Lila Games has raised $2.8 million to build a game studio and craft a new subgenre of mobile shooter games. It’s another example of the boom in game investing led by game-focused venture capital firms.
The company is creating a free-to-play mobile game currently dubbed Project B.L.A.C.K. Lila Games is different in part because its home base will be in Bangalore, India, while most of its founders are in the U.S.
Games are expected to hit $174.9 billion in revenue in 2020, and 49% of the revenues, or $86.3 billion, will be from mobile games, according to market researcher Newzoo. That growth, as well as the resilience of games during the pandemic, has fueled an investment and acquisition boom. Lila Games is the latest to benefit from this.
The founders include Joseph Kim, a former chief product officer at Sega and studio lead at FunPlus. He led the overall development of the hit 4X title King of Avalon. Another founder is Paul Leydon, a former lead game designer at FunPlus and Machine Zone. He worked on titles such as Game of War: Fire Age, and he is the brother of Machine Zone founder Gabe Leydon.
“We’re trying to create a very ambitious and different kind of shooter game,” said Kim, in an interview with GamesBeat. “If you look at the current market today 80% of the market on mobile is battle royale or Team Deathmatch.”
The third founder is Avinash Pandey, who has led development on over 50 mobile apps and games, including the real-time multiplayer shooter Mask Gun that generated over 40 million organic installs. Pandey is based in India and will help establish the studio there.
Leydon and Kim worked on titles in the 4X strategy category, a type of game that involves building an empire and expanding it through exploration or war — much like Sid Meier’s Civilization.
“What we’re trying to do is to actually take a lot of the lessons and learnings in that category,” Kim said. “In other words, if you look at shooters today, the majority monetize based upon buying cosmetics in a Battle Pass system. It can be very difficult in monetization.”
By contrast, 4X games monetize in a variety of different ways (though, of course, some of those are viewed as anti-player, with pay-to-win schemes). And in an age when Apple is retiring the Identifier for Advertisers (IDFA), or reducing targeted advertising in the name of privacy for users, Kim said that game companies have to be careful about how they think about monetization.
It’s worth interjecting that Apple’s push for privacy over targeted advertising is now affecting the strategy of startups in the game industry.
Among the game companies Kim admires when it comes to monetization: Supercell, maker of Clash of Clans and Clash Royale. That’s because its gameplay is usually a step up, and its growth is organic. Rather than emphasize “whales,” or those who spend a lot of money, Supercell tries to widen the percentage of people who monetize by optimizing against the player experience.
“One reason the strategy games are different is that social is much more deeply integrated in those games,” Kim said. “There are reasons that you have social interaction in those games. The question is how do you make people care about something in the game, through deep social interaction.”
Within alliances in games such as Game of War, players can be worker bees in real life but be heroes that are known by 30,000 people in the game, Kim said.
“You have this idea of how to make somebody famous in a game community,” Kim said. “We’re trying to bring this to shooters. We hope it will be the most ambitious mobile game ever designed.”
Influencers have become famous as such heroes, but mainly by broadcasting outside of the game on platforms such as Twitch. Kim wants to make them famous inside the game.
Bitkraft Ventures led the round with participation from Galaxy Interactive and game industry angel investors including Mike Sherrill, cofounder of Machine Zone; Kristian Segerstrale, the CEO of Super Evil Megacorp; and Ludovic Bodin, a former CEO of early mobile shooter maker Cmune.
As soon as the pandemic allows, the company plans to open an office in Bangalore and recruit developers, Kim said.
As a high-growth genre, the mobile free-to-play shooter gaming market has been expanding rapidly with over 91.5% compound annual growth rate (CAGR), according to market researcher App Annie.
In Western markets, the genre has a 47.7% CAGR net revenue growth in the past two years. Jens Hilgers of Bitkraft, which has invested in more than 50 game companies, said that the company believes the first-person shooter market on mobile is in its infancy, and sub-genres on mobile are like to be good growth opportunities.
Kim said he saw a lot of interest from game-focused VCs, which number more than 30 across the world now, as well as from traditional VCs who are interested in investing in games.
Kim said that the development team can be large as needed, but he doesn’t foresee the U.S. side of the team growing larger than five or 10 people.
“We’re betting on India, but we’re not targeting the Indian market,” Kim said. “We want to make a flagship product that is global and takes advantage of India’s cost structure.”