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Master the Meta: With $43M, why VENN has a lot to left to prove | Pocket Gamer.biz


Master the Meta is a free newsletter focused on analysing the business strategy of the gaming industry. MTM and PG.biz have partnered on a weekly column to not only bring you industry moving news, but also short analyses on each. To check out this week’s entire meta, visit www.masterthemeta.com!

According to Newzoo, the global games market will generate revenues of $159B in 2020. And everyone is familiar with how that number eclipses the movie industry by an easy 4 times, while the music industry by almost 3 times. But do you find it odd that games STILL don’t have dedicated TV network programming? That’s where VENN comes in.

VENN (Video Game Entertainment and News Network) wants to create the next MTV for gaming and esports, but in a post-cable world. It raised a seed round of $17m in September 2019 and recently raised a $26M Series A, bringing total funding to $43M. BITKRAFT fittingly led both rounds, while other notable seed round names included Marc Merrill (Riot Games co-founder), Mike Morhaime (Blizzard Entertainment co-founder), Kevin Lin (Twitch co-founder), and aXiomatic Gaming (an esports investment group with stakes in Epic Games, Team Liquid and Niantic). Nexstar Media Group, a publicly traded operator of regional television broadcast stations and cable networks around the U.S, hopped on board during the Series A.

Though to understand the bull case for VENN, one must go back in time to understand the fall of G4, a TV channel that started with the vision of creating linear TV content for gamers. After all, VENN’s vision to be the MTV for gaming doesn’t get any closer to G4’s original vision. So what changed?

First – the timing. G4 launched in 2002, while VENN is taking another crack at the same vision in 2020. Most definitely, a lot has changed in 18 years. But if anything, the core thesis of creating dedicated gaming content for a gaming enthused Millennial and Gen-Z audience has never been more proven. I’m looking at Twitch of course. In other words, it can be said that G4 was way ahead of its time and focussed on too small of a niche then. VENN is now looking to fill that gap, the audience for which is not so niche anymore.

With the rise of Twitch, the core thesis of creating dedicated gaming content for a gaming enthused Millennial and Gen-Z audience has never been more proven. Source: TwitchTracker

Second – the reach. With an initial investment of $150M, G4 was only able to reach around ~15M homes during its first couple years of operations, even with Comcast’s support. This was not enough to get significant interest from advertisers, as ~40M homes was the minimum threshold. That led to a slight catch-22 situation, where G4 had to increase reach to sustain themselves, but TV networks were not interested in broadcasting G4 content given low reach. This catch-22 eventually spiralled G4 into some pretty tumultuous years (and eventual closure) where not only the core vision was lost, but also the core audience.

The loss of G4’s audience and product vision to increase reach and keep the business afloat can be beautifully seen in how many times G4 ended up changing their core slogan over the years.

On the other hand, VENN has a huge distribution advantage over G4, since we now live in a world of YouTube, Twitch, Twitter, Facebook and Roku where the potential viewing audience is easier to find, can be directly reached and effectively converted. Most definitely, VENN is firing on all cylinders here.

VENN’s multitude of content distribution channels, apart from its own website of course.

Third – the business model. As expected, G4 mostly depended on an advertising business model in a linear TV programming world. But VENN lives in an on-demand world, which of course has Netflix to thank for business model innovations. The founders have mentioned that they’re looking to generate revenues through three sources – subscriptions, brand sponsors, and cable operators plus advertisers. And multiple revenue streams like these does make VENN’s path to profitability a little more flexible vs that of Netflix’s.

Fourth – the leadership. G4 was the brainchild of Charles Hirschhorn, a former president of Walt Disney Television and Television Animation. Said differently, he wasn’t an industry insider looking to build engaging content for a young burgeoning gaming audience. Rather, he saw an untapped business opportunity and approached it with a more capitalistic mindset. In stark contrast, VENN’s co-founders are industry insiders who have spent years in other big gaming companies understanding the audience they are now going after. Ariel Horn is a four-time Emmy winning producer that pioneered esports broadcast production at Riot Games and Blizzard Entertainment, while Ben Kusin is a seasoned entrepreneur and former Global Director of New Media at Vivendi Games.

VENN’s co-founders – (Left) Ben Kusin; (Right) Ariel Horn

Alright – so a lot of money has been raised. And there are some good supporting reasons for it. But let’s put on our skeptic hats for a moment and look at four key risks VENN faces.

First, VENN has a long way to go when it comes to maximising reach and distribution. This is because current absolute viewership numbers aren’t looking too hot. Using YouTube as a frame of reference, VENN’s subscriber and average video views pales in comparison to its closest competitors. Yes, all these competitors started way before VENN did, but the numbers below are more to showcase the massive journey VENN has ahead of itself.

At the moment, VENN’s YouTube subscriber and average video views pales in comparison to its closest competitors. Source: Social Blade

Secondly, the massive raise cannot be based on proven numbers because those look pretty weak – at least on Twitch. The graph below essentially uncovers a big content problem for VENN, given how monthly concurrent viewers are dropping on a constant number of hours streamed in a month.

Source: TwitchTracker

That leads to the third and probably most important risk – can linear TV style content really work in an on-demand world? Twitch has made quite clear the kind of content that VENN’s target audience wants, and it’s not what VENN is currently producing, which includes news updates, interviews and workouts?! That also means increasing production values on Twitch style content, a key content argument of VENN’s co-founders, is not absolutely required. Having said that, it would be understandable if VENN is just experimenting with all kinds of content formats to make sure they get as many shots on goal as early as possible. Failing fast will help them to quickly narrow down on what works, just that each iteration currently feels quite expensive.

4 of the 9 different content formats that VENN currently hosts in its original programming suite

Fourthly and finally – Twitch has also proven that content viewership is highly correlated to the content host. And from the looks of it, VENN hasn’t really made any significant headway there either. Yes, it is early days and this can definitely be turned around, but it is also interesting to see the gap that will be required to be covered. Sasha Grey might be a Grey Area of course.

With its current content host lineup, VENN definitely has some catching up to do to the real crème de la crème to really maximise the host to viewership correlation.

In conclusion, VENN broadly looks like a massive bet on rekindling an old vision, but in a different time. As VENN sets sail, it does have some tailwinds, but it definitely has some significant headwinds too. I’m slightly skeptical, but it is also quite early in VENN’s journey. To top it off with just one last headwind, I’ll leave you with this.

Master the Meta is a newsletter focused on analysing the business strategy of the gaming industry. It is run by Aaron Bush and Abhimanyu Kumar. To receive future editions in your inbox sign up here:



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