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.

The sign of an intelligent nation is its willingness and ability to reinvent itself, upstream. Let’s inspire the world with new rigors of excellence we first and successfully apply to ourselves.

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