Above: MIGS 15 party at Execution Labs.
Della Rocca: We’re looking at games that have the potential to move or originate in the eSports context. Related to that is Twitch and all the impact YouTube streamers and celebrities have had. It takes a different mindset as far as how you market a game, develop community, and think about how a game is going to reach your audience. You have to design it in a way that’s not just fun to play, but fun to watch someone play.
I don’t have current statistics, but we’re getting to a point where some games are more watched than they are actually played. That spectator activity is what drives the success of those games. Designing games in that context is an interesting challenge, and we’re certainly keeping an eye on it.
GamesBeat: How would a startup approach esports? Some of the biggest successes in esports now are the biggest brands from the biggest companies, like Call of Duty.
Della Rocca: Like almost every sector—All the big ones started as small ones. On the esports side, it’s very community-driven. If you look at ESL and the other leagues, they do have the farm leagues, the amateur leagues, where it’s players that brings the games forward. If there’s enough of a community around a game, they can use the tools and sites to form leagues and so on. The community can drive interest until something gets enough momentum.
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If you’re a startup and you’re designing your game in a very intentional manner to drive that kind of interest and engagement, you do have the possibility for it to come up grass roots. We were recently doing research on this topic. You can’t come in at the top level. You can’t buy your way into being a competitive game. It has to come from the ground up. That’s feasible for a startup.
Alloul: You have a very good example of a startup that’s not really a startup anymore, the developers of Vainglory. They created a presence and a niche in competitive multiplayer, and then created their own league afterward.
It has to be noticed that this company was heavily funded, but that goes back to the question of how you attract the capital investment to tackle a new challenge. It goes back to my initial point about building relationships, building a track record, and gaining a reputation. That’s what they did.
Zhu: esports is a very hot topic. China has become the largest mobile game market in the world, passing the U.S. and Japan already. esports are getting hotter there as well.
The core thing for esports, to me, is still the game itself. Back in 2014, CMGE launched the first mobile FPS game in China, which was very successful. It’s called Crisis Action. The DAU figure is around 5 million, and it generated $8 million in just five days after launch. This year we’re organizing clubs, professional teams, and working with live broadcasting and streaming partners to build up the ecosystem around it.
We also have plans to release our own MOBA title in China, which is going to be very different from games like Vainglory or Call of Champions. It’s meant to be much easier to play on a mobile phone – better UI, better UX, and better compatibility with more than just high-end mobile phones. We want to be able to reach mid-tier and low-end phones. That’s an important factor.
Above: MIGS 15 venue at the Palais de Congres in Montreal.
GamesBeat: How many people in the room are raising money for a game company? Not as many as I would have thought. I’m curious about what advice you’d have for people about different sources of capital these days. A lot of the money used to come from successful developers or publishers or first parties. Now we have all kinds of sources – angels, venture capitalists, crowdfunding. We have strategic investors like Intel, Oculus, and Samsung. There are overseas investors. What advice would you have for people trying to navigate those options?
Della Rocca: It’s highly dependent on what you’re trying to achieve. For me, the first question you have to ask yourself is, are you just building a game, or are you building a company? If your mindset is just about the game, that’s one path of funding. You apply to the Canadian Media Fund. You go pursue Kickstarter or Fig. You talk to publishers to get project-based financing, advance against royalties, that kind of thing. That’s one path of financing.
The other pathway is building a company. You’re building a long-term business. You have co-founders and you’re thinking about the vision for the studio and so on. That’s a different pathway of investment and options for funding. That’s where you talk to friends and family or chase angel investors or look at institutional venture capitalists or places like Execution Labs, accelerators, that are much more studio- and business-based. That opens the door for strategic investments and so on. There are certainly some types of investors that dabble on both sides of that.
Often, when you talk to game developers, they don’t really know what they’re trying to do. They know they need money, because they have put food on the table and pay bills and buy equipment. But they haven’t thought about questions like, “Am I building a business? Who might be my potential investors and partners for that? Or am I just trying to make a game?” There’s a whole separate workshop on those two pathways. But that’s the initial advice I give when someone comes to see me.
Above: Jayson Hilchie, the president and CEO of the Entertainment Software Association of Canada.
Cournoyer: If you are building a company, the game itself, the creative aspects of the game, that’s less important than what the game enables you to build. In today’s market the community aspect is important. You have a sustainable advantage. You have something that you’re building where, as you add players, the value of your product or platform increases. It’s important to think about the game as a means to an end, as opposed to an end in itself.
Alloul: As an investor, what I’m going to look at as well is how committed you are to a project, if it’s a company that you want to build, a lifetime business, instead of just one game. What’s important that you show the people surrounding you that you’re deeply committed to your project. You’ve invested money of your own. You’ve been participating in the launch of your company. The commitment of you and your partners to the company is a strong signal to the people watching you from outside.
One observation I’ve had as a manager at Execution Labs—I’ve met a couple of companies that were applying from inside the program, and I asked them questions like, “What do you intend to do afterward?” One answer I got was, “We’ll get more money from CMF and launch a second game.” As an investor, that’s a strong signal that you’re not looking at building a company. Taking government money is an advantage in Canada, but it can also be something that will stop you from going fully into action and really committing to your company. Be careful of the easy money that comes from a government loan. That can be a signal that you’re not really committed to launching your company.