How to Evaluate a New Game IP for Investment

This guide walks you through a structured, step-by-step process to assess whether a new game intellectual property (IP) is worth investing in. You’ll learn how to analyze the concept, the market, the team, and the financials—so you can make a confident go/no-go decision. Before you start, gather any available pitch documents, build demos, market research, and financial projections.

What You’ll Need

• The game concept document or pitch deck
• Any playable build or prototype (even a vertical slice)
• Target platform details (PC, console, mobile, etc.)
• Budget and timeline estimates
• Team resumes and past work
• Access to market data (SteamDB, App Annie, Newzoo, or similar)
• A spreadsheet for scoring criteria

Step-by-Step

1. Define your investment thesis and criteria. Before looking at any specific IP, write down what you’re looking for: target genre, platform, budget range, expected return timeline, and risk tolerance. Assign weights to each criterion (e.g., market size 30%, team 25%, gameplay 20%, financials 25%). This prevents you from being swayed by a shiny demo.
2. Evaluate the core concept and originality. Read the pitch deck. Is the premise clear and compelling? Does it offer a unique hook or fresh take on an existing genre? Avoid IPs that are pure clones of current hits unless they have a clear differentiator. Ask: “Why would a player choose this over the next big title?”
3. Assess the target market and audience. Define the primary and secondary audiences. Use market data to estimate the total addressable market (TAM). Look at similar games’ sales or player counts. Is the market growing, stable, or shrinking? For a niche genre, the ceiling may be lower, but so might competition. Check the platform’s user base and monetization trends.
4. Play the build (if available). Spend at least 30–60 minutes with the prototype. Focus on game feel, core loop, and fun factor. Does it match the pitch? Note any technical issues or missing features. A strong prototype can de-risk a lot; a weak one is a red flag unless the team has a clear plan to fix it.
5. Review the team’s experience and track record. Look at the team’s past shipped games, their roles, and any awards or critical reception. A team with a successful launch in a similar genre is a positive signal. Beware of a team with only modding or hobby experience unless the scope is small. Check for any history of missed deadlines or failed projects.
6. Analyze the financial projections. Review the budget: development, marketing, localization, platform fees, and contingencies. Compare it to projected revenue based on realistic sales/player numbers. Use a simple break-even analysis: how many units or how much monthly revenue is needed to cover costs? Be skeptical of projections that assume top-10 chart success without a strong marketing plan.
7. Check the legal and IP ownership. Verify that the team actually owns the IP—no third-party licenses that could expire, no borrowed assets without permission. Look for any existing trademarks or copyrights. If the IP is based on existing source material (book, movie, etc.), confirm the license terms and duration.
8. Evaluate the go-to-market strategy. Does the team have a plan for marketing, community building, and distribution? Are they targeting the right platforms and storefronts? A great game with no marketing plan will likely fail. Look for a wishlist or pre-registration strategy, content creator outreach, and a launch window that avoids major AAA releases.
9. Score the IP against your criteria. Using your weighted criteria, rate each aspect from 1 to 10. Multiply by the weight and sum to get a total score. Set a threshold (e.g., 7.0) above which you’d consider investing. This forces objectivity and makes comparisons between different opportunities easier.
10. Make the go/no-go decision. If the score meets your threshold, proceed to due diligence: contract review, financial audits, and possibly a pilot investment. If it doesn’t, pass or request changes. Document your reasoning for future reference.

Common Mistakes

• Falling in love with the demo. A polished vertical slice can hide a weak core loop or an unproven team. Always separate the experience from the business case.
• Ignoring the marketing budget. Many games fail not because they’re bad, but because no one knows they exist. If the plan doesn’t allocate at least 20-30% of the budget to marketing, that’s a red flag.
• Overestimating market size. Using the total number of gamers as your TAM is a classic error. Be realistic about the niche audience that would actually buy this specific game.
• Skipping the legal check. A missing trademark or a borrowed character model can sink the entire project. Always verify ownership before investing.
• Ignoring the team’s history. A team that has never shipped a game on the target platform is a risk. Even if they’re talented, the learning curve can cause delays and budget overruns.
• Not having an exit strategy. How will you get your money back? Via profit share, acquisition, or ongoing royalties? If there’s no clear exit, you’re not investing—you’re donating.

Tips

• Talk to the players. If there’s an early community or forum, read what they say. Their enthusiasm or criticism is valuable data.
• Compare to similar successful games. Look at the launch numbers of comparable titles, not just the blockbusters. That gives a more realistic range.
• Ask for a milestone-based investment. Instead of funding the whole project upfront, tie payments to deliverables (e.g., vertical slice, alpha, beta). This reduces your risk.
• Check the platform trends. A game that fits the current trend (e.g., roguelike deckbuilder) may have a better chance, but also more competition. Timing matters.
• Get a second opinion. Have someone with industry experience review the pitch and your analysis. They may spot issues you missed.

Troubleshooting

What if the game is great but the team is inexperienced? Consider a smaller investment or require that they hire a seasoned producer or lead developer. You can also offer mentorship as part of the deal.

What if the market data is conflicting? Use multiple sources and look for consensus. If you can’t find reliable data, treat the market size as a high-risk assumption and adjust your score accordingly.

What if the team refuses to share financial details? That’s a red flag. Walk away unless you can get at least high-level numbers. Transparency is essential for a partnership.

What if the IP has a legal issue you discover late? Stop the process immediately. Consult a lawyer to understand the severity. It’s better to lose a small deposit than to inherit a lawsuit.

What if your score is borderline (e.g., 6.5 out of 10)? Revisit the criteria and weights. If the gameplay is exceptional, it might offset a weaker market. But if the team is the weak point, that’s harder to fix. Trust your gut after a second review.

Frequently Asked Questions

Q: How much money should I expect to invest in a new game IP?
A: It varies wildly—from $50,000 for a small indie mobile game to millions for a AAA title. Your investment should match the scope and your risk tolerance. Always have a clear budget breakdown before committing.

Q: How long until I see a return?
A: Most games take 1–3 years to develop and launch. Returns can come from sales, in-game purchases, or licensing, but some games never break even. Plan for a 3–5 year horizon before expecting a full return.

Q: Should I only invest in games with a proven genre?
A: Not necessarily. Proven genres (like RPGs or shooters) have a larger audience but more competition. New genres can be breakout hits, but they’re riskier. Balance your portfolio accordingly.

Q: What’s the most important factor to evaluate?
A: The team. A great team can fix a mediocre concept, but a poor team can ruin a great one. Look for experience, passion, and a track record of shipping.

Q: Can I invest in a game IP without being a game developer?
A: Yes, but you need to rely on advisors or consultants to evaluate the technical aspects. You can also focus on the business and marketing side, but you’ll need to trust your team’s expertise.

Q: How do I protect my investment if the game fails?
A: Structure the deal with clawback clauses, milestone gates, and IP ownership rights. If the game fails, you may still own the IP or assets, which could be sold or repurposed.

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