What’s the deal with HQ Trivia’s VC funding?
HQ Trivia is largely a content play. That’s a bad fit for venture capital, which relies on businesses that can generate increasing amounts of revenue without a related increase in expenditure. Doing that in content (where you always have to produce more, and reducing production costs isn’t always wise) isn’t easy – especially when you’re serving a fickle, largely young, mobile userbase.
If the tech underpinning HQ was unique, there would be an argument for VC funding. But in this case, it isn’t really defensible – Facebook has already launched ‘roll your own HQ’ for media companies, and there are mobile trivia game clones popping up all over the world.
HQ’s parent company, Intermedia Labs, plans to expand its mobile quiz output with new formats, but that’s just more content.
Now, you could say Intermedia Labs is a games company, and plenty of mobile games companies have VC funding. That’s true – and a free-to-play model is capable of generating the scale of returns VCs look for. Like e-commerce, I find this a pretty uninspiring use of VC cash, but you can’t blame investors for backing a proven model.
If Intermedia Labs could be the first mobile games company to fuse free-to-play mechanics with live interactive video gaming – and keep people hooked – that would be a potential VC win. I’d be pushing them in that direction if I was on their board.
But for now, the main question to ask is purely content-based: where is Intermedia’s next hit game?