$1,7 billion invested into Online Games and Related Entertainment in years 2007-2008

Note: This is Part 1 of a two part post. Part 2 with detailed analysis is also available. Cross-posted also at T=Machine.

Roughly a month ago I published a list of $350 million invested in year 2008 into virtual worlds, casual MMOs, and casual & social games. The blog post got a lot of coverage when it was published and Adam Martin of T=Machine contributed to the discussion and posted his own list which had a lot of European deals. We decided that the right thing to do would be to put those lists together. I also continued to search for further data and uncovered more deals from e.g. Avista Partners’ monthly video game briefing. I wanted to also see what the total “game-like” segment looked like, so I expanded my criteria to include core gaming MMORPGs, relevant technology providers and ecosystem players (e.g. payment processors). When I had all the data in and summed it up, I was totally and utterly amazed at the massive scale of investments.

Investments total $1,7 billion in years 2007-2008

The Online games and Related Entertainment segment has amassed a truly astounding $1,7 billion of VC investments in years 2007-2008. Of this staggering figure $625 million was invested into the “Virtual Worlds, Casual MMO, Social games and Casual games” sector, $712 million was invested into core gaming MMORPG sector and a further $326 million into related companies (e.g. technology and payment providers).

The diagram below shows the distribution of investments over the years 2007-2008 and the three sectors:

total-category

The $712 million invested into MMORPG developers/publishers reflects the high cost to play in this space. The cost of the development of a Triple A core gaming MMORPG starts at $50 million, but can easily skyrocket. The reason these high risk investments continue to be made are the 11 million subscribers of World of Warcraft. WoW’s revenues in year 2007 were $1100 million of which $517 million was pure profit. The lackluster success of recent entrants such as Age of Conan and Warhammer Online underlines how risky taking on WoW is, but despite this the lure of WoW-scale profits will definitely continue to draw entrants.

The biggest deals of venture funding in MMORPG sector were:

The biggest deals of venture funding in the Virtual Worlds, Casual MMO, Social and Casual games sector were:

Detailed analysis of this sector is available in Part 2 of this post.

Finally, the biggest VC fundings in the Other related sector were:

The data

The data on VC investments has been collected from publicly available sources including but not limited to

The data was gathered by Jussi Laakkonen and Adam Martin. The data is most accurate for year 2008. Year 2006 and earlier years have been only covered sporadically and typically only for companies that have received follow-up funding in years 2007-2008. The data is provided AS IS and the authors make no warranties or guarantees about its accuracy.

Download the spreadsheet:

Note: a spreadsheet with categorizations is available in Part 2.

cc-by-nc The data is licensed under the Creative Commons Attribution, Non-Commercial license.

The analysis – tomorrow

A deeper analysis of the VC activity in this segment is available in Part 2 of this blog post. My analysis focuses on the Virtual Worlds, Casual MMO, Social and Casual games sector, as this is the sector in which my company Everyplay operates. Topics covered on Part 2 include:

  • Monthly investment rates (peak months, current activity)
  • Most active VCs uncovered
  • Analysis on investments on company categories, deals stages and deal sizes
  • Updated data spreadsheet with company categorizations (subjectively assigned)
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15 Comments on “$1,7 billion invested into Online Games and Related Entertainment in years 2007-2008”

  1. joaach Says:

    Good job Jussi and Adam! Very comprehensive data. Looking forward to the analysis :)

  2. Lasse Hyyti Says:

    Great list, thanks Jussi & Adam!

    Here’s one I did not find on your list:

    http://corporate.powerchallenge.com/news.php


  3. [...] Social games, entrepreneurship and more Jussi Laakkonen’s blog « $1,7 billion invested into Online Games and Related Entertainment in years 2007-2008 [...]


  4. [...] have a read at the full analysis into the investments by Jussi Laakkonen of Everyplay – Part 1 and Part [...]


  5. [...] The MMOG market continues to be very hot, and possibly all but impervious even to our current economic chaos.  I continue to see MMOGs in development for ever broader demographics and more obscure (or focused) niches.  Despite the difficult times for some and the demise of others, investment and development in this area continues to be strong. [...]


  6. [...] Is the VC model broken? (It’s been published a while ago, but still interesting to watch. Can it mean an opportunity for the few cash-rich publishers to play a bigger role in funding?). Also, don’t miss Jussi’s and Adam’s article about online-game related VC investment defying dowturn in October. [...]


  7. [...] above also deals in the related sectors to showcase the VC company’s participation in the total $1,7 billion invested in years 2007-2008. Please note that investments in the related categories MMORPG and technology etc) are only shown [...]


  8. Nice job done man…Iam going to analyze that all informative data.
    online video guide


  9. [...] that comes with handy excel spreadsheet listing a ton of deals, so you may want to look into that. http://jussilaakkonen.wordpress….Unfortunately I haven't had the opportunity to update it since, so it doesn't have year [...]

  10. Quora Says:

    Who are the most active investors in game companies?…

    A couple more active game investors USA: – Tim Chang / Mayfield – Mitch Lasky / Benchmark – Shervin Pishevar / Menlo – In Sik Rhee / Rembrandt Europe – Ben Holmes / Index – Kevin Commolli / Accel Partners – Guillaume Lauteur / IDInvest – Roberto Bonanz…


  11. Very good article. I certainly love this site. Thanks!


  12. i ofen see good site but yours are great


  13. I was very happy to find this web site.
    I need to to thank you for your time due to this wonderful read!!
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  14. igrice Says:

    Hard to imagine so much money going into gaming.


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