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Archive for December, 2008

Why Did Virtual Worlds & Social Games Investments Defy the Downturn in 2008

Posted by Alan O'Dea | Dec 8, 2008 | Filed under News, Research

I wanted to comment on why online, causal, social games and virtual world investment has remained strong throughout 2008 and address a simple question. Why are online games now so interesting to investors?

That answer is usually presented in business terms such as return of investment (RoI), EBITDA, market growth, market traction, exit strategies, proven team, killer product, great technology, or multiple returns on investment 5x, 10x, 25x, etc, in short all of the usual metrics that measure and drive a business. However any successful company that raises money has to demonstrate these business criteria so that’s less valuable to answering our question. What’s more interesting to getting to an answer and what investors are most interested in is potential.

This article presents some of the main factors that I believe are at the hearth of answering that question i.e. capital efficiency, online distribution, acquisition costs, monetisation methods, balance of payments and value chain position.

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