Michael Palank told dot.LA. Multiple generations have now grown up with gaming, from early Nintendo consoles to mobile games and newly immersive platforms like Fortnite. That familiarity has pushed the mechanics of video gaming – taking action, leveling up, expanding your in-game persona – far beyond a traditional leisure activity, he said.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDQ0ODEzMi9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0NTM3NzU4NH0.smnfODhQF1R6u7DG6hFObQUgeYtTXCCo5PZ0FDXEVLE/image.png?width=980" id="106ff" class="rm-shortcode" data-rm-shortcode-id="e8e682434867792bdc797b5bf1a7ee8d" data-rm-shortcode-name="rebelmouse-image" />
<small class="image-media media-caption" placeholder="Add Photo Caption...">A graph from MaC Venture Capital's report highlights gaming's growth in 2020.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Image from MaC Venture Capital</small></p><p>In addition to merging into other sectors, those tropes are starting to inform how people operate in new spaces, including what industry observers have termed the "metaverse." MaC sees this space as a virtual world "where we will not just play games but socialize with friends, shop, learn, earn a living, perform, transform, travel and escape.<br/></p><p>"Many believe that the metaverse will not only be the next great computing platform — one that rivals the internet itself — but also a virtual world where billions of people come to transact trillions of dollars," the report says. </p><p>The ubiquity of gaming has created a stronger desire among consumers to be able to participate in their content. </p><p>And, especially among young people, the way one's digital self is presented to the world is closing in on its real-world analog. </p><p>"Your inventory of items, the character you play with, the skins you have, the avatars you choose – these things are becoming as important as wearing a Starter jacket was when I was in high school," Palank said.</p><p>MaC is currently raising capital for its next fund; Palank said he expects about 25% of it will be deployed to gaming.</p><p>The report, entitled "<a href="https://macventurecapital.com/in-the-news/stcgaming/" rel="noopener noreferrer" target="_blank">The State of Technology & Culture: Gaming Takeover</a>," touches on gaming's darker side as well, including its issues with misogyny and a lack of diversity among developers and characters. This, despite the fact that people of color have a proportionately higher engagement with gaming, as the report details. </p><p>"There is a lot of work to be done to ensure that this new gaming-influenced world is the kind of world in which we want to live," the report states.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<a href="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU3MTIzMy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxODg2OTMxOX0.uVtWcp3syyDKzC5fSNSW_6iNjGLSaAuTLnr0WPu85Q0/img.jpg?width=980" target="_blank"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzU3MTIzMy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxODg2OTMxOX0.uVtWcp3syyDKzC5fSNSW_6iNjGLSaAuTLnr0WPu85Q0/img.jpg?width=980" id="4320d" class="rm-shortcode" data-rm-shortcode-id="8bab1ab029d743755463ebdf5e99fe26" data-rm-shortcode-name="rebelmouse-image" /></a>
<small class="image-media media-caption" placeholder="Add Photo Caption...">PlayVS employs has key relationships with educational institutions as well as partnerships with major game publishers including Riot and Epic.</small>
<small class="image-media media-photo-credit" placeholder="Add Photo Credit...">
Image from PlayVS
</small>
</p><p>As for what MaC will actually do to avoid a world of underrepresentation and gaming addiction, among other potential problems, the firm's partners ascribe to a philosophy of "investing in the future that we want to see," Palank said.<br/></p><p>For example, Cross Culture Ventures was an early investor in PlayVS, <a href="https://dot.la/playvs-high-school-esports-2647048099.html" target="_self">a company that enables high schools and colleges to run esports programs</a> and participate in leagues and tournaments. Palank pointed to the priority that PlayVS places on increasing access to gaming as one reason the firm found it appealing. The company was founded by Delane Parnell, who is Black.</p><p>"If it were a team that didn't care or know about diversity challenges in gaming and had no passion about rectifying those issues, I think PlayVS would have been a less attractive investment," Palank said.</p><p>The report also highlights L.A.-based <a href="https://glowup.games" rel="noopener noreferrer" target="_blank">Glow Up Games</a> and <a href="https://dot.la/run-by-ex-jam-city-executive-robin-games-raises-7-million-to-build-lifestyle-games-2645528288.html" target="_self">Robin Games</a> as companies poised to bring more diversity to the industry. </p><p>Los Angeles is likely to play a big role in the firm's investment strategy. Palank said he expects at least half of the fund's future bets will be L.A.-based. </p><p>MaC's L.A.-based investments in gaming also include Artie, which is <a href="https://dot.la/artie-2647773915.html" target="_self">seeking to change how mobile games are distributed</a>; FazeClan, whose <a href="https://dot.la/faze-clan-2646120733.html" target="_self">culture-shaping initiatives</a> include retail, esports and content production; and Within, whose <a href="https://wonderscope.com" rel="noopener noreferrer" target="_blank">Wonderscope app</a> is designed to give kids AR-enabled interactive story experiences.</p>
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- L.A.-based Artie, which began in 2018 as a platform to help game publishers build AI-enhanced video game characters but shifted its focus to enabling a distribution method that allows game publishers to circumvent app stores, has reopened its seed round.
- The company plans to go to market later this year with celebrity and IP partnerships, then start attracting third-party game publishers and players to its platform with its distribution technology. In the long run it hopes to grow its user base with its original focus of AI-for-gaming features.
- Artie has raised $8 million from investors, including the founders of Zynga, Shutterstock and YouTube; Warner Music Group; Jeffrey Katzenberg's WndrCo; and three L.A.-based venture firms including Scooter Braun's Raised In Space.
In late 2018, Ryan Horrigan and Armando Kirwin set out to bring to life video game characters who could see and understand and interact with the gamers on the other side of the screen. They quickly recognized a problem that has now taken the tech world by storm: App stores create friction.
<p>After shifting their business model to address that problem, L.A.-based Artie raised a $3.1 million seed round in March, bringing its total funding to $4.5 million. COVID delayed Artie's launch plans, so the company reopened that seed round in August. It has since raised an additional $3.6 million, Horrigan told dot.LA., with the potential to tack on another $1 million before it closes the round in the next week or two. </p><p>For the co-founders, the problem with the app stores was not just the 30% cut that Apple and Google take from game publishers – a central concern of the <a href="https://www.vox.com/recode/2020/8/20/21373780/fortnite-epic-apple-lawsuit-app-store-antitrust" rel="noopener noreferrer" target="_blank">ongoing legal battle between Apple and Epic Games</a>. Also at issue was that mobile gamers – <a href="https://newzoo.com/insights/articles/newzoo-games-market-numbers-revenues-and-audience-2020-2023/" rel="noopener noreferrer" target="_blank">who provide the majority of the $150 billion+ gaming industry's revenues</a> – wouldn't be able to access Artie's AI-enhanced games without having to download a separate application. They couldn't just click on a link inside Instagram, TikTok or Facebook and start playing. </p><p>So they built technology to solve this. </p><p>Artie plans to charge game publishers 12-15% – at least 50% less than what Apple and Google charge – and offer them a platform to build high-quality games and reach players directly inside of their social media apps and messaging platforms.</p><p class="shortcode-media shortcode-media-rebelmouse-image image-crop-4x3">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDQzMTk0NS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxNjEwMzM0Nn0.hdV3IXT0vfCMoR_SwuALJ4xIppemh4po6k4p8WqKNDI/image.jpg?width=2000&coordinates=0%2C187%2C0%2C312&height=1500" id="36b08" class="rm-shortcode" data-rm-shortcode-id="a5c8c2a508e8b2611b6b3b24792dc823" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption..."> Armando Kirwin and Ryan Horrigan are the co-founders of Artie.</small></p><p>This approach is meant to offer game developers two big value propositions. One is financial. Developers obviously save money from the lower platform fee. Horrigan also said Artie hopes to streamline mobile gamers' game-discovery process by providing them instant access to a game without their having to leave whatever app they're on, go to an app store and download a new one. That, they hope, should increase the rate at which users decide to try out a new game. These factors, Horrigan said, should in turn lower publishers' costs of acquiring new players.<br></p><p>In some cases, publishers can also monetize their games more easily when they circumvent app stores. Apple, for example, <a href="https://www.facebook.com/fbgaminghome/developers/best-practices/monetization" rel="noopener noreferrer" target="_blank">restricts games' ability to make money via in-game purchases</a>: things like jealousy-inducing outfits to dress up one's virtual character or paying to accelerate the rate at which one can progress through a game. This revenue stream is particularly important for tapping the "whales," the <a href="https://medium.com/shopify-gaming/mobile-gaming-is-a-50b-industry-but-only-5-of-players-are-spending-money-f7f3375dd959" rel="noopener noreferrer" target="_blank">small percentage of gamers</a> who <a href="https://www.blog.udonis.co/mobile-marketing/mobile-games/mobile-games-whales" rel="noopener noreferrer" target="_blank">supply an outsized proportion of mobile gaming's revenue</a>. </p><p>The other benefit that Artie's approach is meant to provide developers is the opportunity to produce higher-quality games. Although both Facebook and Snap have recently made gaming a larger part of their platforms – <a href="https://www.nytimes.com/2020/08/07/technology/facebook-apple-gaming-app-store.html" rel="noopener noreferrer" target="_blank">though not without controversy</a> – the games on those platforms are largely written in HTML5, a coding language that works well for simple games but <a href="https://www.mcvuk.com/business-news/mobile/develop-live-unity-vs-html5/" rel="noopener noreferrer" target="_blank">less so for more complex games</a>. Allowing publishers to write in Unity, by contrast, may help Artie to attract more skilled programmers, Horrigan said.</p><p>Lots of big names have bought into Artie's vision. Investors in the latest $3.6 million extension include Mark Pincus, founder of mobile gaming giant Zynga; Jon Oringer, founder of stock-image provider Shutterstock; Harris Blitzer Sports & Entertainment, a holding company whose assets include the Philadelphia 76ers and New Jersey Devils; Winklevoss Capital (yep, those guys); and a syndicate of NFL and NBA players whose names Horrigan would not disclose. </p><p>Earlier investors include Chad Hurley, founder of YouTube; Warner Music Group; Peter Thiel's Founders Fund; WndrCo, Jeffrey Katzenberg's investment firm; media analyst and investor Matthew Ball; and L.A.-based venture firms MaC Venture Capital, Muse Capital and Raised In Space, which was founded by entertainment entrepreneur Scooter Braun and is the lead investor in Artie's seed round.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
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</p><p>"The most inspiring thing about the gaming space is that whenever a new format, device or access model is found, we see substantial growth that doesn't require cannibalizing old revenue streams," Ball, who has <a href="https://www.matthewball.vc/epic-gamesfortnite" target="_blank">written extensively on gaming</a>, wrote to dot.LA. "In Artie, I see a highly skilled and technical team that I think can deliver; a thesis that's compelling to content owners, developers and players; and an opportunity to build both defensible tech and potentially a studio, too."<br></p><p>Investors surely noticed that Playco, a Tokyo-based mobile gaming company with a slightly different approach from Artie but a similar goal of reducing distribution friction, <a href="https://techcrunch.com/2020/09/21/playco-launch-funding/" rel="noopener noreferrer" target="_blank">launched this week</a> <a href="https://techcrunch.com/2020/09/21/playco-launch-funding/" rel="noopener noreferrer" target="_blank">already as a unicorn</a>. </p><p>Artie plans to start by releasing its own games at the end of this year and beginning of 2021. </p><p>It then hopes to build traction by launching with well-known intellectual property and celebrity partners to leverage their social media followings. Horrigan said he could not share specifics due to non-disclosure agreements, but these include a popular superhero brand, widely recognizable cartoon characters, a superstar athlete and a famous musician. </p><p>Later on next year, Artie will open up its platform to third-party game developers.</p><p>The next-generation AI enhancements that were once the company's central focus will be available to developers, but the features that allow players to interact with characters via voice, text and the camera will be optional. </p><p>Horrigan likened the strategy to what Niantic, the developer of Pokémon Go, has done with its third-party developer approach. The Bay Area company's development platform is <a href="https://venturebeat.com/2019/11/06/niantic-sets-up-10-million-third-party-developer-fund-and-names-first-dev-contest-winner/" rel="noopener noreferrer" target="_blank">available to external developers</a>, who may use Niantic's AR functionality but can also simply leverage its location-based technology that is arguably more essential to the gotta-catch-em-all gameplay experience. </p><p>The goal for Artie, Horrigan said, is for the distribution technology to help the company build a flywheel wherein the more developers it attracts, the more players will come, which will attract more developers and so on.</p><p>The longer-term vision, though, is to retain and grow that player base with the hyper-personalized, artificially intelligent game features. </p><ul class="ee-ul"></ul><p>With this extended seed round, it's game on. </p><p>---</p><p><em>Sam Blake primarily covers entertainment for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA</em><br></p>
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Our second Virtual Pitch Showcase was devoted to startups in the gaming industry. Founding entrepreneurs from Artie, Squab Gaming and RCT Studio pitched to Peter Levin, managing director at Griffin Gaming Partners and Gregory Milken, managing director at March Capital Partners.
<h2>About the Companies</h2><p>
<a href="https://www.artie.com/" target="_blank"><strong>Artie</strong></a> is a platform for next-gen interactive content that is hyper-personalized, exponentially engaging, and can be shared and played instantly inside of popular apps like Instagram, Facebook, Snapchat, Twitter, YouTube, and Twitch, with no app download or integration needed. Our team includes AI scientists, engineers, and interactive storytellers from Activision/Blizzard, Infinity Ward, Disney, DreamWorks Animation, Snap, Mozilla, and Facebook. Our seed investors include Scooter Braun's Raised in Space, Jeffrey Katzenberg's WndrCo, Founders Fund, Warner Music Group, Shrug Capital, YouTube co-founder Chad Hurley, angel investor Cyan Bannister, and top executives from Twitter, Amazon, and Square.
</p><p>
<strong><a href="https://rct-studio.com/" target="_blank">rct studio</a> </strong>is a next-generation creative studio and interactive entertainment company, harnessing the latest in Artificial Intelligence to offer truly immersive VR experiences. Powered by the company's Morpheus engine, the technology instantly mines millions of data points from a vast repository of storylines and human behaviors to create realistic stories with an almost infinite amount of endings. With the ability to slash production costs and development time, whilst unleashing boundless creativity, rct is revolutionizing the way people tell and consume stories.
</p><p>
<a href="https://www.squabgaming.com/" target="_blank"><strong>Squab Gaming</strong></a> is a marketplace for video game players to hire on-demand gaming partner in 3 clicks. Gamers can easily find their perfect teammates at anytime. Squab Gaming also provides expert players an opportunity to make money from the games they are good at. Squab Gaming essentially fills the gap in the current esports ecosystem and makes it more sustainable.
</p><h2>
About the Judges
</h2>
<img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzE1NTQ5OS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzMTU1NDE2OX0.WKkeaKpNSkwdLKmxKrIjzFC3nrmTz-BOIr-2Gmvqcww/image.jpg?width=980" id="0ef69" class="rm-shortcode" data-rm-shortcode-id="fcde63a77005d7cebe222028cb65524b" data-rm-shortcode-name="rebelmouse-image" />
Gregory Milken
<p>Gregory Milken is a Managing Director at March Capital Partners, where he focuses on investments in gaming. Gregory has led March Capital's investments in broadcasting solution Genvid Technologies, esports organization Immortals Gaming Club and game developers Nifty Games, Dorian and Knock Knock.</p><p>Prior to March, Gregory was an active angel investor for companies such as Viagogo and Small Giant Games. Gregory has over 15 years of entrepreneurial and operational experience. He was the co-founder and COO of AltEgo, a cloud-based technology and gaming company. Prior to his work in technology, he worked in strategy and operations for Knowledge Universe Education, new business development at Warner Bros. in Hong Kong and London, and at Twentieth Century Fox.</p><p>Actively involved in philanthropy, Gregory currently serves on the Board of Overseers for Penn's Graduate School of Education as well as on the boards of the Milken Institute and the Milken Family Foundation.</p><p>Gregory received his M.B.A. and M.A. in International Policy Studies from Stanford University, as well as a B.A. in Asian Studies and a B.A. in International Relations from the University of Pennsylvania.</p><img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzE1NTUxMi9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzOTE1NTU2NH0.t2QhE17x_Loe2axrlnNEcpFjAkVch6JmE4AwrZzJjjA/image.jpg?width=980" id="40bd6" class="rm-shortcode" data-rm-shortcode-id="38196d30dbdbd6f30c5b0589c23d6ce4" data-rm-shortcode-name="rebelmouse-image" />
Peter Y. Levin
<p>Peter serves as Managing Director at Griffin Gaming Partners, an early and late stage investment vehicle singularly focused on the video game sector.</p><p>Prior to Griffin, Levin served as President of Interactive Ventures, Games & Digital Strategy at Lionsgate.</p><p>He is the former CEO & Co-founder of Nerdist Industries, a multi-platform creator of genre and popular-culture content, as well as the former Co-President of Digital Strategy at Legendary Entertainment. </p><p>Nerdist Industries was acquired by Legendary Entertainment in July of 2012. Levin serves as Chairman of Immortals Gaming Club and serves on the Board of Directors of N3TWORK, Wizard Labs and Next Games. He also serves on the Los Angeles Sports & Entertainment Commission Board of Directors. </p><p>Previously, Levin was founder and co-owner of the 2006 World Champion Chicago Rush of the Arena Football League. He was also a minority partner in and strategic advisor to Strikeforce, a mixed martial arts promotional entity, that sold to the Ultimate Fighting Championship in 2011. In June 2009, Levin served as the exclusive representative of Deadline.com in its sale to PMC. Levin is the founder of Course of the Force, an annual Olympic torch-style lightsaber relay in partnership with Lucasfilm Ltd. that led up to San Diego Comic Con International and benefitted the Make-A-Wish Foundation. </p><p>He also serves on the Board of Governors at Cedars Sinai in Los Angeles and co-teaches a competitive gaming course at the USC Annenberg School of Communication and Journalism.</p>From Your Site Articles
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