Mobile Is Dead (For VC), Continued

I wrote about the death of mobile application investments a while back and the recently leaked e-mail (posted by Tech Crunch) from Tapulous shines more light on the unattractive economics for investors. Investing in the Long Tail of content (the games category) is not a good idea.

Now I want to preface that selling 100,000 copies of a game is a great accomplishment (good job Bart and thank you Apple), but the $1M or so this very popular game generated can hardly be called a venture-funded business that is going to emerge with a billion-dollar market cap anytime soon.

Here is what needs to be accomplished to generate a little over $1M:

  • #1 most popular game for iPhone & iPod touch for 2008
  • #3 most popular app overall for the US
  • 5 million unique installs on Tap Tap Revenge! (that doesn’t double-count when a user upgrades TTR)
  • 100,000 paying customers

So, if being the #1 most popular game on the iPhone means you make $1M, I can’t see how:
1/ This initial success is going to continue with an avalanche of other attractive games entering the market
2/ The company is going to be able to produce a consistent stream of similar “winners”

And so here is another example if subprime investing, this time provided by a long tail of angels.

Tap Tap Tap.

Let’s lead the world by example with new rigors of excellence we first and successfully apply to ourselves.

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