Angry Birds
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As the gaming market continues to boom, billions of dollars are being invested in new games and new streaming platforms vying to own a piece of the action. Most of the value is accruing to the large incumbents in a space, however, and the entrance of Google and other big tech companies makes it difficult to identify where there are compelling opportunities for entrepreneurs to build new empires.
TechCrunch media analyst Eric Peckham recently sat down with Paul Murphy, Partner at European venture firm Northzone, to discuss Paul’s view of the market and where he is focusing his dollars. Below is the transcript of the conversation (edited for length and clarity):
Eric Peckham: You co-founded the hit mobile game Dots before moving to London and joining Northzone last year. Are you still bullish on investment opportunities in mobile gaming or do you think the market has changed?
Paul Murphy: I’m bullish on mobile gaming–the market is bigger than it has ever been. There’s a whole generation of people that have been trained to play games on mobile phones. So those are things that are very positive.
The challenge is you don’t really have a rising tide moment anymore. The winners have won. And so it’s very, very difficult for someone to enter with new content and build a business that’s as big as Supercell or King, regardless of how good their content is. So while the prize for winning in mobile gaming content big, the likelihood is smaller.
Where I’m spending most of my time is not on content, it’s on components within mobile gaming. We’re looking at infrastructure: different platforms that enable mobile gaming, like Bunch which we invested in.
Their product allows you to do live video and audio on top of mobile games. So we don’t have to take any content risk. We’re betting that this great product will fit into a large inventory ecosystem.
Peckham: New mobile game studios that are launching all seem to fall under the sphere of influence of these bigger companies. They get a strategic investment from Supercell or another company. To your point, it’s tough for a small startup to compete entirely on its own.
Murphy: It’s possible in mobile gaming still but it’s really, really hard now. At the same time, what you’ve seen is the odds of winning are lower. It is hard to reach the same scale when it costs you $5.00 to acquire a user today, whereas when Candy Crush launched, it was $0.05 per user. So it’s almost impossible to achieve King-like scale today.
Therefore, you’re looking at similar content risk with reduced upside, which makes that equation less attractive for venture capital. But it might be perfectly fine for an established company because they don’t need to do the marketing, they have the audience already.
The big gaming companies all struggle with the challenge of how to create the next hit IP. They have this machine that can bring any great game to market efficiently, with a large audience they can cross promote from and capital they can invest to build a big brand quickly. For them, the biggest challenge is getting the best content.
So it’s natural to me that the pendulum has swung towards strategic investors in mobile gaming content. Epic has a fund that they set up with Improbable, Supercell is making direct investments, Tencent has been making investments for years. Even from a content perspective, you’re probably going to see Apple, Google, and Amazon making more content investments in mobile gaming.
Image via Getty Images / aurielaki
Peckham: Does this same market dynamic apply to PC games and console games? Do you see a certain area within gaming where there’s still opportunity for independent startups to create the game itself and find success at a venture scale?
Murphy: The reason we made our investment in Klang Games, which is building an MMO called Seed that people will primarily play through PC, is that while there is content risk–you’re never going to get rid of the possibility that the IP doesn’t fly–if it works, it will be massive…an Earth-shattering level of success. If their vision comes to life, it will be very, very big.
So that one has all the risks that you’d have in any other game studio but the upside is exponentially larger, so the bet makes sense to us. And it so happens that it’s going to be on PC first, where there’s certainly a lot of competition but it’s not as saturated and the monetization methods are healthier than in mobile gaming. In PC, you don’t have to do free-to-play tactics that interfere with the gameplay.
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It’s been 10 years since Google took the wraps off the G1, the first Android phone. Since that time the OS has grown from buggy, nerdy iPhone alternative to arguably the most popular (or at least populous) computing platform in the world. But it sure as heck didn’t get there without hitting a few bumps along the road.
Join us for a brief retrospective on the last decade of Android devices: the good, the bad, and the Nexus Q.

This is the one that started it all, and I have a soft spot in my heart for the old thing. Also known as the HTC Dream — this was back when we had an HTC, you see — the G1 was about as inauspicious a debut as you can imagine. Its full keyboard, trackball, slightly janky slide-up screen (crooked even in official photos), and considerable girth marked it from the outset as a phone only a real geek could love. Compared to the iPhone, it was like a poorly dressed whale.
But in time its half-baked software matured and its idiosyncrasies became apparent for the smart touches they were. To this day I occasionally long for a trackball or full keyboard, and while the G1 wasn’t pretty, it was tough as hell.

Of course, most people didn’t give Android a second look until Moto came out with the Droid, a slicker, thinner device from the maker of the famed RAZR. In retrospect, the Droid wasn’t that much better or different than the G1, but it was thinner, had a better screen, and had the benefit of an enormous marketing push from Motorola and Verizon. (Disclosure: Verizon owns Oath, which owns TechCrunch, but this doesn’t affect our coverage in any way.)
For many, the Droid and its immediate descendants were the first Android phones they had — something new and interesting that blew the likes of Palm out of the water, but also happened to be a lot cheaper than an iPhone.

This was the fruit of the continued collaboration between Google and HTC, and the first phone Google branded and sold itself. The Nexus One was meant to be the slick, high-quality device that would finally compete toe-to-toe with the iPhone. It ditched the keyboard, got a cool new OLED screen, and had a lovely smooth design. Unfortunately it ran into two problems.
First, the Android ecosystem was beginning to get crowded. People had lots of choices and could pick up phones for cheap that would do the basics. Why lay the cash out for a fancy new one? And second, Apple would shortly release the iPhone 4, which — and I was an Android fanboy at the time — objectively blew the Nexus One and everything else out of the water. Apple had brought a gun to a knife fight.

Another HTC? Well, this was prime time for the now-defunct company. They were taking risks no one else would, and the Evo 4G was no exception. It was, for the time, huge: the iPhone had a 3.5-inch screen, and most Android devices weren’t much bigger, if they weren’t smaller.
The Evo 4G somehow survived our criticism (our alarm now seems extremely quaint, given the size of the average phone now) and was a reasonably popular phone, but ultimately is notable not for breaking sales records but breaking the seal on the idea that a phone could be big and still make sense. (Honorable mention goes to the Droid X.)

Samsung’s big debut made a hell of a splash, with custom versions of the phone appearing in the stores of practically every carrier, each with their own name and design: the AT&T Captivate, T-Mobile Vibrant, Verizon Fascinate, and Sprint Epic 4G. As if the Android lineup wasn’t confusing enough already at the time!
Though the S was a solid phone, it wasn’t without its flaws, and the iPhone 4 made for very tough competition. But strong sales reinforced Samsung’s commitment to the platform, and the Galaxy series is still going strong today.

This was an era in which Android devices were responding to Apple, and not vice versa as we find today. So it’s no surprise that hot on the heels of the original iPad we found Google pushing a tablet-focused version of Android with its partner Motorola, which volunteered to be the guinea pig with its short-lived Xoom tablet.
Although there are still Android tablets on sale today, the Xoom represented a dead end in development — an attempt to carve a piece out of a market Apple had essentially invented and soon dominated. Android tablets from Motorola, HTC, Samsung and others were rarely anything more than adequate, though they sold well enough for a while. This illustrated the impossibility of “leading from behind” and prompted device makers to specialize rather than participate in a commodity hardware melee.

And who better to illustrate than Amazon? Its contribution to the Android world was the Fire series of tablets, which differentiated themselves from the rest by being extremely cheap and directly focused on consuming digital media. Just $200 at launch and far less later, the Fire devices catered to the regular Amazon customer whose kids were pestering them about getting a tablet on which to play Fruit Ninja or Angry Birds, but who didn’t want to shell out for an iPad.
Turns out this was a wise strategy, and of course one Amazon was uniquely positioned to do with its huge presence in online retail and the ability to subsidize the price out of the reach of competition. Fire tablets were never particularly good, but they were good enough, and for the price you paid, that was kind of a miracle.

Sony has always had a hard time with Android. Its Xperia line of phones for years were considered competent — I owned a few myself — and arguably industry-leading in the camera department. But no one bought them. And the one they bought the least of, or at least proportional to the hype it got, has to be the Xperia Play. This thing was supposed to be a mobile gaming platform, and the idea of a slide-out keyboard is great — but the whole thing basically cratered.
What Sony had illustrated was that you couldn’t just piggyback on the popularity and diversity of Android and launch whatever the hell you wanted. Phones didn’t sell themselves, and although the idea of playing Playstation games on your phone might have sounded cool to a few nerds, it was never going to be enough to make it a million-seller. And increasingly that’s what phones needed to be.

As a sort of natural climax to the swelling phone trend, Samsung went all out with the first true “phablet,” and despite groans of protest the phone not only sold well but became a staple of the Galaxy series. In fact, it wouldn’t be long before Apple would follow on and produce a Plus-sized phone of its own.
The Note also represented a step towards using a phone for serious productivity, not just everyday smartphone stuff. It wasn’t entirely successful — Android just wasn’t ready to be highly productive — but in retrospect it was forward thinking of Samsung to make a go at it and begin to establish productivity as a core competence of the Galaxy series.

This abortive effort by Google to spread Android out into a platform was part of a number of ill-considered choices at the time. No one really knew, apparently at Google or anywhere elsewhere in the world, what this thing was supposed to do. I still don’t. As we wrote at the time:
Here’s the problem with the Nexus Q: it’s a stunningly beautiful piece of hardware that’s being let down by the software that’s supposed to control it.
It was made, or rather nearly made in the USA, though, so it had that going for it.

The First got dealt a bad hand. The phone itself was a lovely piece of hardware with an understated design and bold colors that stuck out. But its default launcher, the doomed Facebook Home, was hopelessly bad.
How bad? Announced in April, discontinued in May. I remember visiting an AT&T store during that brief period and even then the staff had been instructed in how to disable Facebook’s launcher and reveal the perfectly good phone beneath. The good news was that there were so few of these phones sold new that the entire stock started selling for peanuts on Ebay and the like. I bought two and used them for my early experiments in ROMs. No regrets.

This was the beginning of the end for HTC, but their last few years saw them update their design language to something that actually rivaled Apple. The One and its successors were good phones, though HTC oversold the “Ultrapixel” camera, which turned out to not be that good, let alone iPhone-beating.
As Samsung increasingly dominated, Sony plugged away, and LG and Chinese companies increasingly entered the fray, HTC was under assault and even a solid phone series like the One couldn’t compete. 2014 was a transition period with old manufacturers dying out and the dominant ones taking over, eventually leading to the market we have today.
Google/LG Nexus 5X and Huawei 6P (2015)

This was the line that brought Google into the hardware race in earnest. After the bungled Nexus Q launch, Google needed to come out swinging, and they did that by marrying their more pedestrian hardware with some software that truly zinged. Android 5 was a dream to use, Marshmallow had features that we loved … and the phones became objects that we adored.
We called the 6P “the crown jewel of Android devices”. This was when Google took its phones to the next level and never looked back.
Google Pixel (2016)
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If the Nexus was, in earnest, the starting gun for Google’s entry into the hardware race, the Pixel line could be its victory lap. It’s an honest-to-god competitor to the Apple phone.
Gone are the days when Google is playing catch-up on features to Apple, instead, Google’s a contender in its own right. The phone’s camera is amazing. The software works relatively seamlessly (bring back guest mode!), and phone’s size and power are everything anyone could ask for. The sticker price, like Apple’s newest iPhones, is still a bit of a shock, but this phone is the teleological endpoint in the Android quest to rival its famous, fruitful, contender.
Let’s see what the next ten years bring.
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Gaming and entertainment company Rovio continues to have a very hard time of it as it faces the music on the waning popularity of its once-might Angry Birds franchise. Today, the Helsinki-based company reported Q4 and full-year financials that fell short of analysts’ most conservative estimates as it blamed lower-than-expected interest in its new slate of games. The company also… Read More
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Angry Birds maker Rovio’s stock price cratered after their latest quarterly earnings report painted a dismal future for the game maker. The stock is down 50 percent after the company sent investors a warning in their latest earnings report that revenues were likely to suffer in 2018. Read More
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Rovio, maker of the Angry Birds gaming franchise, saw a small pop of 4.3 percent in its first day of trading as a public company, but like the very birds that get catapulted in Rovio’s original blockbuster game, the rise was not to last.
After pricing its IPO at €11.50 per share — the top of its range — to raise €30 million, today the stock opened on the Nasdaq Nordic… Read More
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Angry Birds-maker Rovio Entertainment priced its IPO at 11.50 euros, at the top of its proposed range. It raises 30 million euros in proceeds.
This values the company a little above $1 billion, just half of the $2 billion the company was previously said to be hoping for. The company previously raised at least $42 million in venture funding from Accel, Atomico, Felicis Ventures and… Read More
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Rovio, the Finnish company behind Angry Birds, is planning to go public “as early as next month,” Bloomberg reports.
Citing sources, Bloomberg reports the IPO could value Rovio at $2 billion and that the company could raise about $400 million from a local market listing. Though, it seems that a final decision has yet to be made, meaning Rovio may decide to stay private for… Read More
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We’ve gotten a fair bit of play out of Google’s latest $35 Chromecast leading up to the holidays. The games are pretty fun, and you can’t beat it for the price. In time for said holidays, a few more games are being shoved out to keep your family yelling at the screen. Angry Birds Friends and Driver Speedboat Paradise are two of the titles, created just for Chromecast,… Read More
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After announcing in August that it would cut up to 260 jobs, Rovio — maker of the Angry Birds games — today released details of the final number: the Finland-based company is letting go of 213 employees, around 25% of staff, as it continues to restructure and cut away unprofitable parts of its business. The whole of the company is being affected, with the exception of those working… Read More
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