The gaming industry is valued at $37.5b by some measurements and growing. The Asian Pacific market is expected to be nearly $19b by 2011. 81% of American youth play video games at least a month. Despite such staggering numbers, if you read the words of Electronic Arts CEO, all is not rosy. Games are becoming too complex, too involved and alienating the mass-market. Their producers are also failing to innovate. So said John Riccitiello in Yesterdays Wallstreet Journal where he was quoted commenting that the industry is "making games that are harder and harder to play" and that "for the most part, the industry has been rinse and repeat." And he’s right.
Statistics show the competition for leisure time and entertainment is incredibly fierce and even with convergence in hardware (which now include DVD players and Internet connections) helping expand the gaming marketplace in some ways, the same competition is requiring game publishers and developers to tread carefully; mistakes are costly. A missed opportunity to get a game to market (e.g. a gamble on the wrong platform) or a weak showing from a game with expensive development costs could be a heavy drag on revenues for months.
Trion World Networks, a gaming company formed in 2006 by a former VP at Electronic Arts and a best selling game developer is hoping to provide a new experience for gamers by blending live media programming with interactive multiplayer gaming. In a way, they are hoping to provide at least one creative answer to Riccitiello’s call to arms.
Aiding the effort, Trion announced an enormous financing. The $30m round (presumed a B round) was led by Rustic Canyon but also includes contributions from corporate partners including Time Warner, GE/NBC Universal (via Peacock Equity) and German publisher Bertelsmann’s investment vehicle BDMI Invest (aka Bertelsman Digital Media Investments).
Much of the funding will likely be earmarked for development costs. Trion is focused not only on game development but also on infrastructure design to optimize performance, cost and scalability; necessary components of any large, distributed multi-player game. They partnered with HP in February; presumably to gain access to server and storage hardware that can act as a central hub for their interactive gaming platform. Theoretically, gamers playing on an Xbox, Wii or Playstation will be able to interact and play against each other by connecting through this hardware with their games onboard Internet connection.
Trion hasn’t characterized its target market as being the rapidly growing niche of Massively Multiplayer Online Games nor have they used the buzzword Casual Gaming which is also growing in popularity. Still, partnership and statements indicate, even if the buzzwords are missing, that MMOGs seems to be a stop on their roadmap. (Though with no product to market, its pure speculation to guess exactly where they are up to.)
Whatever the buzzwords, a lot of money is going into distributed (or networked) multiplayer games. Just a few weeks ago, K2 Network received a, then large seeming, $16m Series B investment from investors including Intel Capital and Khosla Ventures. That, now, pales next to this transaction.
The games to come from these different publishers may vary dramatically in focus and playability, but the size of the investments makes it clear investors are excited about this market opportunity. It may be market sizing (revenue potential and customer base) that has them turned on, or maybe it’s the fact that the network hardware infrastructure required poses a significant and defensibly barrier to entry, or maybe its something else. Whatever it is – this area of gaming is one to watch.
Trion is located in Redwood City, CA, a stones throw from Electronic Arts. They also have a development office in Austin, Texas. The press release for the company regarding the financing can be found here.