Gaming Portfolio Theory

A framework for understanding how gaming companies can be viewed as portfolios of smaller startups, based on Dan Porter's experience building successful games.

Core Portfolio Theory Concept

• Gaming companies are like portfolios of smaller startups
• Each game represents a different type of bet
• One game can change the trajectory of the entire company
• Different from traditional product companies where you're "one feature away"

Key Portfolio Management Principles

• Maintain multiple games/projects simultaneously
• Accept that not all games will succeed
• Stay one game away from changing company trajectory
• Avoid the "one feature away" trap common in app businesses

Game Development Strategy

• Keep games simple and accessible
• Focus on social aspects and user engagement
• Test weekly and iterate based on user feedback
• Remove complexity rather than add features
• Example: Draw Something success
  • Simplified game mechanics
  • Removed traditional gaming elements (XP, levels)
  • Focused on social interaction
  • Created viral word-of-mouth growth

Risk Management

• Don't over-invest in single projects
• Be willing to try new approaches
• Learn from each attempt
• Accept that some games will fail
• Keep core team small for new projects

Success Metrics

• Focus on user engagement over traditional gaming metrics
• Look for organic growth and word-of-mouth
• Monitor social sharing and community building
• Track how games spread within tight-knit communities
• Measure emotional connection with users

Portfolio Diversification

• Mix different types of games
• Target various audience segments
• Try different platforms and formats
• Balance between established and experimental projects
• Spread risk across multiple ventures

This approach allows gaming companies to:

• Manage risk effectively
• Maximize chances of hitting a breakthrough success
• Learn from multiple projects simultaneously
• Adapt quickly to market changes
• Scale successful projects while limiting downside on failures