I’ve become generally negative on most pure software projects. I think it’s very hard to build large value there, for a variety of reasons:
- It’s insanely crowded; lots of people code these days
- Open-source stacks make it easier than ever to crank things out
- Cloud-based hosting (e.g. EC2, S3) removes most up-front capital requirements
- If you’re successful, it’s easy to get copied
It’s a great time for consumers — the innovation rate feels higher than ever. It’s just tough for entrepreneurs: there will be some nice software exits, but returns are becoming so skewed, it’s more like a lottery than anything based on skill.
One exception to all of this: games.
Games are different, for a variety of reasons. One big reason is content: many games aren’t pure software projects, they’re really engines wrapped with levels, puzzles, art, 3d models, textures, sound effects, designs, characters, AI, story lines, scripts, music, etc.
This makes the rules a bit different. Content takes real time and money to create, and it’s harder to copy (copyright law tends to apply more). However, content-centric games, like movies, can have limited re-play value. Which in turn leads to a franchise strategy for the biggest titles (e.g. Halo on Xbox).
So, one question: will we see any large, content-centric, non-game software businesses?