The Multiverse (Intro): why gaming’s virtual worlds are the next stage of social media

Read about my thesis on the next stage of social media, one in which young people will spend as much time socializing within virtual worlds that evolve from games as in social apps like Instagram. This is the introduction to a 7-part series breaking down the thesis step by step.

The coming wave of co-op games

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Co-op games…a core argument in my virtual worlds series is that it has become mainstream for people to turn to the virtual worlds of games as spaces to build new relationships and deepen existing ones. People bond when they share an intense, high stakes experience together and games can simulate that type of experience.

A lot of games have been designed for core gamers eager for competition against each other without appreciating the psychological effect of different design decisions though. Many games unintentionally encourage toxic behavior by not understanding the social dynamics they’ve created.

Humans are tribal and I expect mainstream consumers spending more time in virtual worlds will crave environments that offer a sense of belonging and collaboration against a common adversary more than individual competition. Project Horseshoe has spearheaded interesting research on game design tactics here, and top talent is pursuing this path.

EA’s chief design officer Patrick Söderlund left to found the ambitious Embark Studios in Stockholm with this vision and (Korean games giant) Nexon has acquired a majority stake while it is still in development. In LA, top VC firm Andreessen Horowitz just led a $5M seed round in Elodie Games, a new co-op game studio by two former Riot devs. Co-operative gameplay is also part of forthcoming virtual world experiences that have raised substantial VC funding, like Klang Games in Berlin.

Mobile game spending stats for 2019

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Interesting 2019 stats from App Annie’s State of Mobile 2020 report…

There were 204 billion worldwide app downloads last year and $120 billion of consumer spend through those apps. (That consumer spend is from money running through the app stores due to paid apps, in-app subscriptions, and in-app purchases; it excludes e-commerce purchases made via apps.)

 Of that $120 billion in consumer spend, 40% ($48B) was spending in China and 72% ($86B) was spending on gaming apps.

While Casual games (puzzles, arcade games, etc.) account for 82% of downloads, it is Core games (role playing, shooter, action, strategy) that comprise 76% of consumer spending on games and 55% of hours spent on mobile gaming.About half of revenue in the mobile game industry comes from ads and that’s where Casual games shine but it is clear consumers are most willing to spend money when they are in more immersive, social experiences.

 By the way, 1,121 game apps generated at least $5M in revenue in 2019. That’s an increase from 1,055 in 2018 and 959 in 2017. Notably, the most growth has been in the segment of games generating over $100M: there were 140 last year after 116 in 2018 and 88 in 2017.

How Unity built the world’s most popular game engine

I’m excited to share my in-depth profile on the founding and rise of Unity Technologies, the most used game engine in the world and a multi-billion dollar startup poised to IPO in 2020.

I interviewed two dozen Unity executives in San Francisco and Copenhagen for this and other research into the gaming industry, including hours of discussion with two of Unity’s co-founders (David Helgason and Joachim Ante) and current CEO John Riccitiello.

Read it on TechCrunch >>

A guide to Virtual Beings

Last week in San Francisco, I spoke at the first Virtual Beings Summit (organized by Fable Studio CEO Edward Saatchi).

The term “virtual beings” gets used as a catch-all categorization of fictional personalities that humans can interact with. This ranges from activities like Amazon, Apple, Google, and Microsoft pouring resources into conversational AI technology to chip-maker Nvidia and game engines Unreal and Unity advancing real-time ray tracing for photorealistic graphics to VCs backng “virtual influencer” startups like Brud and Shadows.

There are really three separate fields getting conflated though:

  1. Virtual Companions
  2. Humanoid Character Creation
  3. Virtual Influencers

These can overlap — there are humanoid virtual influencers for example — but they represent separate challenges, separate business opportunities, and separate societal concerns. I’ve outlined an overview of at these fields and how they collectively comprise this concept of virtual beings… Read my article on TechCrunch >>

A guide to Virtual Beings and how they impact our world

My interview with Northzone’s Paul Murphy on the next era of gaming

Paul Murphy is a London-based general partner at VC firm Northzone who previously founded the popular mobile game Dots when he worked at betaworks in NYC.

Paul looks at a range of startups but 2 of his 4 first investments at Northzone have been related to gaming. I interviewed him on his current investment theses and where he sees opportunity in gaming for entrepreneurs. Read the transcript on my TechCrunch column >>

Northzone’s Paul Murphy goes deep on the next era of gaming

June 10, 2019

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Hey folks. I’m in Canada for the Banff World Media Conference (courtesy of the Consulate General of Canada San Francisco).

It’s an annual powwow for TV producers, distributors, and network executives. Netflix is here from the SVOD side and Jeffrey Katzenberg spoke about his plans for Quibi yesterday. Chatting with people, there’s a feeling of momentum that a lot of production is happening in Canada…since September both Netflix and CBS announced plans to open major production facilities in the Toronto area.

Katzenberg’s details on Quibi, his short-form, mobile-native video startup:

  • It will launch April 6, 2020 with a two-week free trial. The basic tier with pre-roll ads will cost $4.99/month and the ads-free tier will cost $7.99/month.
  • They will spend $470M on marketing in the first year.
  • They will release 7,000 pieces of content in its first year.
  • A minority of those are “lighthouses”…high-budget series aiming to be hit shows.
  • The rest of the content will be unscripted series, including many “Daily Essentials” that are ~5min daily news shows about topics like esports.
  • Launch will be US & Canada. International expansion will be gradual, due to need to localize content offerings.

Quibi pays creators “cost plus 20%” and lets them retain ownership of their content. Creators can release a traditional film/TV format of their show after two years and are free to do whatever they want with the Quibi-format show after the Quibi contract expires in seven years.

Quibi, Fiction Riot, and Capital Intensity

Katzenberg and Meg Whitman set $1-2B as the amount of funding commitments they need upfront to launch Quibi successfully.

An upstart competitor to Quibi is LA-based Fiction Riot, which is prepping to launch its app Ficto. It’s a subscription app with vertically-shot shows founded by Mike Esola (fmr UTA agent). I’ve been in the beta for few weeks and like the experience. The shows in the beta are repurposed rather than original, but Ficto will have a slate of original series coming out soon. Esola says he’s raised less than $15M.

I’ve been bullish on this opportunity–I wrote in the fall that Facebook should make its IGTV app a Quibi competitor. Netflix is also ramping up short-form content with 12-15 minute episodes in a move to appeal to consumers while they’re on mobile. Fiction Riot will be an interesting comparison for the capital efficient approach to seizing this market.

I’m not sold that Quibi needed to take such a capital intensive launch strategy. Quibi isn’t iterating on an initial product that’s in market, seeing what changes need to be made to product features and content. It’s making a massive upfront bet on the product and content that consumers want. If it’s not perfect right away, 1) press will criticize it as a potential flop for not living up to sky-high expectations, 2) there may not be time/resources to make serious changes. My sense is a more gradual roll-out could have been possible for Quibi even if the core content is big budget.

Responsive Storytelling

Steven Spielberg is writing a scary series for Quibi that will only be viewable at night. Quibi built functionality to pull location and time data from your phone, lookup sunset/sunrise times, and restrict you accordingly. That same functionality can be used by other Quibi creators to restrict their shows to certain time slots, creating a live social viewing experience.

Katzenberg said that Quibi will have functionality for creators to make their shows interactive too. He was vague on this, but interactive storytelling is heating up and I’m convinced it’s an inherent part of the next era of media given the devices we will consume content through (mobile, voice interfaces, AR/VR, etc). There are a number of cool interactive storytelling startups I’ll feature here shortly.


Where top VCs are investing in media | I shared the investment theses of 9 sharp VCs focused on the ME&G sphere: Cyan Banister (Founders Fund), Alex Taussig (Lightspeed), Matt Hartman (betaworks), Stephanie Zhan (Sequoia), Jordan Fudge (Sinai), Christian Dorffer (Sweet Capital), Charles Hudson (Precursor), MG Siegler (GV), and Eric Hippeau (Lerer Hippeau). There was a recurring focus on interactive media, esports, and virtual influencers.

Interview with Delane Parnell | I interviewed the PlayVS CEO about his startup’s vision to become the platform for all amateur esports, starting with high school leagues. 

Fundraising tactics | For entrepreneurs raising from VCs, I compiled advice from serial entrepreneurs who’ve raised hundreds of millions of dollars in funding. It focuses on how to create a fear of missing out among investors, driving the round to happen faster and on better terms.

Private equity giant KKR is making big moves in Germany where it acquired Tele München–the largest independent TV production, licensing, and distribution co in Germany–and is making a play to take Axel Springer private. Axel Springer is the largest publishing group in Europe with a market cap of €6B. KKR is well versed in German media, having controlled TV giant ProSiebenSat.1 from 2006 to 2014.

Speaking of ProSieben, Italian TV conglomerate MediaSet–led by founder (and former prime minister) Silvio Berlusconi–bought a 9.9% stake in Prosieben last week. It also creating a new (Dutch) holding company for its Spanish and Italian TV properties. It’s all part of a vision to make MediaSet a pan-European TV giant in both broadcast and OTT mediums.

The video and music search engine Pex released a bunch of data about YouTube based on indexing the site over time. It says 101M unique users are uploading 1.3B videos per year (10hrs per minute), which means an average of 13 uploads per creator.

One takeaway is that music is by far the most profitable content category for YouTube (when looking at hosting cost vs ad revenue). Music videos and music-related videos are among the shortest average length but receive (by far) the highest average views. While the category only represents 5% of YouTube videos uploaded, it’s responsible for 20% of all views.

I highlighted the wave of “Peloton for X” startups recently, tying subscription fitness video services with a premium-priced hardware component. Well Peloton has now filed for its IPO and smaller players in the trend have raised new rounds:

Hydrow, the “Peloton for rowing” startup in Boston, raised $7M in additional Series A funding (after an initial $20M from L Catterton).

Journey Meditation, a $20/month app for live and recorded meditation classes over video, raised a $2.4M seed round from Canaan.

Mirror is said to be raising $36M at a valuation close to $300M for its service where the video play through a screen that’s also a mirror.

Tencent’s Game for Peace earned $14M in its first 3 days on the market in early May and $70M in the month overall. Goldman Sachs predicts it could become a $2B/year revenue stream.
Game for Peace is a remade version of the global hit PlayerUnknown’s Battlegrounds (PUBG) that compiles with increased censorship demands of the Chinese govt. Instead of a death match, it’s framed as a Chinese air force training exercise with no blood and numerous other quirks designed to make it friendlier and more nationalist.
Tencent took a major hit last year when the Chinese govt blocked approval of all new video games for 9 months. While it’s common for Hollywood to re-edit films to compile with Chinese censorship, the rebuilding of a massively popular game for this purpose isn’t common. Political agendas aside, it also suggests a big market for fighting games to be made with less gore to begin with now that China is getting stricter.

Podcasting & the death of iTunes

Apple is shutting down iTunes, making way for a full transition to its subscription music, video, and reading services. It’s a confirmed end to the digital downloads era, which has functionally been over for years. (Read more)

One place downloads are still common: podcasts. Apple has the most used podcast listening app in the world, pre-installed on iPhones. But I expect it will switch from a download service to a streaming service in the next couple years, and podcasts too will be rolled into this subscription model.

Downloading podcast episodes is dumb. Songs make sense to stream even though you play the same ones repeatedly. Podcast episodes you rarely listen to more than once. Downloads take up space and lack listening data to inform creators on how their podcasts are consumed.

Apple will likely roll out a premium tier of podcasts once Spotify, Luminary, and others make more headway in developing consumer comfort with it. It would enable Apple to finally monetize its market share in podcasting and would tie into a bundled subscription option for all types of content as Apple launches its new services.

Apple will also end up incorporating podcasts into its Apple Music app — Spotify is showing it can drive substantial adoption of podcasts among new demographics by featuring them within its music app, and that expansion is causing Spotify to quickly gain ground against Apple in podcasting, beating it for the top spot in several countries now.

Cool tech: Soundtrap for podcasting

In 2017, Spotify acquired Stockholm-based Soundtrap, a platform for easy editing and production of songs, for $24M. In May, it launched Soundtrap for Storytellers, a new feature set of the $15/month platform for podcasters to edit their audio files.

Audio is synched with a transcript and when you edit the written transcript (like you would a Google Doc), the audio file will automatically be edited to correspond. That said, the transcript-based editing is limited to 8 hours of audio per month.

Audio files can be directly submitted to Spotify from there, with the accompanying transcript to make it easier to discover in search. (Read more)

The Obamas’ new production co Higher Ground Productions signed an exclusive deal with Spotify to create podcasts (it already has a deal with Netflix for films/series). Hillary Clinton also launched a production company.

Smart Reads

  • “Everything to know about digital celebrities and how they could change the world” by Compound Ventures partner Mike Dempsey (Read it here)
  • “How BeatSaber beat the odds” by TechCrunch’s Lucas Matney (Read it here)
  • “Fortnite is free, but kids are getting bullied into spending money” by Patrician Hernandez. A feature on the social stigma attached to being a default character in Fortnite and corresponding rise of the insult “default” in youth culture. (Read it here)
  • “The end of app stores is rapidly approaching” by Owen Williams (Read it here)
  • If you’re not familiar with differences in how the leading content platforms in China monetize their users, Andreessen Horowitz’s Connie Chan gave a 25 minute talk last year on the topic. (Watch it here)
  • “As the internet divides”…Antony Funnel’s (Australian) ABC radio show, did an episode on the growing bifurcation of the internet between Chinese model of top-down censorship and monitoring vs. American model of open access. (Listen here)

Interesting Deals, Stats, & Product Updates


  • WarnerMedia restructuring has put Tony Goncalves, CEO of its Otter Media unit, in charge of the WarnerMedia SVOD service that’s in development. Otter COO Andy Forssell (fmr CEO of Hulu) is becoming EVP & GM of the SVOD service. (Read more)
  • Netflix acquired children’s content brand StoryBots, which runs a popular YouTube channel and has sold shows to Netflix previously. Netflix has been trying to beef up its children’s content offerings as Disney prepares to launch its family-focused Disney Plus service later this year. (Read more)
  • FloSports, the niche sports OTT platform, raised a $47M Series C from Discovery and existing investors like Causeway, BDMI, and others. (Read more)
  • MadRiver Pictures acquired Adaptive Studios, the LA-based startup that raised $16.5M Series B last year in its mission to acquire un-produced screenplays from studios and turn then into books, digital series, etc. (Read more)
  • MainStreaming, a Milan-based provider of infrastructure for live and on-demand video streaming, raised $6M to expand into game streaming and cloud gaming markets. (Read more)
  • VICE secured $250M in debt from 23 Capital, Fortress, Soros Fund Mgmt, and others. (Read more)
    • Meanwhile Disney wrote down $353M in value of its VICE shares. (Read more)
  • Hotstar, the leading Indian OTT service that’s now owned by Disney (via the Fox acquisition), set the record for most concurrent viewers of an OTT live stream on May 12th with 18.6M users watching the Indian premier League (cricket) final. (Read more)
  • Fox Corp — the Lachlan Murdoch-led company comprised of news and sports assets that Disney didn’t acquire from 21st Century Fox — announced a sports betting platform called Fox Bet in partnership with Star Group. (Read more)
  • Netflix is testing the release of top-10 lists that rank the popularity of its content. It’s currently running the test in the UK, revealing each month’s most popular films, series, documentaries, and more. (Read more)
    • Netflix has long kept its content’s viewing data secret, even from the creators. It makes it tough to compare the popularity of its films/shows with the rest of the industry, helping hide under-performances and letting positive press run away with hype over popular shows.
    • Whether it is films, music, games, or articles, humans want to consume the content everyone else is consuming. Rankings provide a guide on what to watch in order to have a shared social experience (and as a rough assessment of quality). Netflix rankings will almost certainly concentrate more Netflix viewing on the most popular content. It has been shrinking the size of its library substantially already and this move would let them reduce it further.


  • Neuromotion Labs raised $6.6M in Series A funding from Asset Management Ventures, FundRx, Founder Collective, Slow Ventures and Project 11 for its Mightier bioresponsive video games platform. (Read more)
    • The difficulty of the 25 games currently on the platform is responsive to the gamer’s heart rate. The games are designed to teach emotional self-regulation, with clinical testing showing children who play improve their ability to manage stress.
  • Unity Technologies, the leading game engine, is raising $125M in Series E funding at a $6B valuation. (Read more)
    • A new lawsuit alleging sexual harassment by the CEO and a sexualized culture among executives will likely throw a wrench in this process. Still too early to know how Unity’s board will respond. (Read more)
  • Sony and Microsoft announced a collaboration to explore cloud gaming opportunities. (Read more)
    • While they haven’t announced a jointly owned game streaming platform, the owners of Playstation and Xbox, respectively, may see a Hulu-style joint venture as a stronger competitor to Google’s Stadia (and other upcoming game streaming platforms).
    • Playstation already has its own game streaming service, Playstation Now, although it hasn’t shaken up the industry or changed much recently.
  • Scopely, the LA-based creator of mobile games that leverage existing IP like The Walking Dead, Wheel of Fortune, etc., acquired Dublin-based Digit Game Studios (which created Star Trek: Fleet Comman). (Read more)
  • THQ Nordic continued its acquisition spree of small game studios by buying Piranha Bytes, the creator of GothicRisen, and Elex. (Read more)


  • Bytedance, the $75B parent co of TikTok and news aggregator Toutiao, is creating a music streaming service focused on emerging markets. (Read more)
  • Soundcloud acquired Repost Network. (Read more)
  • Sofar Sounds, the network of small live concerts in homes and other intimate venues, raised $25M from USV and Battery Ventures. Sofar has facilitated over 20,000 concerts since launch. (Read more)
    • Customers pay $15-30 per ticket and Sofar essentially keeps all of it: artists are paid just $100 and venue hosts aren’t paid. Artists participate for exposure and hosts just want to host a cool gathering at their home/venue.
  • Stem, the distribution and royalty management platform for indie musicians, launched a concierge member service called Stem Direct and increased its commission rate from 5% to 10%. (Read more)
  • Soundstripe raised $4M to expand its platform for video creators to license music. (Read more)
  • Tracklib, a Swedish music sampling platform, raised $1.7M from Wndrco and Sony Innovation Fund. (Read more)


  • $479M = US podcast advertising market in 2018, +53% yoy. (Read more)
  • Anchor (which is now part of Spotify)added a feature letting users submit voice messages to podcast hosts. (Read more)
  • Spotify is testing an app redesign that puts podcasts front and center. (Read more)


  • Pico raised a $4.5M seed round from Stripe and Precursor Ventures for its “audience relationship management” platform that’s an easy-to-use toolset for running a paywalled (or registration-walled) media site, handling payments, identity management, and CRM functions. (Read more)
  • The Athletic–the rapidly growing subscription sports news site–is expanding to the UK, hiring 50 people there. (Read more)
  • Meredith sold Sports Illustrated for $110M to Authentic Brands. (Read more)


  • Cameo is raising a Series B at a $300M valuation, according to Axios, for its app where consumers can pay celebrities for a personality video shout-out. (Read more)
  • Daisie, a social network for different types of content creators, raised a $2.5M seed from Founders Fund, 8VC, Shrug Capital. (Read more)

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TC Interview: Delane Parnell’s plan to conquer amateur esports

Los Angeles-based PlayVS  (pronounced “play versus”) wants to become the dominant platform for amateur esports, starting at the high school level. The company raised $46 million last year—its first year operating—with the vision that owning the infrastructure for competitions and expanding it to encompass other social elements of gaming can make it the largest gaming company in the world.

I recently sat down with Founder & CEO Delane Parnell  to talk about his company’s formation and growth strategy.  Read the transcript on TechCrunch >>

Delane Parnell’s plan to conquer amateur esports