Benchmark Capital investor speaks out on uncertainty of digital transformation
The rise of digital distribution and new business models has left publishers in an uncertain position, says investor Mitch Lasky.
The Benchmark Capital investor has been behind some of the most successful funding operations in recent industry history, including Gaikai and Riot games, which were recently purchased for $380 and $400 million respectively by major industry players.
In a fireside chat at VentureBeat's Gamesbeat 2012 conference, Lasky argued that in a changing market, the burden of proof is on the incumbent publishers.
"I think we’re in a period right now where it is unclear what a publisher is or does," he said.
"I think we’re still feeling our way through where we come out at the other end of that. I have some ideas about where it’s going, but I do think it’s quite uncertain where this ends up."
When asked if he thought that publishers still provided necessary marketing reach, he explained that the rise of social media was making it hard for publishers to claim a monopoly on advertising.
"What we’ve found is that we’re in an era now where it’s so frictionless to find things that you want to find — the social media are amplifying hits to a higher degree," said Lasky.
He used Riot Games' League of Legends as an example of how this works.
"Here’s a game where we did zero acquisition marketing. We really did very little marketing of any kind for it. And in a period of two years, we have 42 million downloads."
"That’s the size of Xbox Live. That’s an enormous captive audience. A company can use that audience to launch new products that lower the cost of acquisition."
Who is filling the role of publisher then? Lask believes digital stores like Steam and the App store may be good canditates.
"You could make the argument, in the current environment, that the likes of Steam or the Apple App Store or Android store are almost fulfilling a kind of publishing role," he said.
But these digital publishers take a much larger cut than traditional models.
"Certainly, they’re getting paid a much greater premium for aggregating an audience and facilitating discovery than historical distributors in the typical packaged-good reality," said Lasker.
"The distributor used to get 10, 12, 14 percent in most cases, but the App Store or Steam — they’re taking 30 points. So clearly, they’re viewing what they bring to the table in the digital environment to be more valuable than distribution. I’m not sure it quite raises to the level of publishing, but there’s an argument to be made there."