Benchmark Capital partner Mitch Lasky has encouraged developers to exploit new digital business methods in order to grow value in their business.
Lasky, who has held senior positions at Activision, Jamdat and Electronic Arts, said that intellectual property is no longer the most valuable asset an independent developer can own, and new digital opportunities are where studios should focus their energies.
"People bent over backwards to create intellectual property and that was the name of the game," said Lasky, in an exclusive interview published today. "I do not think any longer that is the value driver in the videogame business.
"With the IP development business you're buying lottery tickets and you're hoping that one of them works. Every so often somebody wins, and everyone else says 'that's why I'm playing'. But only one out of 1000 won," he said.
Lasky added that if a development studio has not yet made a significant mark with new IP on home consoles, it's unlikely to succeed this far in to the current console lifecycle.
Nintendo's Wii, said Lasky, "turned out to be a place where if you developed a real expertise you probably would still be getting work now because publishers are devoting a lot of resources". But he added, "If you're not already an established PlayStation 3 or Xbox 360 developer it's going to be very tough going."
Business models which are still experimental, or just beginning to carve a niche in the business, are where developers should concentrate, said Lasky.
"To me, what's really generating value nowadays is distribution innovation. Free-to-play and virtual goods models are tremendously innovative too, and possibly the future of a lot of content in this business."
Lasky believes that company's need to leave boxed product behind and move online, as retail has exploited the second hand software market, completely pushing out developers and publishers.
"It's completely screwed the publishers because they've the cut the developers and publishers out of that revenue stream.
"It's been disastrous for the creative side of the business, but it's been wonderful for GameStop. Their margin on the used stock is enormous."
The full interview with Mitch Lasky, can be read here.