I 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.

I 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.

I 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

> 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-20006...

Agreed. It is possible to make money in video games while treating customers with respect. This is the way! (and what EGG looks for because it builds stronger IP and longterm retention and good will)

I helped Indie Fund Hollow Knight back in the day and look a them now!

Well said!

Great 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.

Aren't games like CSGO, FIFA, and Overwatch almost exclusively run on gacha-profits?

I think it is possible to be successful in games without being predatory. Humble Bundle was a demonstration of that.

I don’t believe that ultra-predatory mechanics are long-term sustainable. They usually yield a “ring of fire” effect that creates a growing ring of users for a while but really you’re burning out all your core users and will implode. This is how many describe the original Zynga model.

Supercell (founded around the same time) has cultivated longterm ecosystems and IP by respecting their players.

EGG takes a similar long-term perspective.

>I don’t believe that ultra-predatory mechanics are long-term sustainable

I don't think they're trying to be. I think they're whale hunting, find a few high spenders, and milk them for all they're worth. Then they spin up a new IP (or license one out), rinse and repeat

Yes they are. The implementation tends to differ from how eastern-developed gacha games work, but they're making billions from virtual slot machines nonetheless.

Yeah, 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.

...I think I mixed up East and West oops

Overwatch is not

Didn't they bring back loot boxes?

Yes, but you basically can't pay for them. Revenue is basically all from direct cosmetic sales or the battle passes

I see. You can remove 'Overwatch' from my original comment and the point still stands, but I do appreciate the fact check. I know Blizzard from HearthStone and Diablo....not great experiences with gacha there haha (Diablo Immortal, atleast), but those are far from the most popular Eastern games

The battle pass contains loot boxes though, right?

Yes

You'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.

Games are a zero marginal cost industry driven by hits. The cap is pretty high. The floor is what you should be worried about.

FTR, 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.)