Earlier this month VentureBeat’s Dean Takahashi sat down with veteran VC Tim Chang to discuss what’s hot and what’s not hot in the gaming sector.  As it turns out, one of Chang’s top properties to watch is “white-label engines that fulfill functions such as software-as-a service for virtual worlds”, sound vaguely familiar?

Tim Chang is a principle at Norwest Venture Partners and focuses on digital media, mobile, and Asia Pacific investments.  He has been involved with VC for over ten years, working with Idealab, Gabriel Venture Partners, and joining Norwest in 2007.

Jumping right in, Chang says that the largest ‘cooling off’ of investment capital in the gaming sector is in the in-game advertising market.  While the market is still going strong, Chang sees less and less VC money headed in that direction due to the product being past its peak hype cycle.  Remember, Massive, now owned by Microsoft kicked off the hype cycle when they were purchased for an estimated $400 million.  This purchase set off a deluge of big names buying up hot in-game advertising firms including Google snapping up Adscape, and lest we forget about rapidly becoming big players Double Fusion and IGA Worldwide.

On the opposite side of the spectrum, Chang is quick to point out an industry that is still in it’s peak hype cycle is social games.  Players in this category include Zynga, RockYou, and Playfish.  Another hot topic according to Chang is engines that make high quality, 3D graphics, browser based games a possibility.  Players in this arena include Unity and InstantAction.  Don’t forget that this is also technology that David Perry and the Acclaim crew are keen to nail down.  And last, but certainly not least, Chang points a finger at what he calls, “white-label engines that fulfill functions such as software-as-a service for virtual worlds”.  If that notion of a white-lable SaaS sounds vaguely familiar, that is just one of the offerings that fatfoogoo makes available to it’s customers.

A bit further in the interview, Tim goes on to say that gaming companies and studios of the not-so-distant future will combine talent from both social networking startups and established game companies.  These companies will then be far more likely to explore various alternative monetization models including free-to-play, virtual goods, microtransactions based money makers, as well as hybrids of subscription/free-to-play models.

So despite Barry Gilbert’s recent forecasting of Doom and Gloom in kid based virtual worlds, it seems as though there’s still a very bright future ahead for both free-to-play, microtransaction based games and the technology that powers them.

While you’re here, why not find out a big more about fatfoogoo’s white label offerings, and get in touch?

This entry was posted on Friday, March 13th, 2009 at 1:00 pm and is filed under industry news. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.