2012 investment: Busting myths by looking deeper at the numbers

[Read this week’s DeanBeat for an analysis of all of 2012’s gaming deals. –Ed.] Within every investable vertical market there are views about what is and isn’t investable at a given period. But I find in gaming more than in others there are a lot more myths about the investment landscape. Many of these myths are promoted by none other than the investors themselves. What follows is a deeper dive into the investment numbers of 2012 and 2011 to set the record straight–bust the myths and verify what is true.

Myth: Common investor refrain–I only invest in picks and shovels, not game studios. Who needs the content risk!

It is common for many a budding entrepreneur to be told by investors I don’t invest in games, too much content risk. I only invest in platforms. When investors are talking about picks and shovels in gaming they are referring to platform plays that help game studios either build, promote, engage, or monetize their games faster, better or cheaper. This includes cross-platform game engines such as Unity, cross promotional networks such as Applifier and for some even android publishers such as MoMinis. However, if you look across overall investments in 2012, game studios fared better than game platforms. Of the 160 gaming investments (not counting Kickstarters or strategic investments in large companies) made in 2012, 82 were game developers and 78 were platform plays. In aggregate dollar value game studios received slightly less funding that platforms, of the $734.77 million invested 45 percent went to game studios.