Mitch Lasky – The Business of Gaming
Colossus
Mitch Lasky is a partner at Benchmark. We cover the most important features of the modern gaming business model, how platforms like Twitch and Discord have re-shaped the industry,
Historically with the console business and the PC business and even the mobile business, games would come and go in a fruit fly’s lifespan. They were extremely short lived. You could understand from an investor’s perspective how hard it would be to figure out continuity of value when you had that temporal mismatch between the way the business rolled out and the needs of the investor.
The key things to understand about the business model are that it is ultimately a customer acquisition, customer lifetime value business, fundamentally, like subscription businesses and other sorts of businesses. Although interestingly, the monetization models are a lot more diverse. And so it’s not necessarily always just about retention, although clearly retention plays an important role.
The other thing is that it’s very much driven by content and network effects in a way that a lot of investors are somewhat unfamiliar or may be uncomfortable making calls because you kind of have to make an aesthetic call. It’s very hard to look purely at the metrics of something, particularly at the early stage and say, “Oh, this is going to work.” You could with a social network.
Much harder to do with the games business. Much easier for those metrics to be manipulated in the early days through enthusiasts coming on board early, but maybe the product not making the transition to the mass market or aggressive customer acquisition spending early on, which somewhat distorts the KPIs.
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