Hunting Godzilla & why games is the most misunderstood sector in tech

by Ben Holmes

Boom Beach from Supercell is one of the most successful mobile games of recent years.

In this post: Supercell, King, Playfish

Index partner Ben Holmes on why games is arguably the best sector in tech and why in the next 5 years we will see a "Godzilla" game emerge.

This week, for the 4th year running, Index Ventures sent a big contingent to the Slush in Helsinki, one our favourite events on the calendar. Almost uniquely among tech conferences it is organised and run by an amazing team of mostly student volunteers. It also gets enormous support from local and national government and broader tech community.

The sale and continued success of Supercell remains a driving light in the Helsinki tech ecosystem and one the highlights of the programme was Neil Rimer's fireside chat with Ilkka Paananen, the Supercell CEO and founder. They discussed principles of leadership in tech companies and the importance of vision and ambition not just for a company but also for an ecosystem as a whole. We left feeling extremely optimistic about the future of tech startups in the Nordics and confident that Helsinki and theSlush movement will be a play a big role in the future.

I was asked to give panel on lessons from investing in games. Index Ventures has been fortunate to have invested in the two biggest mobile games companies, King and Supercell. We have also been very active in backing many up and coming games companies. The slides from this talk are below. Here are some of the key points:

  • Despite the audience size, revenues and profits and longevity being demonstrated by the leading games companies, the valuations are actually very modest in comparison to other sectors in technology. We feel confident over time this will correct and games companies will achieve the valuations they deserve.
     
  • Godzilla - with the continued uptake of mobile applications, we predict that within the next five years there will be a company within the games sector that will become so mainstream and commercially successful that it will break through the glass ceiling and earn the valuations which other leading companies in the tech sector have.
     
  • Europe and the Nordics are exceptionally well placed to build this kind of company. Team quality is paramount in games development and we see the relevant talent, passion, creativity and ambition in many of the startups in the region.

As you can read more in the slides below and see in this interview with a local broadcaster YLE, I covered some of the questions, approaches and models we use to evaluate games companies. If you are building a Godzilla company in games or another sector, we would be delighted to hear from you. 
 

Published — Nov. 19, 2015