Holy Grail of Gaming

Another day, another gaming company gets venture capital funding. The latest entry is Guild Cafe, a Cambridge, Mass.-based developer of a social network for online gamers, which just raised an undisclosed amount of Series A funding from IDG Ventures Boston.

Gaming companies raised over $260 million in VC funding last year, and should easily match that total in 2007 (and will far outpace the actual number of companies funded). But not all gaming deals are created equal, and there are some very different views on which ones will prove lucrative from a VC perspective.

Among those chiming in is Paul Heydon, a managing director with UK-based media banking botique Avista Partners.

In a speech to the Casual Gaming Association in Seattle last week, Heydon argued that the most successful gaming companies will need to be more than just publishers or just portals or just MMORPGs like World of Warcraft. Instead, the “Holy Grail” will need to combine all of the above, with a serious advertising component. Guild Cafe, for example, satisfies part of Heydon’s formula, but falls short on the advertising front.

For those interested in more info, here is a copy of Heydon’s presentation.