How to Get Investment for Mobile Games in a Mature Market
What’s making more money than ever, but is more difficult than ever to get investment in? Mobile games.
For the first time, mobile is the most successful game platform on a revenue basis. In 2016, mobile games generated $36 billion, exceeding both the console and PC sectors and making the mobile industry a firmly established part of the gaming economy.
But that means getting investment for mobile games is increasingly difficult. Finnish government investment body Tekes—which invests in tech companies and invested in Supercell before it became big business in 2012—reduced its mobile gaming investment this year to its lowest level since 2008. That news, particularly from mobile game mecca, Finland, represents a worrying decline for developers looking for a head start.
To secure an investment, mobile game developers without the clout of King or Supercell need to show that they mean business in terms of game quality and relevance, as well as knowing when to ask for money and having a strong team behind them.
In March 2016 Kopla Games, the Finland-based creators of surprise infinite running RPG hit Nonstop Knight, closed a seed investment round of $750,000. CEO and co-founder Mika Kuusisto thinks that the key to securing funding is to demonstrate meaningful return to investors.
“I think it will be increasingly important to be able to show promising traction (e.g. early retention and monetization) as proof that you are onto something,” he said. “Focusing on that won’t only help you with funding, but it will also validate that you are making games that users want to see before you waste years and millions on something nobody cares about.”
In particular, developers working on free-to-play games, which can deliver returns to investors that paid games simply can’t, should look to soft launch early. This will help a developer determine quickly if the game concept is sound and identify areas where investment may support their cause (e.g. increased spend on servers to support a larger user base).
Spot the trends
Devs can also capitalize on trends in the mobile game industry to secure funding. The growth of new markets, such as South East Asia, offer a major opportunity. With tens millions of players still to enter the mobile gaming market in countries like Vietnam, India and Indonesia, forward-thinking developers could enter these regions early and benefit from the developing markets and making them a prime candidate for investment.
Otherwise, new technology and sectors offer another useful front for developers battling the investment war to fight on. Investment in eSports and VR crossed the billion dollar mark in 2015, meaning that mobile game developers capable of creating entertaining mobile eSports or immersive mobile VR games could benefit from cash flowing into these areas.
Know when to ask for money
Even if a game is good enough to attract the interest of investors, devs should know the right time to pitch for cash. To grow rapidly, devs need an early-stage cash injection. Securing this typically requires a clear plan that will demonstrate value to skeptical investors, and the amount of the round tends to be lower.
Developers interested in securing a larger round of funding might want to consider a more steady growth strategy. The early years might be tight, so devs should identify alternative sources of funding. Devs in the U.K., for example, can apply for game investment funds or local tax relief to stay afloat. In the long run, those developers capable of growing a meaningful games business without initial funding may be better placed to receive larger investments later in their life cycles than faster-growing rivals.
Build a quality team
Finally, it’s important to remember that investors are looking for talented teams to invest in over everything else. For Harry Holmwood, co-founder of mobile gaming company The Secret Police, this is an incredibly important point.
“When raising equity funding, especially as a new startup, you should realize that investors tend to invest in people, and companies, rather than products. An investor from outside the games business won’t know whether your game prototype or concept is good or bad, and even a seasoned VC won’t want to make investment choices based on products—they’re looking for individuals and founding teams who can build a world-class company.”
Moreover, as Tom van Dam, Head of Business Development at Netease, said at Casual Connect, developers capable of showing investors that they are experienced enough to successfully bring a game to market will, ultimately, stand a better chance of getting investment than inexperienced counterparts.
In practice, that means a business needs to cover core competencies (such as game development, back end development, user acquisition) or have clear plans to plug knowledge gaps (e.g. getting an investor to sit on the board to provide business advice). That’ll help a pitch to stand up under the pressure of investors.