Friday, July 24, 2009

Valve's Gabe Newell discusses community-based venture capitalism

Valves Gabe Newell discusses community-based venture capitalism

In a new interview with ABC TV's Good Game, Valve's co-founder Gabe Newell has some interesting thoughts on piracy and copy protection (not a good direction in which to move, he says) as well as a new means by which to fund games -- radical stuff:

"One of the areas that I am super interested in right now is how we can do financing from the community. So right now, what typically happens is you have this budget - it needs to be huge, it has to be $10m - $30m, and it has to be all available at the beginning of the project. There’s a huge amount of risk associated with those dollars and decisions have to be incredibly conservative.

What I think would be much better would be if the community could finance the games. In other words, ‘Hey, I really like this idea that you have and I'll be an early investor in that and, as a result, at a later point I may make a return on that product, but I’ll also get a copy of that game.’

In venture capital there's a concept that your best investors are your customers, because they have 'secondary gain.' If you are successful they not only want a return on their money, but they're incredibly happy if you actually make a great game that they get to play. It would be really great if we could evolve Steam in a way that made it possible so that a developer could say, you know, 'if you want this game to start moving forward, here's the sort of 'seed round',' were people can sort of opt-in and say 'I'll pay thirty dollars and I own a piece of this game going forward.'

So move financing from something that occurs between a publisher and a developer… Instead have it be something where funding is coming out of community for games and game concepts they really like.”

Sounds like anarchy, so naturally we approve.

Given the game industry seems to get more expensive all the time, and more job cuts and studio shutdowns than ever seem to be occuring, could this be viably be a prominent means of funding going forward? Steam has over 20 million accounts, after all, and $30 is cheaper than what we pay now. If so, an industry funded largely by gamers could only be good for innovation.



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