Posts Tagged ‘investment’

£10 million to be invested in UK Games Industry

Tuesday, December 8th, 2009

The  trade association TIGA, representing the games industry in the United Kingdom has recently announced that the UK games industry is on the verge of receiving £10 million from government agencies. This investment will also see a £2 million earmark for a prototype fund being administered by Abertay University.

british-pound-collage.previewStemming from the Digital Britain report that was published in June 2009, the commercial potential developed at Abertay will be further enhanced by the new center of excellence in Manchester. The new facilities at MediaCity UK will allow games and creative content developers the opportunity to better understand how gamers use their prototype products. This research and development will then in turn allow gaming companies to further refine these prototypes, with the ultimate goal leading to enhanced success in the competitive marketplace.

The MediaCity UK project is supported by £1 million from the Strategic Investment Fund, with additional funding arriving via individual European Regional Development Fund initiatives in both Manchester and Scotland, as well as the North West Development Agency. The Scottish government alone is contributing close to £1 million. The total commitment to the project is estimated at £10 million.

“This is good news for the UK games industry,” says TIGA CEO, Dr. Richard Wilson. “We particularly welcome the intention to use the funding to invest in prototypes to support new Intellectual Property (IP) development. Finding sources for finance for new IP is difficult at the best of times.”

Wilson continues, “We now look forward to the Pre-Budget Report on Wednesday December 9th. A commitment by the Chancellor of the Exchequer, Alistair Darling, that the Government will introduce Games Tax Relief would demonstrate that the Government is serious about supporting the UK games industry, one of the UK’s leading digital industries.”
£10 million to be invested in UK Games Industry

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Virtual Worlds receive over half a billion dollars in investment in 2008

Wednesday, January 21st, 2009

New market research provided by Virtual Worlds Management reveals that 2008 saw approximately $594M invested in the virtual worlds space.  This capital was invested in 63 companies across the virtual landscape, with $101M going to 13 virtual worlds companies in Q4 alone.  While this in itself is a decent number, it does indicate a decline, with Q1 showing $184M invested, Q2 $161M, and Q3 $148M.

Although figures may be sliding, the youth-oriented virtual worlds sector managed to take home more than 10 percent of the total capital invested: $70.47M, spread across 19 companies.  The majority of this funding occurred in Q1 and Q3.  Possible reasoning behind the variances point to this particular sector gaining massive traction, with some investors speculating that the space is already over crowded, while others seeing the market ripe with potential.

Developers active in the non-youth, i.e. adult virtual world space saw a bit slower growth in their sector.  11 companies saw $47.721M, which, proportionally does better than youth oriented virtual worlds, but is spread out amongst a smaller developer base.  Nurien Software was the biggest winner, bringing home $15M for it’s social network/virtual world/casual games products, FooMojo (no affiliation) saw $9.9M flow through the coffers for it’s virtual pets project (see facebook), and EveryScape landed $7M for it’s mirror world that also introduces an advertising play.  Appealing to a wide audience in platform format, Metaplace added $6.7M to the bank account in 2008.  And while not everyone received funding directly, it’s noteworthy to point out that YoVille, a social networking world virtual world was acquired my Zynga, and Metaversum received an undisclosed multi-million Euro investment for it’s virtual world: Twinity.

Given the current global economic slowdown, these figures shouldn’t really come as a surprise, and I don’t see them as any sign to worry, anytime soon.  Investors are simply responding to current market conditions.  What is interesting to note is that virtual worlds investors have made it quite clear: the value of the marketplace is becoming diluted with more and more players involved.  Instead of a massive influx of investment capital over the course of 2009, I believe we’re more likely to see existing cash being leveraged by virtual worlds leaders to merge or acquire lesser players, and induct their users into these newly forged virtual worlds.  And what’s more, these virtual worlds will aggressively start seeking methods to help them monetize.  fatfoogoo anyone?  Let’s talk.

View the full Virtual Worlds Management report here.

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Guide to Total Economic Return from Virtual Worlds Applications

Wednesday, August 6th, 2008

Strategy Analytics recently released a new study titled, “Defining the Total Economic Return from Virtual Worlds Applications”.  This guide is mean to serve as a better informed roadmap for companies planning their virtual world investments in order to receive larger returns.

“Virtual Worlds have witnessed considerable growth among consumers, but companies have lacked the economic justification, metrics, and process to guide investments,” said Harvey Cohen, President of Strategy Analytics and chief architect of the study, while adding, “Virtual worlds can serve as a strategic catalyst for penetrating youthful markets as well as a checkpoint for demonstrating a company’s focus on innovation.”

Strategy Analytics estimates that there were 46m virtual world users in 2006, 90m in 2007, and projects 137m this year.  Keeping this growth rate in mind, that would place over 1 Billion virtual world users in 10 years time.  Granted, 10 year out projections can be a bit tricky, the general industry wide consensus shows now sign of hindering this explosive growth.  With the average consumer website engagement lasting only a few minutes, the average virtual world experience tend to be 45-50 minutes in duration.

“Companies will require more specific measurement tools in order to continue their investments in virtual worlds,” commented Barry Gilbert, Vice President and Research Director of the Strategy Analytics Virtual World Strategies program. “Multi-billion dollar global brand companies looking to target the global youth market should be investing a minimum of one percent of their advertising and promotional budget in virtual worlds.”

The downside of the report finds:

This report finds that many companies have found that investments in virtual worlds have not met expectations. Their problems begin with poorly implemented media strategies that do not include virtual worlds as part of an integrated PR and promotional effort, and end with a lack of understanding of the appropriate metrics for assessing economic impact. [...]

While companies can access virtual worlds with a small development investment, they often find that building and sustaining consumer momentum requires an on-going budget of at least 60% of their initial investment.

Strategy Analytics is quick to point out that the traditional ‘build it and they will come’ approach has been many top brands downfall.  Unfortunately, the virtual world landscape is littered with grandiose building (marketing) projects that have simply been set up, with little to no engagement and/or follow through from these brands.

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