Leadership

Good Game

How Student Founders Can Shape the Future of Gaming
Published
March 15, 2024
Share
#
min read

Over the last decade, gaming has gone from a niche hobby to a mainstream phenomenon that people of all ages enjoy. From desktops and consoles to mobile devices and headsets, gaming now reaches a global audience of over 3B players and generates over $187B in revenue. 

With such widespread popularity, not surprisingly, gaming has attracted significant attention from VCs including us here at General Catalyst — although we have a long history of gaming investments including most notably our investment in Discord in 2012. Last year alone, VCs completed 376 deals with $2B of funding to support founders who are working to bring next-generation experiences to gamers. At General Catalyst Venture Fellows (GCVF), we believe that gaming is one area that student and Gen-Z founders are particularly well-equipped to not only tackle, but truly lead.

How gaming leveled up from the dorm room 

There is strong precedent for students affecting the gaming space since its very inception. While there is much debate among gaming historians as to what counts as the first video game, one is worth noting: Spacewar!. In 1962, a group of graduate students and MIT employees created the two-player spaceship fighting game, predating the classic game, Pong, by a full decade (1972). Spacewar! involved fast-reflex mechanics and a scrolling starfield backdrop built by Peter Samson who, at the time, was just a 21-year-old undergraduate student. Written for the PDP-1 (Programmed Data Processor-1), multiple universities and research labs could install and play the game, making it an instant hit. Spacewar!’s simple, yet rich gameplay and portability led to widespread distribution and inspired the likes of Nolan Bushnell, who founded Atari, as well as Steve Jobs and Steve Wozniak who would play Spacewar! while at Stanford’s artificial intelligence lab.

Beyond early successes, student-founders in gaming have produced some of the industry’s largest companies. Notably, in 1991, while Tim Sweeney was enrolled at the University of Maryland, he started Epic MegaGames studio, which later became Epic Games. Today, Epic Games is a titan in gaming, with its flagship title, Fortnite, generating billions of dollars in revenue every year. In addition, Epic’s other games such as Rocket League, Rock Band, and Gears of War, as well as its game engine, Unreal Engine, has gained significant traction today. Epic’s successful trajectory was sparked in the college dorm room.

Most recently, the popular co-op survival horror game Lethal Company was founded by Zeekerss. The young game developer began his journey in 2012 when he was only 10 years old, creating a wide variety of horror games on Roblox, a popular platform for user-generated content (UGC) in gaming. After graduating from high school and moving on to tools like Unity, Zeekerss eventually released Lethal Company in late 2023 which experienced a meteoric rise in popularity. Selling 10 million copies and $100 million in revenue, the game peaked at over 200,000 concurrent users.

Student founders change the way we play

At GC, we’ve had a history of backing young and student founders working in the gaming space. Kyle Zappitell, the founder of bash.gg, a browser-based gaming platform, founded the company shortly after graduating from University of Michigan. Asad Malik, the founder of Jadu.ar, an AR fighting game, began the company shortly after graduating from Bennington College. Sam Wang, the former founder of Proguides, now working on his next big project, built an esports team named Team 8, from his dorm room at UC Berkeley. Team 8 was acquired by the Immortals, one of the premiere esports teams today. Jake Brooks and Jared Geller, co-founders of Triumph Arcade, an SDK for games of skill, founded their company while still students at Stanford.

The unfair advantage — in four parts

There are four core reasons why student founders are best equipped to bring fresh energy and perspective to gaming. These same qualities, which give students a unique chance for success, are what get us most excited about the opportunity to invest in these young entrepreneurs. 

Young founders are best equipped to build for themselves 

We’ve long been believers that the consumer internet is outdated, and that it’s time to build by Gen-Z, for Gen-Z to create the next generation of the internet. Whether that’s in fitness, education, parenting, or love, we feel that the consumer segment as a whole is ripe for innovation. 

Gaming is no different. Increasingly, it’s an activity that young people like to enjoy together. For example, a majority of Roblox’s audience is younger than 16 years old, and a majority of Fortnite’s audience is between the ages of 18 and 24. In many ways, these digital-native gamers grew up with (and on) these gaming platforms and will be gaming for many decades to come. They innately understand their audiences and how to improve these games. As gaming evolves, they will build the next generation of gaming.

Distribution by (and to) young people has never been easier 

Platforms like Roblox and Fortnite’s Creative platform are expanding their focus on UGC and helping UGC creators create gaming businesses. Both help put game developers on equal footing as they look to market and distribute their games. Rather than focus on performance marketing and ads, which can be very costly for early studios, building a strong, sticky, and viral game can attract a platform’s attention and create a flywheel for enhanced distribution.

We believe younger founders are the best equipped to market to the next generation of gamers. Discord can host communities with millions of members, and speaking to audiences on TikTok is a great way to boost awareness of your product. As students, it’s never been easier to reach a mass audience in gaming through organic and community channels!

Gen-Z has been trained to build digitally-native businesses

As the first digitally-native generation, we believe that Gen-Z knows how to build digital businesses. Over the last few years, through the rise of NFTs & Crypto and Gen-Z’s adoption and ability to trade them, we’ve seen that the internet is already enabling young founders to think entrepreneurially. In gaming specifically, gamers have long traded ‘skins,’ or in-game cosmetic items, on virtual marketplaces like Skincashier for real-world money. We believe that Gen-Z has already begun to recognize the value of digital assets and will rethink the concept of ownership in the coming years.

Platforms like Roblox and Fortnite Creative only accelerate this trend. Roblox enables its developers to add in-game purchases and items, and Fortnite’s monetization system rewards heightened engagement and play-time amongst individual creators’ players. Given Gen-Z’s entrenched experience with these platforms and other experiences building businesses online, we feel that these founders are particularly well-equipped to not only build great gaming products online, but also convert those products into enduring businesses.

AI and better tooling democratize access to game creation

Over the last few years, gaming tools have developed to better handle specific parts of the tech stack, a trend that has only been accelerated by AI. Platforms like Roblox and Fortnite Creative streamline the physics of third person action games, but beyond that, tooling like Github’s copilot and Roblox and Unity’s AI tooling help streamline other aspects of game coding. Tools like Midjourney, Scenario, Leonardo, and Layer can help streamline 2D asset creation, while tools like optimizerai.xyz and suno.ai can help generate sound effects and music, and Hathora or Coherence can help streamline multiplayer creation. As long as a founder is able to dream up a game, they’ll soon be able to create it!

Student founders can shape the future of gaming

From the early days of computer science departments to contemporary game development studios, students have been at the forefront of designing games that captivate millions. These young entrepreneurs bring a fresh perspective to the table, building outside the box and challenging the status quo. Their work not only enriches the gaming landscape with diverse and engaging content but also inspires a new generation of developers to explore the boundless possibilities of interactive entertainment. Their enduring success within gaming history solidifies our conviction that gaming is a ripe space for student and Gen-Z founders to innovate.

If you’re a founder building something exciting in gaming, no matter where you are in the journey, we’d love to hear from you!

Published
March 15, 2024
Share
#
min read

Over the last decade, gaming has gone from a niche hobby to a mainstream phenomenon that people of all ages enjoy. From desktops and consoles to mobile devices and headsets, gaming now reaches a global audience of over 3B players and generates over $187B in revenue. 

With such widespread popularity, not surprisingly, gaming has attracted significant attention from VCs including us here at General Catalyst — although we have a long history of gaming investments including most notably our investment in Discord in 2012. Last year alone, VCs completed 376 deals with $2B of funding to support founders who are working to bring next-generation experiences to gamers. At General Catalyst Venture Fellows (GCVF), we believe that gaming is one area that student and Gen-Z founders are particularly well-equipped to not only tackle, but truly lead.

How gaming leveled up from the dorm room 

There is strong precedent for students affecting the gaming space since its very inception. While there is much debate among gaming historians as to what counts as the first video game, one is worth noting: Spacewar!. In 1962, a group of graduate students and MIT employees created the two-player spaceship fighting game, predating the classic game, Pong, by a full decade (1972). Spacewar! involved fast-reflex mechanics and a scrolling starfield backdrop built by Peter Samson who, at the time, was just a 21-year-old undergraduate student. Written for the PDP-1 (Programmed Data Processor-1), multiple universities and research labs could install and play the game, making it an instant hit. Spacewar!’s simple, yet rich gameplay and portability led to widespread distribution and inspired the likes of Nolan Bushnell, who founded Atari, as well as Steve Jobs and Steve Wozniak who would play Spacewar! while at Stanford’s artificial intelligence lab.

Beyond early successes, student-founders in gaming have produced some of the industry’s largest companies. Notably, in 1991, while Tim Sweeney was enrolled at the University of Maryland, he started Epic MegaGames studio, which later became Epic Games. Today, Epic Games is a titan in gaming, with its flagship title, Fortnite, generating billions of dollars in revenue every year. In addition, Epic’s other games such as Rocket League, Rock Band, and Gears of War, as well as its game engine, Unreal Engine, has gained significant traction today. Epic’s successful trajectory was sparked in the college dorm room.

Most recently, the popular co-op survival horror game Lethal Company was founded by Zeekerss. The young game developer began his journey in 2012 when he was only 10 years old, creating a wide variety of horror games on Roblox, a popular platform for user-generated content (UGC) in gaming. After graduating from high school and moving on to tools like Unity, Zeekerss eventually released Lethal Company in late 2023 which experienced a meteoric rise in popularity. Selling 10 million copies and $100 million in revenue, the game peaked at over 200,000 concurrent users.

Student founders change the way we play

At GC, we’ve had a history of backing young and student founders working in the gaming space. Kyle Zappitell, the founder of bash.gg, a browser-based gaming platform, founded the company shortly after graduating from University of Michigan. Asad Malik, the founder of Jadu.ar, an AR fighting game, began the company shortly after graduating from Bennington College. Sam Wang, the former founder of Proguides, now working on his next big project, built an esports team named Team 8, from his dorm room at UC Berkeley. Team 8 was acquired by the Immortals, one of the premiere esports teams today. Jake Brooks and Jared Geller, co-founders of Triumph Arcade, an SDK for games of skill, founded their company while still students at Stanford.

The unfair advantage — in four parts

There are four core reasons why student founders are best equipped to bring fresh energy and perspective to gaming. These same qualities, which give students a unique chance for success, are what get us most excited about the opportunity to invest in these young entrepreneurs. 

Young founders are best equipped to build for themselves 

We’ve long been believers that the consumer internet is outdated, and that it’s time to build by Gen-Z, for Gen-Z to create the next generation of the internet. Whether that’s in fitness, education, parenting, or love, we feel that the consumer segment as a whole is ripe for innovation. 

Gaming is no different. Increasingly, it’s an activity that young people like to enjoy together. For example, a majority of Roblox’s audience is younger than 16 years old, and a majority of Fortnite’s audience is between the ages of 18 and 24. In many ways, these digital-native gamers grew up with (and on) these gaming platforms and will be gaming for many decades to come. They innately understand their audiences and how to improve these games. As gaming evolves, they will build the next generation of gaming.

Distribution by (and to) young people has never been easier 

Platforms like Roblox and Fortnite’s Creative platform are expanding their focus on UGC and helping UGC creators create gaming businesses. Both help put game developers on equal footing as they look to market and distribute their games. Rather than focus on performance marketing and ads, which can be very costly for early studios, building a strong, sticky, and viral game can attract a platform’s attention and create a flywheel for enhanced distribution.

We believe younger founders are the best equipped to market to the next generation of gamers. Discord can host communities with millions of members, and speaking to audiences on TikTok is a great way to boost awareness of your product. As students, it’s never been easier to reach a mass audience in gaming through organic and community channels!

Gen-Z has been trained to build digitally-native businesses

As the first digitally-native generation, we believe that Gen-Z knows how to build digital businesses. Over the last few years, through the rise of NFTs & Crypto and Gen-Z’s adoption and ability to trade them, we’ve seen that the internet is already enabling young founders to think entrepreneurially. In gaming specifically, gamers have long traded ‘skins,’ or in-game cosmetic items, on virtual marketplaces like Skincashier for real-world money. We believe that Gen-Z has already begun to recognize the value of digital assets and will rethink the concept of ownership in the coming years.

Platforms like Roblox and Fortnite Creative only accelerate this trend. Roblox enables its developers to add in-game purchases and items, and Fortnite’s monetization system rewards heightened engagement and play-time amongst individual creators’ players. Given Gen-Z’s entrenched experience with these platforms and other experiences building businesses online, we feel that these founders are particularly well-equipped to not only build great gaming products online, but also convert those products into enduring businesses.

AI and better tooling democratize access to game creation

Over the last few years, gaming tools have developed to better handle specific parts of the tech stack, a trend that has only been accelerated by AI. Platforms like Roblox and Fortnite Creative streamline the physics of third person action games, but beyond that, tooling like Github’s copilot and Roblox and Unity’s AI tooling help streamline other aspects of game coding. Tools like Midjourney, Scenario, Leonardo, and Layer can help streamline 2D asset creation, while tools like optimizerai.xyz and suno.ai can help generate sound effects and music, and Hathora or Coherence can help streamline multiplayer creation. As long as a founder is able to dream up a game, they’ll soon be able to create it!

Student founders can shape the future of gaming

From the early days of computer science departments to contemporary game development studios, students have been at the forefront of designing games that captivate millions. These young entrepreneurs bring a fresh perspective to the table, building outside the box and challenging the status quo. Their work not only enriches the gaming landscape with diverse and engaging content but also inspires a new generation of developers to explore the boundless possibilities of interactive entertainment. Their enduring success within gaming history solidifies our conviction that gaming is a ripe space for student and Gen-Z founders to innovate.

If you’re a founder building something exciting in gaming, no matter where you are in the journey, we’d love to hear from you!