Matthew Roszak

In The Press Blog

Game companies raise record $1.05B in 2010, up 58 percent

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ame fundings broke a record this year as 91 companies raised more than $1.05 billion in 2010. That number is up 58 percent from a year ago, based on VentureBeat’s own research.

We found that 115 game companies raised a total of $663.1 million in 2009. And in 2008, 112 game companies raised $936.8 million. That means that venture capital funding for games has never been bigger.

That’s a big change from years ago, when venture capitalists were afraid to invest in games because they were a lot like Hollywood movies, where it was too hard to pick the hits. But the big trend that continues to drive the investments is the theme of disruption. The traditional game business is being disrupted by the popularity of social games on social networks like Facebook.

Major VC firms such as Sequoia Capital, Kleiner Perkins Caufield & Byers, Andreessen Horowitz, and others all put their money behind game companies this year. Private equity firms such as Providence Private Equity Partners and Temasek Holdings also dove into the biggest deals. John Doerr (pictured right) of Kleiner Perkins, the “Michael Jordan of venture capital,” even said that his company’s investment in Zynga was its best ever.

Mobile gaming is coming into its own as a major platform for games. With Rovio’s Angry Birds, the iPhone has now had its first major mega-hit. It’s still not anywhere near as big as Call of Duty Black Ops, the blockbuster combat game that generated $1 billion in six weeks. But the numbers of downloads — more than 50 million to date — is becoming impressive.

And digital distribution is disrupting traditional game retailers as new players come in with Netflix-style businesses. New business models such as virtual goods are also giving users the option of playing for free until they find something in a game that they want to purchase.

In each of these categories, there are now entrenched leaders. Zynga’s $150 million raise from SoftBank builds on its $180 million in venture capital raised last year. It will be hard to fund social game startups that can compete effectively with Zynga. But companies are still trying.

Investors and startups alike are no doubt inspired by the big transactions that have taken place, such asDisney’s $763.2 million purchase of Playdom and DeNA’s $403 million purchase of Ngmoco (the Ngmoco celebration is pictured above). Those prices are fueling a Gold Rush mentality.

We’ve chronicled the Gold Rush religiously ourselves but have also pulled data for these fundings from the internet at large, the EngageDigital site, and the National Venture Capital Association.

These fundings mean lots of innovation ahead and continued employment for game industry veterans. As we noted before, not all of these companies will last. But the successful ones will create revenues, profits and jobs in the years ahead.

We’ve ranked them here in order of the amount of money raised, and I’ve linked to our coverage. Fundings where the amounts weren’t made public are listed at the end. If you’ve heard of others, please note in the comments and we’ll add them to the list. The list includes companies that raised funds in prior years but disclosed for the first time in 2010. It’s likely that some companies from last year’s list or this year’s have gone out of business. If so, let us know in the comments.

Once again, we acknowledge our method is imperfect. As was the case last year, we have lots of deals where we don’t know the exact amount raised (we have listed them alphabetically at the end). We know that Mentez raised a substantial round, but the exact amount wasn’t disclosed, and so it is not included in our figure for 2010. And one of the big mysteries was the rumor that Google had invested $100 – $200 million in Zynga; but the two companies never announced the deal, leading some to believe that it wasn’t finalized. We expect that we’ll be revising the list upward in the coming weeks as we add more deals that we didn’t know about.


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