Are virtual concerts here to stay?

The COVID-19 pandemic pushed the music industry to experiment seriously with virtual concerts.

Historically, musicians and their managers have been careful about challenging the traditional concert model that became their main source of income as revenue from album sales disappeared.

Is the current surge of virtual concerts here to stay or will it be abandoned as soon as large in-person gatherings are permitted again and the novelty of concerts in Fortnite wears off?

For the middle tier of recording artists, virtual concerts are shaping up to be a worthwhile part of their business portfolio, generating healthy income and engaging a geographically dispersed base of core fans. For the top tier of artists — those who perform in stadiums and arenas — the opportunity cost of virtual concerts doesn’t make financial sense to do very often once in-person concerts return. That said, a couple such performances each year can unlock a lot of the untapped potential revenue from fans who can’t attend their normal concerts.

Virtual concerts are having their moment

There’s no opportunity cost to trying a virtual concert during a pandemic. Artists aren’t performing, touring, shooting videos or even doing in-person sessions with songwriters. With everyone stuck at home, fans will forgive a disappointing attempt at performing online and artists have time to experiment. Live Nation, the dominant concert promotion and venue management company, has even converted its site to curating a schedule of virtual performances.

Virtual concerts have been growing in three formats: video streaming platforms, within the virtual worlds of video games and virtual reality.

Concerts via video

Starz CEO Jeffrey Hirsch on programming in a digital world

In the war between subscription video on-demand (SVOD) services like Netflix and Amazon Prime Video, Starz has been growing on the sidelines and fighting to be the preferred add-on for consumers on top of their primary subscription. That journey has required the longtime premium cable TV network to rethink its target audience, content strategy and pricing.

It now has more than two million subscribers on its direct-to-consumer video platform and roughly seven million subscribers when including all the users of other SVOD services in the U.S. who pay for Starz as an add-on. I recently spoke to Jeffrey Hirsch, the company’s CEO since last September (and COO before that), about how he defines Starz’ overall strategy now and the process through which his team determined new pricing, new content strategy and international expansion.

Below is our conversation, edited for length and clarity:

TechCrunch: Who do you think of as Starz’ core audience?

Jeffrey Hirsch: What we found from the data was women were driving our transition from the old world to the new world. We did a bunch of research and realized that women are twice as likely to buy apps under $10, their lifetime value is higher, they are more loyal and they become a guerilla marketing engine for the company.

We refined our programming strategy domestically to focus premium content on the female audience. There’s three kinds of demos underneath that: There is a general female point of view, there is an African American female point of view and there is a Latina point of view. If you look at our programming, we got there based on the strength of our show “Power,” which is our biggest show and is 65% African American female, and then “Outlander,” which is over 80% female.

Newzoo forecasts 2020 global games industry will reach $159 billion

Games and esports analytics firm Newzoo released its highly cited annual report on the size and state of the video gaming industry yesterday. The firm is predicting 2020 global game industry revenue from consumers of $159.3 billion, a 9.3% increase year-over-year. Newzoo predicts the market will surpass $200 billion by the end of 2023.

Importantly, the data excludes in-game advertising revenue (which surged +59% during COVID-19 lockdowns, according to Unity) and the market of gaming digital assets traded between consumers. Advertising within games is a meaningful source of revenue for many mobile gaming companies. In-game ads in just the U.S. drove roughly $3 billion in industry revenue last year, according to eMarketer.

To compare with gaming, the global markets for other media and entertainment formats are:

Counting gamers

Of 7.8 billion people on the planet, 4.2 billion (53.6%) of whom have internet connectivity, 2.69 billion will play video games this year, and Newzoo predicts that number to reach three billion in 2023. It broke down the current geographic distribution of gamers as:

  • 1,447 million (54%) in Asia-Pacific
  • 386 million (14%) in Europe
  • 377 million (14%) in Middle East & Africa
  • 266 million (10%) in Latin America
  • 210 million (8%) in North America

Where to open a game studio

With the game industry booming, more entrepreneurs are evaluating where to base their new startup or open a new office for their existing company. The U.S. government’s block on H1-B and L-1 visas will encourage American game startups to add an office abroad much sooner than they otherwise would have. But where?

This spring, I surveyed a number of gaming-focused VCs about which cities are the best hubs for game studios targeting the Western games market. Several locales stood out as heavily recommended — which I’ve shared below — but the most interesting takeaway was the lack of consensus.

Game studios are far less geographically concentrated than other categories of VC-backed startups. While there are odes on Twitter and conference stages that “you can build a successful startup anywhere,” most investors will push founders to locate themselves in the SF Bay Area, or at least in LA, NYC or London. Meanwhile, the most common piece of advice from those I spoke to: You should probably not base a gaming startup in the San Francisco Bay Area.

Access to the right talent is the top priority, as is the ability to retain them. Proximity to investors matters, but a successful game quickly turns a profit, which reduces the need for outside funding beyond Series A (and U.S. and European VCs who focus on gaming tend to be very international in scope). Quality of life, ease of obtaining visas and access to strategic partners all play into the decision as well and will weigh these recommendations differently depending on who you are and the games you’re developing.

Three notes:

  • I focused on qualitative research, gauging the assessments of top investors who track new startups in the sector about where the action is right now. 
  • The scope of this survey is limited to studios targeting the Western gaming market, so leading hubs in Asia weren’t included.
  • I group cities by metropolitan area so, for example, San Francisco includes Redwood City and Seattle includes Bellevue.

North America

In North America, Los Angeles is the clear favorite with Montreal, Seattle, San Francisco, Toronto and Vancouver all receiving many endorsements as the other top hubs. Regarding cities with the most interesting gaming startups recently, Ryann Lai of Makers Fund said, “It is hard to name a single best location, but Toronto, Culver City (in Los Angeles), Orange County (next to Los Angeles) have gotten increasingly popular among gaming founders lately.”

What went wrong with Quibi?

Two months after Quibi’s high-profile launch as a short-form mobile-native TV app led by Jeffrey Katzenberg and Meg Whitman, it is evident the startup is greatly underperforming relative to the hundreds of millions of dollars already spent on content and marketing. 

According to a Wall Street Journal report, “daily downloads peaked at 379,000 on its April 6 launch day but didn’t exceed 20,000 on any day in the first week of June, according to Sensor Tower.” The article says Quibi is on pace for just 2 million subscribers by year-end, from its predicted 7.2 million. Most of the current subscriber base is on free trials, so even just maintaining the current pace of subscriber growth for several more months will be challenging. Quibi hasn’t released any of its own stats on subscribers, which it almost certainly would do to combat the negative perception among investors and press, if the stats showed a lot of traction.

I argued in 2018 that Facebook should turn its IGTV into a Quibi competitor, and I continue to believe there’s untapped opportunity for premium, mobile-native storytelling apps. So what went wrong with Quibi? There appear to have been four key mistakes:

  1. Miscalculating the risk of launching during the COVID-19 lockdown.
  2. Failing to see the central role of interactivity in mobile-native entertainment.
  3. Creating misaligned financial incentives with the wrong content partners.
  4. Launching Quibi like a movie instead of like a startup.

Confronting racial bias in video games

Protests across the U.S. over police violence and systemic racism against Black Americans have sparked gaming companies like Electronic Arts, Epic Games and Sony Interactive Entertainment/PlayStation to publish statements of their support and make donations to relevant advocacy organizations.

These are positive actions, but the most impactful thing game companies can do is take action internally. Racial bias is baked, usually unintentionally, into games by those who develop them. This creates a recurring pattern of Black and Latinx characters being stereotyped or completely absent in games, which is invalidating and demeaning.

There are 2.5 billion gamers in the world, a group that includes consumers across every ethnicity and age (especially in mobile gaming, the largest market segment). Quartz has noted that “57% of video game players in the U.S. between the ages of 6 and 29 will be people of color in less than 10 years.” Black and Latinx youth in the US spend more time per day, on average, on both mobile games and console games than white youth. For hundreds of millions of gamers globally — particularly in demographics driving the industry’s rapid growth — there are very few games whose stories center on characters like them. That is also a missed business opportunity.

“Telling these stories isn’t as niche as people think it is. Look at [the Marvel movie] Black Panther,” says Rashad Redic, co-founder and Chief Creative Officer of Brass Lion Entertainment, “The content is defined by whether it’s entertaining, period.”

Beyond characters’ skin color, there are subtle aspects of game development that contribute to underrepresentation or misrepresentation. The consistent view among gaming executives and researchers I interviewed for this article is that the lack of diversity among employees at leading gaming companies results in leadership remaining largely oblivious to this.

Raising this simple critique isn’t always welcome. Games industry journalist Gita Jackson, for example, has described the criticism she gets anytime she mentions the race of characters within a game. “I think the presence of more video game characters who are women of color is good … These should not be controversial statements — I’m simply stating something I appreciate, something that’s relevant to me,” she wrote last year, “and yet some readers responded as if I’d suggested that all gamers should amputate their pinky toes.”

Character representation

One of the most extensive studies of racial representation in games was a 2009 study that analyzed 150 of the most popular titles. Black characters comprised 10.7% of characters, roughly on parity with the then-most recent census data that 12.3% of Americans are Black, and only 2.7% of characters were Latinx (relative to 12.5% representation in the U.S. population). But Dmitri Williams, a professor at the University of Southern California and the lead author of that study, says that Black representation is even lower if you only look at primary characters and that in any case “athletes in sports games account for most of the Black characters in those games.”

Kishonna Gray, a professor at the University of Illinois—Chicago, highlights that merely tracking the number of Black characters present in games misses the point of how they are represented. “In film, there have historically been three roles you see Black characters in: Black as violent, Black as the sidekick, Black as the help. This has also been true in video games.”

Furthermore, she argues that “sports games should be removed from those analyses since they are just copying real people from the real world” and mask the statistics that would show how infrequently Black characters arise from the creative process at most game studios.

Casting specific demographics in a certain light in any form of media has an impact on consumers’ perception of those demographics in the real world. At least one academic study found that white participants were more likely to associate Black faces with negative words after playing a violent video game as a Black character than after playing a violent video game as a white character.

When the only option to experience the fantasy worlds of many games is through white characters, it internalizes in many gamers that those fantasy worlds weren’t designed for them. “Anything is possible in games,” Gray told me in reference to her passion for the industry, “But anything is only possible for white characters. When they add Black characters to a game they root them only in their real world context … why can’t Black characters ride dragons?”

Game developer demographics

Data has shown that the representation of different races within games correlates to the racial makeup of the game development community. According to Williams. “It was pretty much a one-for-one representation.”

The International Game Developers Association (IGDA) found in the 2019 edition of its annual survey that among game developers worldwide:

  • 81% identify as “white/Caucasian/European”
  • 7% identify as “Hispanic/Latinx”
  • 2% identify as “Black/African-American/African/Afro-Caribbean”

“People draw their inspiration from their experience,” explained Gray, “that’s why we still have a problem with representation.” Redic said that during his career — which includes roles at top gaming companies like Bethesda and Crytek — he has frequently been “the only — or one of very few — Black guy among hundreds of game devs at a company.”

Tanya DePass, founder of the non-profit I Need Diverse Games, makes the point that for companies wanting to improve diversity in their content, “the biggest thing is diverse staff, and diverse staff at leadership level.” Moreover, her advice to game studios is to hire outside experts who can review their development plans and give feedback on where their content may stereotype or misrepresent an ethnic group: “Bring in diversity consultants in the beginning, not a month before launch, and treat it seriously.”

One company that uses consultants is Niantic, the studio behind Pokémon Go and Harry Potter: Wizards Unite. It has also implemented “Diversity and Inclusion check-ins through a game’s concept, preproduction and postproduction phases,” according Trinidad Hermida, the company’s Head of Diversity and Inclusion. “These check-ins look at everything from character design to evaluating whether the internal Niantic team working the product is diverse,” she explained, “Every new game we publish must go through this process to launch.”

Good intentions, slow progress

That IGDA survey last year also found that 87% of game developers said “diversity in game content” is “very important” or “somewhat important,” which offers optimism that representation can improve as developers are pushed to think of diversity less in the abstract and more in the context of the specific games they work on.

The number of Black or Latinx characters across popular games is indeed growing, even if that progress is quite slow relative to the pace at which the demographic makeup of the gaming community is diversifying. Examples can be found in Moby Games’ list of games with Black protagonists through 2017 and the list of Black video game characters on Wikipedia.

Giving users lots of options to customize their avatar’s appearance goes a long way in helping different demographics of gamers feel welcomed and emotionally attached to a game. This is increasingly common in games, but there are often more limited options for Black avatars, like the ability to choose natural hair styles. DePass says that game developers “are often not thinking about the fact that there are other people who also want to see themselves [in creating their avatar].” And when they do, the homogeneity of their team can lead to foreseeable mistakes. For example, DePass expressed that “If Black hair is available at all, it looks bad. Sometimes there’s 5 inches between braids; or Afros look like steel wool. It’s like, ‘Have you ever met a Black person or seen photos of black hairstyles?’”


Cyberbullying is a big issue in games, MMOs in particular, and in their efforts to combat it, gaming executives should recognize that both female gamers and Black and Latinx founders are particularly targeted with abuse, often denigrated with slurs and racist jokes.

A small but important step that developers can take, according to Gray, is giving players the option to mark racist behavior as the reason for submitting a complaint against another user. Many games have added the ability to mark a complaint as being due to gender discrimination, she notes, but the lack of a similar option for racism permits game studios to remain ignorant about how often racism occurs on their platform. Collecting data on a problem allows for more measurement of that problem and more effective action to address it.

Building for an underserved market

As DePass noted in our call, “There aren’t a lot of Black creators of games, but there are a lot of Black buyers of games.” There is business opportunity in creating content that better speaks to often-overlooked segments of the gamer community.

The natural question here is: If making games with narratives that center on Black or Latinx characters is a compelling business opportunity, why hasn’t it already been tapped? Leadership at established gaming companies “have a sense of who is a gamer, and who isn’t, that is very archaic” says Glow Up Games CEO Mitu Khandaker, whose studio is developing a mobile game leveraging IP from the HBO show “Insecure.”

Likewise, she explains, entrepreneurs who found their own studios with this thesis quickly find that the major funding sources (publishers and venture capitalists) are composed of ethnically homogenous teams who are quick to judge such games as niche.

As a result, the game developers focused on building games that speak to Black and Latinx audiences remain stuck in the indie games space, lacking the resources or industry credibility to develop a AAA title.

There’s a long list of societal problems that contribute to the disproportionately small number of Black software engineers entering the games industry or in leadership roles in the industry, from less access to high-quality STEM education in K-12 to employers devaluing degrees from historically Black colleges and universities to the well-researched pattern of resumes with white-sounding names receiving dramatically more job interviews.

Khandaker noted that the perceived lack of representation and role models for Black engineers looking at the gaming industry causes many to avoid the sector altogether, and many who enter the industry leave it in frustration.

Taking responsibility

On our recent call, Williams shared his memory of speaking on a panel about racial bias in games at the DICE Conference for game executives: “In the few minutes of transition between the prior session and my panel, roughly 90% of the audience left.”

A repeated sentiment among several of those I interviewed for this post was that the problem is not gaming executives with harmful intent so much as gaming executives lacking the interest or empathy to treat diversity as an issue that they personally should dedicate time to address. Discussion of diversity, whether at conferences or otherwise, is still too often treated as a token matter for purposes of political correctness, not a pressing business problem to solve.

If the current news cycle is helping change that attitude and energize executives in the industry to step up, the most impactful action they can take is to approach diversity as a product development priority not as a PR issue.

With stadiums closed, TV networks turn to live esports broadcasts

The COVID-19 pandemic has wiped out the spring seasons for professional sports and associated revenue for TV networks, but esports is filling part of that void.

Gaming companies behind titles licensed by each major league are the winners in this unexpected shift; Electronic Arts (EA) is first among them with FIFA, Madden NFL, NBA Live and NHL in its EA Sports portfolio and more than 100 esports events planned for 2020. The way EA, networks and sports leagues are responding to production challenges in this crisis will reshape the esports market going forward.

Millions of people sheltering in place has created a breakout opportunity for esports broadcasting:

  1. A large portion of the internet-using population is at home 24/7, with screens as their main entertainment outlet;
  2. Sports fans have few competitive live events to watch;
  3. Broadcasters like ESPN, CBS, and Sky lost their most valuable content for attracting live viewers and need alternative content;
  4. Star athletes and non-sports celebrities are stuck at home with wide-open schedules.

In late March, 900,000 viewers tuned into Fox Sports for Nascar’s iRacing series, with 1.1 million watching in early April; the network has also broadcast Madden NFL tournaments with NFL commentators and athletes. ESPN is televising NBA players facing off against each other in NBA 2K (by Take-Two Interactive) and pro drivers (and other pro athletes like Manchester City striker Sergio Aguero) are racing each other in Codemasters’ F1 2019 game. ESPN has broadcast competitive play of non-sports games with League of Legends (by Riot Games) and Apex Legends (by EA) tournaments.

To be clear, ratings for these events have have varied widely, but networks and game companies are rethinking how esports is broadcast, which will advance its pop-culture appeal.

Games adapting pro sports are best bridge to non-gamers

Esports is a massively popular activity with its own large piece of turf in pop culture, but it hasn’t secured a central role. Research firm Newzoo pegs the global audience of “esports enthusiasts” at 223 million. But unlike soccer and basketball, esports is siloed because it caters to viewers who are generally avid gamers. The action is extremely fast, so commentary by a streamer rarely helps outsiders understand what is going on enough to become engaged.

CRV’s Saar Gur wants to invest in a new wave of games built for VR, Twitch and Zoom

Saar Gur is adept at identifying the next big consumer trends earlier than most: The San Francisco-based general partner at CRV has led investments into leading consumer internet companies like Niantic, DoorDash, Bird, Dropbox, Patreon, Kapwing and ClassPass.

His own experience stuck at home during the COVID-19 pandemic spurred his interest in three new investment themes focused on the next generation of games: those built for VR, those built on top of Twitch and those built for video chat environments as a socializing tool.

TechCrunch: We’ve been in a “VR winter,” as it’s been called in the industry, following the 2014-2017 wave of VC funding into VR drying up as the market failed to gain massive consumer adoption. You think VR could soon be hot again. Why?

Saar Gur: If you track revenues of third-party games on Oculus, the numbers are getting interesting. And we think the Quest is not quite the Xbox moment for Facebook, but the device and market response to the Quest have been great. So we are more engaged in looking at VR gaming startups than ever before.

What do you mean by “the Xbox moment,” and what will that look like for VR? Facebook hasn’t been able to keep up with demand for Oculus Quest headsets, and most VR headsets seem to have sold out during this pandemic as people seek entertainment at home. This seems like progress. When will we cross the threshold?

VCs see opportunities for gaming infrastructure startups and incumbents

As the infrastructure for developing games becomes more advanced, studios have turned to buying best-in-class technology from others instead of building everything from scratch (often with inferior quality).

This shift underpinned Unity’s rise as the most popular game engine. The current focus on games as ever-evolving social hubs that can remain popular for a decade requires investment in “live ops” to keep updating the game with new features and experiences, only adding to a game studio’s responsibilities.

There are big movements in gaming right now to make games cross-platform (not just restricted to mobile or PC or one console), incorporate new types of chat (in-game or outside of it) and to automatically remove bullies and bots among other things. Optimizing games’ virtual economies is only getting more complex as trade of virtual goods becomes increasingly popular.

All this means more opportunity for startups (and large incumbents) that provide new tools and platforms to game developers and gamers. To gauge which opportunities are prime for entrepreneurs, I asked four leading early-stage investors who focus on the gaming sector to share their analysis:

  • Sam Englebardt, Galaxy Interactive
  • Gigi Levy Weiss, NFX
  • Amit Kumar, Accel
  • Anton Backman, Play Ventures

Sam Englebardt, Galaxy Interactive

Which areas within gaming infrastructure seem firmly dominated by large incumbents, versus open for new startups to rise up?

I’m always rooting for the startup, but some of the really big and expensive infrastructure challenges seem unlikely to be solved by a startup, especially where the incumbents have a lead in time, money and the personnel they’re throwing at the problem. I’m thinking here, for example, about something like cloud computing, storage solutions, etc.

Recap: Roblox, SuperAwesome and Fingerprint execs discuss kids’ media

Consumption of all types of kids-focused digital media has soared with a large portion of the world’s children home from school right now. At all times of day, children are playing games, watching shows and using edtech tools — often in a social context with friends online.
This only accelerates the normalization of virtual spaces as social hubs, and it makes protection of children’s data a more pressing concern for entertainment and communications platforms (like Zoom) that haven’t built a product specific to this demographic.
During last week’s TechCrunch Live session on the state of kids’ media, I had an engaging discussion with three industry leaders about how COVID-19 is impacting companies in the space and what long-term changes could result from it:

  • Craig Donato, chief business officer of Roblox, the $4 billion gaming platform that counts the majority of U.S. kids age 9-12 among its active users.
  • Nancy MacIntyre, co-founder and CEO of Fingerprint, the company behind Kidimo, a leading subscription video and gaming service for children.
  • Dylan Collins, co-founder and CEO of SuperAwesome, the London-based creator of “kid-safe” adtech and privacy tools.

Below is the recording of our conversation as well as the full transcript (with minor edits for clarity):

TechCrunch: The COVID-19 crisis has put families all at home together and changed a lot for your businesses. I want to set context first by looking at the couple years leading up to this. What have been the two biggest changes in the kids’ media space from your perspectives?

Craig Donato: One huge shift that we’ve seen over the last five years is the evolution of games into social places — experiences where kids hang out with their friends, do things with them versus these narrow competitive environments. We really see Roblox as a medium of shared experience. That’s a pretty significant shift, and it’s really benefited platforms like Roblox, but also Minecraft and Fortnite.