My most recent investment, Kongregate, announced its beta launch last night alongside the closing of a $1M seed financing. I am delighted to be part of a strong syndicate of angel investors, led by my good friend Reid Hoffman, backing gaming veteran Jim Greer and his team. Even though I don’t like these types of analogy, you could argue that Kongregate is a YouTube for casual games developed in Flash (today).
Developers will be able to upload their work on the site – maintaining all IP, rights, etc. – and will get exposed to the community who will review, rate and eventually rank the game based on how much it is being played. They will eventually get a cut of the advertising revenue generated by Kongregate, though in the short term exposure, user feedback and popularity will be the most significant benefit they extract. One of the hooks offered by Kongregate is a set of APIs that allows developers to create contests and statistics that will be saved in the player’s profile.
To date, during the alpha phase of the service, about 300 games have been uploaded.
Users don’t need to be registered to play, but some of the more advanced features like maintaining personal statistics, chat rooms and contests participation are reserved to site members (membership being of course free). In an interview with Red Herring’s Ryan Olson, I mentioned that one of the motivations for gamers is ego/bragging rights about beating a level, hitting challenges and being on the top score leaderboard (the need for consumer services to satisfy one of the seven sins is a notion I learnt from Accel Partner’s Kevin Efrusy) . There is also the opportunity to hang out online in one of the many chat rooms available on the service, where you can interact with other gamers as you are playing.
The screenshot below shows one of the popular games of the moment, The Fancy Pants Adventures (which has been played over 50,000 times). You can also see the live chat on the right hand-side, and if you scroll below the game, you find all the rating, reviews/comments and recommendations about other games that might be of interest.
I have been looking into the different segments of the gaming space for a few months, trying to understand the trends and opportunities that my kind of investing might have. I have been fortunate to meet and discuss with a number of CEOs in the space, including the talented CEO of Boonty, Mathieu Nouzareth, who gave me a great primer on this industry a few months ago. Kongregate was almost the ideal first investment opportunity for me since it bridges the gap between gaming and passion-centric communities, one of my main area of interest. I am very excited to announce that first dip in the gaming space, which has proven to be fascinating so far – even if traditionally it has not been one to generate spectacular returns for investors. We shall see!
I have been asked if users would develop games "for real", therefore increasing the amount of content on the site. My answer is essentially that 1) based on the current set of uploads, we see a lot of amateur game developers uploading interesting demos or actual games, and 2) a user will typically play a given game over and over (and over) in order to beat levels or succeed on challenges. The need to massive daily uploads is therefore less critical than on an audio or video site. Traffic and usage patterns will have the final word on that question at the end of the day.