Why Andreessen Horowitz is investing in video games

Andreessen Horowitz is opinion of as one of Silicon Valley’s supreme conducting capital companies investing in every early-stage startups and established enhance companies. Its investments span the gamut of software program industries, and no longer too lengthy ago, it has furthermore been investing in video games.

Started in 2009 by Netscape founder Marc Andreessen and entrepreneur Ben Horowitz, Andreessen Horowitz has backed companies equivalent to Skype, Airbnb, Lytro, GitHub, Ripple, Oculus VR, Buzzfeed, CryptoKitties, and hundreds of additional. The company, furthermore identified as a16z, has bigger than $12 billion in property below management in the course of extra than one funds.

It has furthermore begun making extra investments in game companies and threw its weight in the attend of the user-generated gaming world of Roblox, which raised $150 million in February in a deal led by Andreessen Horowitz. This interest is a validation of gaming’s mainstream enhance, as the amount of avid gamers in the sector reaches billions and industry revenues top $160 billion.

Andrew Chen, a partner at Andreessen Horowitz, has a lot to manufacture with the company’s interest in video games and consumer merchandise. Along with video games specialist Jonathan Lai, Chen and the companions at a16z dangle set apart money into such game startups as Singularity6, Uniqueness, SandboxVR, Mainframe, Inconceivable, Elodie Video games, CodeCombat, and others. Chen writes in most cases about gaming and consumer trends, and he balances his enthusiasm for video games with interests in the broader tech arena.

I spoke with Chen about these trends and why he thinks gaming would be the provision of one of the most supreme conducting returns in due course. We furthermore talked about social unrest and the map in which the firm can attend thru its existing cultural management funding fund and its unusual Abilities x Opportunity Fund.

Here’s an edited transcript of our interview.

GamesBeat: Listing me about your background. Why did you in discovering out to affix Andreessen Horowitz?

Andrew Chen: I’ll give a huge fleet summary. I grew up in Seattle. I labored in startups and ended up in the bay yelp, where I became as soon as starting my dangle firm, which became as soon as seed funded by Marc and Ben attend after they had been angel investors. Within the midst of that time I became as soon as doing somewhat hundreds of blogging relating to the intersection of product construct and social merchandise, the type you grow merchandise from zero. I’ve been writing for a extremely very lengthy time, which has been fun. I comfy landed the startup at Uber, so I became as soon as running a bunch of the enhance video games at Uber, basically on the rider side of the product. The total tens of hundreds and hundreds of most as much as date customers that dangle popped into Uber your total old few years battle thru experiences that I labored on, which is cool.

Then I joined Andreessen Horowitz somewhat over two years ago. It’s been cool. Part of the the explanation why we’re speaking is because I’ve had a lifelong passion for video games, going your total manner attend to playing BBS door video games, early online multiplayer video games. Then the NES, and then playing a lot of the early massively multiplayer video games. I started to dangle a examine a convergence of assorted issues I became as soon as in, all at one scoot. I received large brooding about that. I’ve been investing in video games, doubtlessly spending half of my time there. The core of it is investing in game studios. Now we dangle a bunch of studio investments. I’ve furthermore been in tech companies associated to video games. You almost definitely can imagine that as the next dwelling of companies fancy Sleeper, which we factual announced, with chat and verbal substitute around video games. Whatever will turn out to be the next Discord. We’re in Caffeine, a Twitch competitor. We’re very brooding about all these adjacent issues.

Frankly, we’re factual seeing somewhat hundreds of existence in game construct suggestions and components getting into mainstream merchandise, which is fascinating. The entirety from avatars to taking a survey at digital components and currencies and microtransactions. I exercise half of my time there, and then I exercise the opposite half of of it working on my background in marketplaces and Uber, extreme relating to the next dwelling of marketplace companies and ways for americans to construct money online. These are companies fancy Substack.

GamesBeat: Did it’s doubtless you’ll be found in in with an funding thesis? And if that is so, dangle you ever stuck to it?

Chen: I became as soon as lucky to be very in what’s the next overall of social networks early on. I at all times opinion that there would be extra previous–clearly you dangle gotten TikTok and Twitch and merchandise fancy that, which can keep success and proceed to grow. But then furthermore extreme about what’s next. Part of what we’ve talked about on this, and the map in which it intersects with video games, is that regarded as one of the most effective ways to in discovering out the next dwelling of social merchandise–what are young of us the exhaust of?

You snappily watch that whenever you occur to’re a baby, regarded as one of the first stuff you manufacture is exercise all your time playing alongside with your mates in Roblox. You exhaust it fancy a social community. You lollygag around alongside with your mates there and remark with them. You fabricate a power identification. You would possibly perchance perchance perchance play Roblox and Minecraft and Fortnite and every regarded as the kind of different video games for years earlier than you’re allowed to dangle a “social community” tale. Despite the indisputable fact that that’s in actual fact your social community. I’ve turn out to be in that, the hypothesis that these multiplayer game experiences are the next social networks. That’s been a key section of my thesis.

Every other thesis that’s been bewitching to me, and that has stuck your total manner thru, has been the reality that there’s ways to–when I grew up, my mother would order, “You would possibly perchance perchance perchance also goal furthermore be a physician or an engineer. Opt one or the opposite.” It’s improbable to me now that being a YouTuber or being a game streamer is an proper profession which you can perchance scheme shut on. The different enormous yelp that intersects with video games, that you’ve furthermore followed very closely, is the hypothesis that as a say creator, an influencer, there are somewhat hundreds of most as much as date ways in yell to create work in the economy.

Ought to you fabricate a platform that enables that, that’s regarded as one of the large areas we’ve gotten brooding about no longer too lengthy ago. There’s a entire sector of marketplaces that allow avid gamers to search out other avid gamers, fancy pro avid gamers or companions, to play video games with them. Here’s a model that’s labored well in China. There are a pair companies floating around, fancy Legion Farm and EPal and others which would be all very bewitching. That’s one model. Obviously there’s the streaming model. A bunch of of us are making enormous livings for themselves by constructing tutorials and opinions, doing that for formulation avid gamers and one of the most celebrity video games on YouTube, rising a residing that manner. That’s a attention-grabbing pattern, and one I’ve followed very closely.

GamesBeat: Given the company’s history with issues fancy Oculus and Roblox, how critical manufacture which you can perchance be feeling fancy this desire to a earn to a metaverse is guiding you in every regarded as the kind of investments? Finally this universe of digital worlds which would be all linked is where we’re going to wind up.

Chen: It’s a attention-grabbing quiz. I don’t bid it’s come up very critical in our funding criteria. The parts where we portion somewhat hundreds of interest with what of us dangle articulated as the metaverse is, quantity one, in the occasion you imagine of a metaverse you imagine of the hypothesis that there’s other of us. Intrinsically, it’s a social product. There are other of us you’re interacting with, as in opposition to the next triple-A prime-particular person legend-driven ingredient. We’re no longer in the industry of funding these. I don’t bid the metaverse will come out of these.

The different section of the metaverse that’s compelling is that you’d be willing, maybe, to set apart in somewhat hundreds of assorted sorts of say there. You would possibly perchance perchance perchance imagine section of the metaverse would dangle very science-fiction stuff, or very yarn-oriented stuff. We fancy the hypothesis of user-generated say or moddable platforms as section of our funding thesis, because it lets customers take part in rising their very dangle worlds. That’s very bewitching.

Every other enormous section of it is factual the principle that of a power identification you care about. Part of the metaverse belief is that which you can perchance exercise as critical time there as in proper existence. That’s a attention-grabbing ingredient. People are already gaming, clearly, for many hours per week. That’s nearly already available. That’s shared.