1. Games 2.0 Web 2.0 Expo April 25, 2008 Jeremy Liew
MD, Lightspeed Venture Partners
lsvp.wordpress.com

2. Birth of Web 2.0 has been driven by making costs variable
Development
Build everything from scratch
Open Source
Outsourcing
Marketing
Superbowl ads
CPC and CPA
Distribution
Multi year, multi million dollar portal deals
Social network platforms
Viral growth
Content
Teams of writers and editors
User Generated Content
Monetization
Internal sales teams
Ad networks

3. The games industry is starting to feel the same dynamics
Development
Massive development projections
Fat clients
In browser gaming
Flash and other rich media improving
Marketing
Offline advertising driving players to retail
CPC and CPA online advertising driving online play
Distribution
Controlled by retail and big game portals
Social network platforms
Viral growth
Content
Teams of level designers
Multi player is user generated content for games
Monetization
Selling games in jewel cases
Digital download
Free to play supported by subscription and digital goods
Advertising

4. Development: “Low fi” games gathering more users
Development Costs ($M)
Players (M)
Halo 3
Power Challenge
Zynga’s Texas Hold’em
Friends for Sale
SGN’s Jetman
Sources: Lazard Capital Markets, Adonomics, Press Releases, LSVP Estimates

5. Marketing: Online distribution allows CPC and CPA advertising
$30M in marketing
- Primarily offline
10M copies sold
- 90+% through retail

6. New user growth (illustrative)
Distribution: Viral growth and social networks allow games to grow virally
* Not to scale
TYPICAL AAA GAME
New user growth (illustrative)
Marketing campaign supports big launch, with sales declining thereafter
SOCIAL GAMES
Friend invitations drive increasing growth curve as user base grows

7. Content: Multiplayer is user gen content for games
Single-player games
Need new levels to keep player interest
AI for NPCs to maintain challenge
vs.
Multiplayer Games
Each game is different, keeping player interest
Other players have real intelligence, not AI
Asynchronous Play
- Large pool of other players
- Easier to play against friends
- Players playing in sequence, not in tandem. - Requires persistent state which all players affect, and which in turn affects all players. - Breaks between players are the organizing principle
Source: Ian Bogost, Lightspeed analysis

8. Monetization: Online games market growing as revenue sources become more variable
ONLINE GAME REVENUES
Sale of downloads
Advertising
Digital goods
Self expression
In-game power
Extra levels/content
Attention
Convenience

9. If Web 2.0 is the social web, then Games 2.0 is social gaming
MODERATOR
PANELISTS
Jeremy Liew:
MD, Lightspeed Venture Partners
Siqi Chen:
CEO, Serious Business (Friends for Sale)
Johan Christenson:
CEO, Power Challenge
Shervin Pishevar:
CEO, Social Games Network
Mark Pincus:
CEO, Zynga Game Network