April 27, 2006
MMOs (MMORPGs) Continue to Rock
There is a great deal of interesting activity in MMO land these days. You may remember that we highlighted the invest-abilty of this trend/category about 18 months ago. Despite my enthusiasm, I could have never anticipated the massive impact of World of Warcraft. It appears today to be the most valuable title in the history of gaming. There are also rumors that Vivendi (parent of Blizzard) may spin it out to get full credit from investors. Huge Kudos to the team at Blizzard for firing the "shot heard round the world".
Some updates and tidbits:
- There is a new subscriber update at MMOGCHART.com. This is a great site that tracks subscriber counts for the major titles.
- SecondLife is on the Cover of BusinessWeek this week (FYI-Benchmark is an investor in SecondLife). Very interesting story highlighting how entrepreneurs are making real money developing real IP inside the virtual world.
- I don't think Electronic Arts has had a blow away quarter since WOW launched. In fact there has been a lot of downward guidance. You don't here much talk about it, but the substitution effect must be tremendous. Wow launched in November, 2004.
- Microsoft buys Massive.com, the leader in in-game advertising. My own guess is that the price is closer to $100MM, rather than the $200-400 that the press is reporting. This follows on the heels of Xfire being acquired for about $102MM by Viacom (MTV). Microsoft clearly wants to make sure that they are the Google of this space, and that they don't let the ad network fall into other hands. I have a hard time seeing how XBOX can thrive in MMO land if Microsoft won't share the network fees with the developers. Today, only Microsoft gets "subscription" fees. Ironic that the PC is the alternative here.
- Many of the rising stars of multi-player interactive entertainment are more social than interactive. They also target much broader demographics than gaming ever dreamed of hitting. Consider three sites targeted at younger children and teens that are all doing extremely well -- NeoPets, HabboHotel, and GaiaOnline (Benchmark is an investor in HabboHotel).
- Lastly, there is an amazing amount of cool things happening in Korea these days, all around a category that many are calling "Advanced Casual". These are games where users interact with multiple-players in a quick (5-7 minute) interlude. Once again, very broad demographic. The unquestioned leader here is KartRider by Nexon. Rumor has it that Nexon will file to go public on the JSE (click here to see why JSE instead of NASDAQ), and should be a whale of a stock. Other cool titles include Audition (multi-player Dance, Dance, Revolution), Sudden Attack (looks like a Counter Strike knock off), and FreeStyle (3 on 3 street basketball), which was recently licensed by Vivendi for launch in the US. One more is Pangya, a multi-player casual golf game.
All of this is quite amazing and exciting. Multi-player interactive is going to be a massive, massive category.
April 25, 2006
As Wifi Grows, So Do the PR Attacks
An AP story ran yesterday suggesting there are problems with a city-wide Wifi network in St. Cloud, Florida. What is amazing here is that the writer talks to 3 people total and then infers many grand assumptions.
Here are the facts:
- In a few short weeks over 3600 residents of St. Cloud have registered for the service. This is a higher penetration rate (by an order of magnitude) that EVDO has seen in any city.
- The performance of the network is as high as 10X over EVDO downstream, and 100X upstream.
- The gentleman that complained is outside the coverage zone and can't get service. In other words, teh big negative here is that more people want it than can get it. Hmmm....
- EVDO is not planned to be dployed in a town this size (28K residents) anytime soon. The carriers are focused on the higher denisty cities.
Talk to the people and policy makers in St. Cloud and they will tell you this is a huge success. They post updates frequently.
Better performance than EVDO at a much lower cost. You won't stop this with an AP article. Are their issues? Sure, but I drop 5 cell calls a day in Silicon Valley and that technology (cellular voice) is over 25 years old.
April 05, 2006
Why SOX Will Lead to the Demise of U.S. Markets
Everyone should read this article from the CEO of Nasdaq. He is properly concerned that the overly bureaucratic Sarbanes-Oxley (SOX) processes could lead to the end of global domination by the U.S. capital markets. Ironically, the two gentlemen that created SOX did it with the intention of “preserving” U.S. capital market leadership. Their fear was that people viewed our markets as too risky, and so they created SOX to ensure that investors would “trust” our markets.
It turns out that SOX is doing the opposite – it is ensuring
the demise of the leadership of U.S. capital markets. New up and coming companies outside the U.S.
are now shunning the U.S. markets in mass. Let us not forget that the Nasdaq has and as always had “weaker” listing
requirements that the NYSE. And
eventually, the then new and up and coming companies like Microsoft, Cisco, and Intel eventually
came to dominate the Fortune 500 – and they all started as emerging companies that
preferred the Nasdaq. Now companies are
going to “prefer” other markets with requirements that are less stringent than the
SOX laden U.S. markets.
This is a HUGE issue. I applaud the Nasdaq BOD for going after the LSE, and I have to wonder whether Mr. Sarbanes and Mr. Oxley have any idea that they will go down in history as the specific architects of the demise of U.S. capital market leadership.
July 22, 2005
Click on this graphic from the most recent edition of Business Week. What you will see, and what many continue to deny, is that Metro-scale Wifi isn't a theory, its a reality. The networks are live. They perform way better than EVDO or any cellular alternative. They are cheaper to deploy. AND, there is huge momentum around more and more networks.
This is classic "Innovator's Dilemma" type disruption. And the incumbents should start to embrace it instead of trying to pass laws to make it illegal.
Resistance is futile...and denial is typically a poor business strategy.
DISCLOSURE: The information contained Above the Crowd has been obtained from sources believed to be reliable but is not necessarily complete, and its accuracy cannot be guaranteed. Any opinions expressed herein are subject to change without notice. The author is a general partner of Benchmark Capital, a venture capital firm in Menlo Park, Calif. Benchmark Capital and its affiliated companies and/or individuals may have economic interests in the companies discussed herein. © J. William Gurley 2005-2006. All rights reserved.