ForeVR's Financial Backers
ForeVR's initial funding fund is best seen as a seed round. As such, early investors are mainly individuals who know the industry rather than large venture capital firms. The Galaxy Interactive Fund, based in New York, is the principal institutional investor in the company. Galaxy Interactive has been investing steadily through the pandemic. Beyond ForeVR, Galaxy has invested in GreenPark Sports (video games based on sports), Tilt Five (holographic games), and HourOne AI (uses artificial intelligence to create characters based on real-world individuals).
Individual backers in ForeVR include Zynga founders Mark Pincus and Justin Waldron. Zynga, which earned $500 million in revenue in Q3 2020, is the company behind games such as Farmville and Zynga Poker. Also, senior individuals from Twitch, the video game streaming platform, are supporting the company, including Twitch CEO Emmett Shear and co-founder Justin Kan.
Investments from the Twitch leaders are particularly notable. Shear's previous investments include Cruise (autonomous vehicles) and SocialCam (a photo editing app for Android and iPhone). Shear's expertise in consumer-facing technology from investments and Twitch suggest that he may be able to offer something more than a check: expertise and industry introductions.
From PayPal Mafia to Zynga Mafia?
PayPal, one of the most successful fintech companies, became famous for what its staff went on to achieve. PayPal co-founder Elon Musk went on to run SpaceX, Tesla, and other ventures with the fortune he made through PayPal. Another PayPal alumnus, Peter Thiel, became a billionaire entrepreneur and investor known for investing in Facebook and founding Palantir Technologies. A whole generation of technology firms benefited from PayPal's success. That trend may be starting to repeat in the gaming industry.
If ForeVR becomes a success, it might be due to Zynga's success. ForeVR's founders both developed their gaming experience by working at Zynga. Furthermore, Sam Englebardt, managing partner of Galaxy Interactive, also worked at Zynga. It's no wonder that Zynga achieved a multi-billion dollar valuation at its IPO.
ForeVR's Key Challenge — Selling to a Small VR Owner Marke
Developing VR games represents a different kind of challenge from other games. With a PC, web, or smartphone game, players already own the hardware to play. In that sense, Zynga didn't have to worry about player hardware.
ForeVR faces a challenge closer to the leading console game makers such as Microsoft, Nintendo, and Sony, who have to sell a dedicated hardware device and games. ForeVR's success will depend on the distribution of the Oculus VR gear. According to Variety, Oculus was expected to sell more than one million units in 2019. Sales volume for the Oculus hardware is difficult to determine because Facebook does not report this data. Furthermore, Facebook acquired Oculus for $2 billion in 2017.
In contrast, Microsoft has sold approximately 24 million Xbox units. Xbox gamers may not switch away from the platform if they have recently purchased a higher-end Xbox or a subscription to Xbox All Access. The Oculus VR headsets range in price from $399 to $459, depending on features such as memory. In contrast, the latest Xbox is available for upfront purchase or a monthly price of less than $50.
ForeVR's Other Market Opportunity — Esports
Fortunately, ForeVR is not solely dependent on winning customers who happen to own VR equipment. ForeVR will have an entry point into the esports industry by focusing on a VR bowling game. Given that some of ForeVR's early investors come from the Twitch streaming platform, watching esports may be part of its long-term strategy.
According to Business Insider, there are more than 400 million viewers for esports in 2019. That figure was already set to grow before the COVID-19 pandemic largely eliminated other types of leisure. The esports viewing audience can lead to revenue, which is indicated by Twitch’s earnings of an estimated $230 million in 2018 through advertising alone. If ForeVR's VR games offer a more compelling experience than conventional games, it might earn even more.
About the Author
Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.