https://open.spotify.com/episode/60MKDviyMQlVkf6PTFVVi5
Context: Blake Robbins is a partner at Ludlow Ventures. Blake is being interviewed by Patrick O'Shaughnessy, the CEO of O'Shaughnessy Asset Management and host of the Invest Like the Best podcast.
One of Blake's many superpowers is his genuine curiosity, his ability to explore and dive deep into sub-cultures that people would often overlook - a passion, skill, and interest that comes through in this interview.
These are my abbreviated notes and commentary from Patrick O'Shaughnessy and Blake Robbins's interview. Everything is from the perspective of Blake Robbins.
// @thejerrylu
Table of Contents
01:35 Growth of the gaming industryThe explosion of the gaming industry is largely credited to the tailwinds of games starting to realize that they should become free-to-play and become platforms rather than pure one-time purchase type games.
There's a push-pull between old school companies like Activision Blizzard and Electronic Arts (EA) where they continue to sell copies of games at $60/piece, are sold in-store, and the cycle time for a new game happens yearly.
There's a big shift starting with games like League of Legends and Fortnite that are pushing forward, completely free-to-play, and the requirements to play those games are very low.
That's really what led to this massive growth, especially growth in terms of now gaming being part of the conversation vs it being a pure hits-driven business.
03:46 Biggest players in gamingThe real giant in this space is Tencent, completely proactive at acquiring studios and buying large stakes in studios, owning: 100% of Riot Games (League of Legend, Valorant), 40% of Epic Games (creators of Unreal, Fortnite)
The other big players:
Activision Blizzard
Electronic Arts
Sea Limited (and their gaming platform Garena)
Valve (private company, creators of Counter Strike, DOTA, Half-Life)
Have their own app store called Steam which was one of the first app store for games and the first ones to realize that they could build a platform for which to distribute third-party games and take a fee.
05:30 Monetization of gamesMost people viewed free-to-play games as you have to pay to win (pay to unlock certain elements, buy expansion packs). That's not true of the major games today like Fortnite, League of Legends, Counter-Strike which are completely free-to-play.
These games are able to be free-to-play because they make the majority of their revenue via in-game items (emotes, cosmetics, items that don't impact your gameplay but are purely meant to flex).
Counter-Strike:
People pay to open loot boxes to unlock in-game weapon skins (cosmetic finishes on your weapon that can range in price from $.01 - $10k depending on rarity). There's a secondary market to buy, sell or trade these skins and even third-party sites for the actual transactions of these (i.e. escrow services).
Fortnite / League of Legends:
The release of emotes and skins are usually event-driven and limited in supply (you never know when they're going to come back). You actually see people selling their accounts on eBay for specific skins that exist (one of the rarest being Skull Trooper for being one of the first skins in the game).