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Konvoy Ventures is a thesis driven venture capital firm focused on the video gaming industry. We invest in infrastructure technology, tools, and platforms.

2021

A summary of the key trends we observed

2021: Trends in Gaming

As we close out 2021, we wanted to revisit the core topics we have seen and written about over the course of the year. Each one of these categories represents a theme in gaming that we believe will continue to be relevant for years to come - these are in no particular order.

Gaming at the Center of Media and Entertainment: As gaming investors, we frequently talk about gaming as the future of media and entertainment. This does not just suggest that gaming will steal away a larger portion of the consumer’s attention compared to traditional outlets like TV and movies; it also means that these competing mediums will turn their focus towards games as the most compelling way to distribute and extend IP. Consider Netflix’s aggressive push into games and Fortnite’s diverse array of collaborations with groups like Marvel, the NBA/NFL, and Ariana Grande. Media and entertainment are converging on gaming, and this trend will only accelerate.

Gaming at the Center of Media and Entertainment IP newsletters:

Metaverse: “Metaverse” was the most significant buzzword of 2021. This is not only true for gaming, but across technology as a whole. While the metaverse as it exists today is essentially a collection of individual digital platforms, the vision for an interconnected and persistent online world is compelling. However, interoperability requires cooperation across platforms and shared protocols. It is not clear that large corporate entities (Facebook notably changed its name to Meta) and smaller up-and-coming players are interested in pursuing this unified vision in coordination with other platforms. As a result, there will likely not be one universal digital world, but rather a plethora of platforms that each are unique, specialized, and immersive in their own rights. And that is probably a good thing.

Metaverse newsletters:

Virtual Reality: Despite the underwhelming adoption that has plagued VR for the last 5+ years, the technology continues to be a key focus for the gaming industry. With a relatively high (but declining) price point and lack of games, VR has historically been less popular with consumers, who have historically been reluctant to make the purchase. However, the cost of entry is now dropping (the Oculus Quest 2, released in Oct 2020, was initially priced at $299) and more developers are focusing on the medium. There will inherently be a virtuous flywheel between content, adoption, and hardware. High quality experiences will help onboard more players, and the strength of network effects in gaming will yield a larger community that validates the continued development of more advanced hardware and infrastructure. Across fitness, social, and traditional gaming, VR offers significant value that we think will make it an important part of gaming’s future.

Virtual Reality newsletters:

Cloud Gaming: Similar to VR, cloud gaming had another underwhelming year of adoption despite excitement about its potential as the future for game distribution and accessibility. Microsoft has continued to push their xCloud product (i.e., by bundling it with Game Pass), but even their leadership position in the space has fallen flat over the past year as products like GeForce Now from Nvidia has come on the scene. For an industry segment with a large graveyard that includes tech giants like Google and Amazon, technical limitations such as input lag and latency overshadow the convenience of playing on any device, instantly. That being said, there are a number of infrastructure-oriented startups that are trying to solve the user-experience problems that are holding cloud gaming back. It will be interesting to see how these applications operate in the field that has predominantly been dominated by tech’s giants, but these efforts are not going away any time soon.

Cloud Gaming newsletters:

Blockchain Gaming: The concept of blockchain-enabled gaming did not originate in 2021, but this year was undoubtedly the turning point for adoption. The trend of giving autonomy back to users is fitting for a year that was marked by Epic’s somewhat ironic lawsuits against Apple and Google for their allegedly monopolistic practices. Starting with Axie Infinity this Spring/Summer, we are now witnessing a massive wave of new game studios (many of which are founded by impressive industry veterans) that are trying to creatively implement blockchain into their games to improve the user experience and share the upside with their player base. The rush of talented builders into this space has resulted in rapid innovation and we are now starting to see high-quality games and AAA-studio adoption (e.g., Ubisoft, Zynga). Many of the most popular games are actually still pre-release, so 2022 is likely to be a proving ground for content that has achieved massive valuations solely based on the idea/pre-sale (i.e., Illuvium, The Sandbox).

Blockchain Gaming newsletters:

User-Generated Content (UGC): Just as blockchain gaming has transferred economic power back to the player, UGC tools are enabling players to determine their own content experiences. The rise of UGC is particularly relevant as no-code/low-code solutions that allow anyone to build digital scenes and gameplay became more prominent over the last 12 months. Unlocking player creativity is a powerful asset for the entire gaming industry, as everyone is able to share their unique vision. In the current environment, where players are increasingly financially rewarded for contributing to gaming communities, UGC will become even more attractive. Looking ahead, we expect UGC platforms to not only grow in number and prominence, but also diversify into niche focuses that will elevate the quality of experiences built on these platforms.

UGC newsletters:

The whole team at Konvoy is thrilled to continue investing at the frontier of gaming. Great things ahead.