Game Funding Up

Funding in the game industry grew 130% in 2010, to nearly $2 billion.

While the traditional game industry is still looking at monthly sales declines, now going on the third straight year, other types of games are doing rather well. A recent study showed that funding and acquisitions rose to nearly $2 billion in 2010, a rise of 130% over the previous year. Of course, the bulk of that was in social and mobile games, along with online games and digital distribution and freemium and all the other new business models that have been growing explosively for the last few years.

Asian companies have become major players, with Chinese companies like Tencent dropping hundreds of millions for companies like Riot Games, and Japanese companies investing hugely in companies like ngmoco. This goes to show the strength of the Asian markets in gaming, and how much money is being generated there by online games and virtual goods sales.

As this trend accelerates, the transformation of the game industry continues. Except among certain old-line industry giants like Activision, where apparently it's just business as usual. If they didn't have Blizzard around to keep cranking out megahits, you do have to wonder how they would keep the growth up as they avoid investing in the high-growth areas of the game industry. I guess they're content to have a larger share of a shrinking market... but eventually they're going to find a top end to how many units of the next Call of Duty title they can sell.

Meanwhile, gaming becomes a bigger part of the lives of a wider audience than ever... many of whom could not care less about Call of Duty, or in fact have never heard of it. How many Farmville players even know about CoD? I'd guess less than half, maybe a lot less than half. Zynga might even take the time to note that fact, but I'm sure they're too busy counting money to notice.

Hard-core gamers are no longer the core gaming audience. It's perhaps disappointing to those hard-core gamers in the industry who like to make games that they themselves play. But not to those who are in the game business to make money... they just head for where the money is.