Tech Start-Up Funding Slowdown Benefits Disney Video Games Division

Paresh Dave reported in today’s Los Angeles Times that, “A slowdown in tech start-up funding has at least one big beneficiary: Walt Disney Co.’s video games division.

“The entertainment giant is having an easier time finding partners with whom it can develop mobile games, one of its top executives said last week. Why? Up-and-coming companies are losing access to the cash needed to launch games on their own.

“‘As the venture money has dried up and exits have slowed down and valuations have come down, larger game developers that have one or two hits [but not a big stable of them] are now open to work with us in co-development,’ said Chris Heatherly, senior vice president and general manager at Disney Mobile Games.”

Today’s article indicated that, “The cool-down in venture funding has raised the possibility of a buying spree among big tech companies now that target firms might be available at a discount. A flurry of purchases has yet to materialize, but Disney’s co-development efforts highlight an alternate way large companies may be able to take advantage of the new landscape.

“Two to three years ago, video game makers wanted to furnish their own characters and stories, Heatherly said. Venture capital enabled them to spend heavily on advertising to draw consumers to their products.

“In recent months, the game developers have become more likely to come to Disney for help. The companies usually have a game they think users like, but short on cash, they require a marketing push from someone like Disney to spread the word.”

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