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Gambling rules the entertainment industry, so why aren’t investors showing up? – Tech Crunch

As the popularity of the game reached epic heights, the activity of venture capitalists in the industry does not seem to match the overall size of the gaming market. Boosted by an unreal year where traditional entertainment has been disrupted by the COVID-19 pandemic and consumers are finding unity in virtual worlds like Animal Crossing and Fortnite, gaming has never been more popular.

Late-stage investors showed they have a huge appetite for companies in the gaming industry. They poured capital into established gaming companies like Scopely, which on Wednesday announced an investment round of 340 million at a valuation of $3.3 billion. But venture capital simply hasn’t given the gaming industry and the broader synthetic market the attention it deserves given its place in the entertainment and cultural firmament.

Just ask LeBron “Bronny” James Jr., the son of the NBA’s biggest star, who became a pro athlete this week – as a player with one of online gaming’s most popular teams, FaZe. Clan. Or look at Unity, the creator of a popular game development engine, whose stock price has nearly doubled since its public offering in mid-September. Since opening trading at $56 per share, the stock has nearly doubled in value and is now trading at $100 per share.

In the first half of the year, gamers spent $36.8 billion on games through Android and iOS app stores, according to data from SensorTower. New gaming installations are also up for the year. The app analytics firm said new game installs hit 28.4 billion in the first half of the year. Annually, the 15 billion new game downloads in the second quarter represented a 45.2% year-over-year growth in games.

So there is bitcraftone of the only venture capital firms to focus on the entire gaming industry, which announced the closing of its latest fund, a $165 million investment vehicle. The company, which added a former Goldman Sachs chief executive earlier in the year to capitalize on the opportunity for what the company calls “synthetic reality” investments, raised $25 million above its target. of $140 million. One of these things is not like the others.

“I’ve been in the gaming industry for 23 years now [and] I’ve always had this huge fundamental belief that video games not only dominate the entertainment industry, but somehow occupy a huge part of what society is – where video games create the digital identities that further define plus what we understand about ourselves, said Jens Hilgers, founding general partner of Bitkraft. “We think these are times of acceleration…it’s great to see how we’re jumping one, two or three years from the gaming industry in this crisis and it makes it more exciting to invest in these times.”

The Unity public offering, and its focus on markets outside of gaming, seems to prove Hilgers’ point and show just how much opportunity remains around the notion of synthetic reality in business and entertainment.

“Their thesis of democratizing access to gaming tools by allowing enthusiasts to use the tools for free is smart, if you want to win the market,” said Alice Lloyd George, founder of Rogue Ventures, a new game company. investment focused on cutting-edge technology and gaming investment. .

Lloyd George compared Unity’s business to its biggest competitor, Epic Games, and noted that both had broad aspirations. “Both want to use their game engines beyond pure gaming,” Lloyd George said of the two big developers of new gaming platforms. “Unity is really well positioned because they’re so strong on mobile . This positions them well for AR and VR. And you need on-ramps for AR and VR developers. »

Engagement and the Future of Entertainment

When Scopely co-CEO Walter Driver talks about the appeal of gaming properties to gamers — and why investors have been willing to value his Los Angeles-based company at billions of dollars — it talks about the bonds between the players. “People have discovered – and investors watching the space have also discovered – that people value the connection they get from interactive experiences. It’s not just our relationship with players, but their relationships with each other. others,” Driver said. “In most passively consumed media experiences, you don’t have an identity. You don’t have friends.”