Meteor Entertainment, a video game publisher that recently attracted critical attention for its upcoming free-to-play title “Hawken,” has raised $18 million in a second round of funding according to a report from VentureBeat.
The latest round of funding brings total amount of investments to $28.5 million for the company, which was just founded earlier this year. Its success in such a short period of time shows the financial support available for video game developers willing to expand into freemium software, a business model now claims more than half of the European market share for video games.
The new investment comes from Rustic Canyon Ventures and the Chinese mobile company KongZhong, who is planning to help bring the game to a Chinese audience. They join FirstMark Capital and Benchmark Capital, which supported the company in an initial round of investment last February.
Benchmark and FirstMark were also some of the first investors in Riot Games, the creators of the wildly successful freemium computer game “League of Legends.” Last year, the Los Angeles-based developer was acquired by Tencent, China’s largest internet company, for $400 million. The hefty endorsement was seen less as a statement of the company’s current success than its potential for future growth: in the two years since it was first released in 2009, the company had amassed 70 million registered players and 32 million monthly active users.
The current dilemmas that free-to-play pioneers like Zynga (Nasdaq: ZNGA) has lead many industry analysts and tech journalists to speculate about the potential decline or demise of freemium business models. But investors throwing their weight behind companies like Meteor and “Hawken” developer Adhesive games implies that companies are now betting that a higher-quality breed of free-to-play products might reverse freemium’s recent fortunes.
“It’s clear from this investment that we do not believe the game industry as an investment category is going down,” Nate Redmond, managing partner at Rustic Canyon Ventures, told VentureBeat. “From watching disruption in multiple industries and seeing it come to games, that is appealing to me as an investor and a gamer. We see how quickly it is happening. The incumbents see it, but they can’t change quickly enough to capture it.”
According to VentureBeat, the investors hope that establishing an international community from the outset and appealing to a “core” gaming audience with the content of the title itself (the game centers around giant robots fighting in a post-apocalyptic wasteland), they can create a billion dollar freemium business.