The venture deadpool in games
The most recent GameCraft episode with Mitch Lasky and Blake Robbins should be required listening for anyone in games. It dissects why so many venture-backed studios are failing despite raising hundreds of millions.
You should listen to the whole thing, but here's a summary:
1) The fundamentals were broken:
Game studios raising $50-300M without clear competitive advantages
Burn rates of $3-4M monthly ($40-50M annually) PRE-LAUNCH
No capital reserved for go-to-market or post-launch iteration
Founders optimizing for perfect games, not viable businesses
Recent failures tell the story:
Mountaintop: $86M raised, shipped one season, shuttered
Singularity 6: $50M+ raised, acquired by Daybreak for pennies on the dollar
Elodie: Raised at $90M post, then did a round at $9M post (selling 44% for just $4M)
That's No Moon: $110M raised, followed by a desperate $10M extension
Build a Rocket Boy: $300M+ raised, nothing shipped yet
3) The "vertical slice seed round" model sets companies up for failure in a normal capital environment:
Series A/B funding typically requires market validation
Games need massive capital pre-launch ("the naked Series B problem")
Too many game founders think like developers, not company builders
4) The cold, hard capital efficiency reality:
Successful companies return capital to VCs. Period.
The "Riot diaspora" fallacy: People from Riot/Blizzard aren't automatically successful
Discord pivoted from a failed game with dry powder and succeeded
Indie successes often do more with $1-5M than VC-backed studios do with $50M+
5) What actually works in games venture:
Durable competitive advantages (distribution, technology shift, network effects)
Founders who understand capital as a strategic weapon, not just fuel for production
Products with clear answers to "why would someone play this?"
Teams that can articulate their business, not just their game mechanics
Let's be honest: We're witnessing a cataclysmic reset in games venture. The companies in the "deadpool" - those at risk of imminent failure - include some of the most heavily funded studios of the past five years.
The bar for raising venture in games is now astronomical. It should be. When studios burn through $100M+ with nothing to show for it, something is fundamentally broken in how we're building these companies.
A final observation: venture capital works best when it exploits a technology shift. Most of these companies were funded in the absence of one (mobile was the last), which left them competing in a red ocean with no tailwind.