There are more than 900 video game companies headquartered in California, according to the Milken Institute, and most of them are split between Los Angeles and San Francisco. It’s not surprising that the esports and gaming industries have grown in L.A. over the years, given the city’s proximity to the influence of Silicon Valley and its wealth of tech incubator programs, such as the UCLA Anderson Venture Accelerator. Many universities in the area offer game-design programs that attract young entrepreneurs, including the University of Southern California and the Pasadena-based ArtCenter College of Design.
With the gaming and esports industries each valued at well over a billion dollars, many up-and-coming businesses are jumping into the L.A. scene with fresh content or funding.
There are already several giants in the local gaming industry, including Santa Monica-based Activision Blizzard Inc. Since its founding in 2008, the company has established itself as a household name with its production of classic franchises like “Call of Duty,” “Overwatch,” “Guitar Hero” and “World of Warcraft.” Microsoft Inc. is currently pursuing an acquisition of Activision Blizzard for $68.7 billion. The deal, which was announced in January of 2022, has faced some pushback from regulators and is currently under review by the U.K. Competition and Markets Authority.
Another titan is Naughty Dog, located in Santa Monica. The company developed “Crash Bandicoot” and “Uncharted,” both of which are among the best-selling video game franchises of all time. Naughty Dog developed a video game franchise called “The Last of Us” that recently gained both notice and profit for last year’s television adaptation, which was produced by Home Box Office Inc. and has garnered more than 20 Emmy Award nominations. Finally, Culver City-based Scopely Inc., has continued to produce mobile games with much success over the last year. The company was recently acquired for $4.9 billion by Savvy Games Group, which is owned by Saudi Arabia’s Public Investment Fund.
Within the presence of these industry bigwigs, there is a wealth of developing gaming companies that are making moves to produce new content and expand. Some companies are coming out of stealth, such as Silver Lake-based Gardens Interactive. The game studio is preparing to release its flagship game, and recently closed a $31.3 million series A funding round. Gardens’ new game, still in the prototype phase, was demoed at a recent industry convention and led to new investors coming in, saying they were excited about the prospects of the company and the innovative nature of its new game.
Another fresh face in the gaming community is M80 Games, which was founded in December and is dual headquartered in Santa Monica and Austin. M80’s esports teams are already competing in tournaments for “Rocket League,” “Valorant” and “Tom Clancy’s Rainbow Six Siege.”
A longer-running company that is moving forward is Crunchyroll LLC. It focuses its platform and gaming products on anime and “anime-adjacent” content, and is currently working to expand its output of gaming titles and grow its team.
This special report highlights these local companies and others and explores how they are making a name for themselves in the industry and experimenting with new designs and trends in the gaming and esports worlds.
GARDENS INTERACTIVE
GARDENS INTERACTIVE INC.
HEADQUARTERS: Silver Lake
YEAR FOUNDED: 2020
BUSINESS: Video game design and development
CEO: Chris Bell
EMPLOYEES: 20
FUNDING TO DATE: $35.8 million
NOTABLE: Founders of the company previously worked on games including “Sky: Children of the Way,” “Dustforce” and “What Remains of Edith Finch.”
Gardens Interactive’s first game is still in development, but the company has already established that it’s on a fast growth track. It closed a $31.3 million series A round in July and previewed a demo of its upcoming flagship game at the San Francisco-based Game Developers Conference in March, the success of which led to new investors coming on board.
Founded by Lexie Dostal, Chris Bell and Stephen Bell, Gardens is focused on creating games that center on social play and in-game communication between players. Bell, who serves as chief commercial officer and narrative director, said that Gardens is deep in development but intends to be a bit more public facing in coming months, including such initiatives as hosting larger playtest sessions for the game. He said that the name of the upcoming title has not been released. Stephen and Chris, who are brothers, have credits including “Sky: Children of the Way,” “Journey” and “What Remains of Edith Finch.” Dostal has worked for more than a decade in the video game industry as a designer and engineer, and co-created the game “Dustforce.”
“We’re focused on tending the future of social play, and our flagship title is meant to bring both technical and design innovation to one of the largest and fastest-growing genres in gaming,” Stephen Bell said.
The studio’s first title will be a fantasy- and adventure-themed player-versus-player-versus-environment action role-play game. This mean that players can interact with one another as well as computer-controlled characters and have few limitations, all of which is designed to encourage exploration of the game’s world. Players will be called “adventurers” and the in-game world will shift and change.
“It’s a project that builds upon and learns from the multiplayer ideas and mechanics of our previous games,” Stephen said. “It’s a game about crossing paths and going on adventures – everything made better when experienced together.”
Gardens has 20 employees, five of which were brought on in August. Stephen said the company plans to continue hiring and expects to roughly triple in size over the next two years.
He added that the company’s debut game doesn’t have a set launch date, but said the Gardens team is excited to get the game in the hands of new players. One of Gardens’ new investors, a South Korean video game holding company called Krafton Inc., said the demo was “innovative and, above all, joyful … filled with other adventurers, magical creatures and a charming landscape to explore.”
“It’s a game about crossing paths and forming relationships, both competitive and co-operative, with other players and with our game world,” Stephen said. “The game will continue to evolve and expand beyond launch, introducing new mechanics and social experiences, new calls to adventure for our players.”
PLAY VERSUS
HEADQUARTERS: Sawtelle
YEAR FOUNDED: 2018
BUSINESS: Designer and organizer of scholastic esports team programs
CEO: Jon Chapman
EMPLOYEES: More than 60
FUNDING TO DATE: More than $100 million
Esports teams and tournaments have exploded in popularity over the last few years, with Statista valuing the industry at about $1.4 billion last year. While there are competitive esports leagues for adults, as well as many professional esports players, Sawtelle-based Play Versus Inc. is focused on opening access to schools and students by helping them build teams for esports games as easily as they would set up a soccer program.
The company, which does business as PlayVS, was founded in 2018 by former chief executive Delane Parnell. Parnell stepped down in May and was replaced by Jon Chapman, who said that PlayVS is currently focused on expanding its competition platform to more schools. PlayVS is the high school esports partner to the Special Olympics, Nintendo Co., Psyonix LLC, 2K Games, Activision Blizzard and 36 state associations.
“Esports are the most inclusive sport to date,” Chapman said. “Anyone can join, and you do not have to have won the genetic lottery to participate and compete at the sport’s highest levels. Beyond that, at the amateur level where we are focused, it is as unifying as can be: cross-gender, cross-cultural, accessible and safe. All individuals can still be an integral part of the team and glean the important lessons that come from this experience.”
Chapman said that besides adding more schools to its platform, PlayVS is focused on launching new partnerships and creating more gaming opportunities outside of the school setting. Its programs currently run in more than 17 states, and titles available for high schoolers include “Rocket League,” “Madden NFL 23,” “League of Legends” and “Super Smash Bros. Ultimate.”
“Esports create many lasting positive benefits on schools and their students, and their value stands apart from every other sport because of their inclusivity and accessibility,” Chapman said. “One of the biggest positive impacts is the ability for esports to unlock exciting career paths. Not only in competitive esports league professions, but by exposing students to related career outlets such as design, digital media, engineering, music composition, business development, production operations and more.”
CRUNCHYROLL
HEADQUARTERS: Culver City
YEAR FOUNDED: 2006
BUSINESS: Anime entertainment distributor and video game developer
PRESIDENT: Rahul Purini
EMPLOYEES: More than 1,000
FUNDING TO DATE: $26.8 million
NOTABLE: The company is an independently operated joint venture between two subsidiaries of Sony Group: Culver City-based Sony Pictures Entertainment Inc. and Aniplex Inc., which is owned by Sony Music Entertainment Japan.
Culver City-based Crunchyroll LLC describes itself as a global publisher and distributor of anime-centric gaming content and art. As a publisher, Crunchyroll has put out games such as “Street Fighter: Duel,” “Bloodline: The Last Royal Vampire” and “The Eminence of Shadow: Master of Garden,” many of which are based on anime and manga franchises. It focuses on mobile games, and many of its offerings are free to play.
In August, Crunchyroll’s games were represented at three industry conventions: Evolution Championship Series, Gamescom and Fan Expo Canada. Its upcoming action game, “One Punch Man: World,” comes from a partnership with game developer Perfect World Co.
The company has been around for more than 15 years, and its headcount is more than 1,000. Terry Li, general manager of Crunchyroll Games, said the company is different from other gaming entities because of its understanding of anime, both on the business side and the fandom side.
“Crunchyroll Games is dedicated to serving global fans, both the longtime anime fan and the anime-curious, with unique and immersive gaming experiences tied to their favorite series, or new adventures in anime that have yet to be explored,” Li said.
The company wants to increase its output of gaming content and, to meet that goal, is looking to diversify its portfolio beyond free-to-play games. Li said that the company is also expanding its team and looking to work with new studios in order to deliver new titles to both the U.S. and international markets.
“Anime is experiencing remarkable growth in popularity, driving demand for games based on anime intellectual property and aesthetics,” Li said. “As the interactive division of Crunchyroll, the ultimate home for anime worldwide, Crunchyroll Games is scaling up to meet that growth in several ways, namely expanded output with an emphasis on publishing a variety of titles and hiring talent to support additional releases.”
M80 LABS INC.
HEADQUARTERS: Operates out of Santa Monica and Austin, Texas
YEAR FOUNDED: 2022
BUSINESS: Esports team organizer
CEO: Marco Mereu
EMPLOYEES: Nine
FUNDING TO DATE: $3 million
NOTABLE: The company has a partnership with Portal, a web3 infrastructure company.
Although it launched officially only in May, M80 Labs Inc. has established a strong roster of esports teams, announced a partnership with web3 infrastructure company Portal and closed a healthy seed funding round of $3 million. The round was led by Expert Dojo, a Santa Monica-based startup accelerator firm that has also backed local companies Champions Round and Game Tree.
M80 operates dually out of Santa Monica and Austin. It was co-founded by Marco Mereu and Nate Schanker, who previously worked together at the esports and entertainment organization Xset Gaming. Mereu was the chief operating officer of Xset and now serves as M80’s chief executive, while Schanker is the director of marketing. M80 soft-launched in December to begin fielding its competitive roster, and officially began operations in May.
“We have a lean model, which allows us to scale as the business of esports scales,” Mereu said. “We run M80 as a linear business, as opposed to spending ahead of ourselves, which has allowed us to be selective about deploying capital where and when it is needed most … competition is the cornerstone of our business, and we’re leaning on that fandom to scale our global fan base.”
This year, M80 debuted competitive teams in professional tournaments for “Valorant,” “Counter-Strike,” “Rainbow Six: Siege,” “Rocket League” and “Street Fighter.” Mereu said it’s utilizing community data as well as new developments in technology to take advantage of emerging markets around gaming-consumer behavior.
The company announced an “innovation arm” called M80 Labs in May, which will explore non-esports ventures such as merchandise and blockchain products. With its seed funding round, M80 is planning to increase its team rosters as well as expand beyond esports into web3 application initiatives to advance fan engagement, including digital collectable items. The company said that its new partnership with Portal will empower these ventures and exemplifies the steps M80 is taking to explore web3.
“We will continue to watch out for high-growth opportunities that allow us to make a competitive splash while also growing and monetizing our fandom across titles,” Mereu said. “While our esports teams are having success at a global level, we are also shaping emerging markets such as influencer publishing, web3 and the creator economy. We’ll have more to share about our plans in the coming months.”
SURVIOS INC.
HEADQUARTERS: Marina del Rey
YEAR FOUNDED: 2013
BUSINESS: Virtual reality video game studio
CEO: Seth Gerson
EMPLOYEES: 75
FUNDING TO DATE: $105 million
NOTABLE: The company is partnering with the gaming division of 20th Century Studios to develop a new game based on the “Alien” action-horror franchise.
Since its founding in 2013, Survios Inc. has been devoted to developing and publishing virtual reality-based games. While the studio has released a few original titles, such as “Electronauts” and “Battlewake,” it has also created several award-winning games based on popular franchises. Within the field of game development, Survios chief executive Seth Gerson said that the company sets itself apart from other local studios with its adamant focus on VR and how long it has been working with VR and spatial computing technology.
“Survios stands out from the competition through a proven history in producing and delivering a multitude of premium gaming experiences that have consistently topped the charts on all major VR gaming devices,” Gerson said. “The studio has been at the forefront of the VR gaming industry since the market’s modern inception, and through that success, Survios is the premier hub for innovation in the future of gaming and expanding beloved intellectual property universes to new mediums.”
Among Survios’ releases are “Westworld Awakening,” “Creed: Rise to Glory” and “The Walking Dead: Onslaught,” all of which are based on popular television shows or movies. The studio is developing a single-player game based on the successful “Alien” action-horror franchise, which will be available for PC, console and VR. The title is being developed in partnership with the gaming division of Century City-based 20th Century Studio, which produced and distributed the “Alien” franchise.
“Much like how Riot Games pioneered successful free-to-play PC gaming and cultivated a massive gaming community, Survios has been at the forefront of VR gaming since its inception,” Gerson said. “In the current landscape, major technology giants are entering the VR space … which underscores Survios’ perspective that the realm of VR gaming is being increasingly validated and substantiated by established industry players.”
Survios is looking to expand its team, form new partnerships to access more IP for game development and grow its user base to increase revenue.
“What truly differentiates Survios from its industry peers is its unwavering dedication to virtual reality as a specialized sector of the gaming market, one that the company believes is poised for the largest growth in the gaming landscape,” Gerson said.
