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The $150 billion video game industry grapples with a murky track record on diversity

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A woman plays at the stand of Xbox during the media day of the Gamescom video games trade fair in Cologne, western Germany, on August 20, 2019.

Ina Fassbender | AFP via Getty Images

The video game industry may be booming in the coronavirus era but it continues to face intensifying pressure over its handling of diversity and inclusion.

For years, gaming has been criticized for fostering a culture that excludes and is even hostile toward women. Stereotypes surrounding so-called “gamer girls” for instance have led to harassment of female gamers online and resulted in a perception of the $150 billion industry as one dominated by men.

The industry has been trying to change this by highlighting the variety of people that play video games and throwing the spotlight on initiatives to engage women, ethnic minorities and other underrepresented groups. The Entertainment Software Association (ESA) for instance notes that American gamers are almost evenly split between men (54%) and women (46%).

But industry employment demographics show a different picture. “The industry is overwhelmingly white and male,” Tanya DePass, director and founder of I Need Diverse Games, a non-profit aiming to diversify the gaming industry, told CNBC. 

According to the International Game Developers Association (IGDA), 71% of game developers globally are men while just 24% are women and 3% are non-binary. And when it comes to race and ethnicity, just 2% of developers are Black while 69% identify as white.

Jay-Ann Lopez, founder of the online community Black Girl Gamers, said that increasing diversity and inclusion in the sector has been a “work in progress.” Big industry events like E3 — which is usually hosted by the ESA every year — and Gamescom “happen to be very male-led,” Lopez, who is based in the U.K., told CNBC.

“Even the way they’re designed, marketed and structured is very male-focused,” she added. “It’s hard, especially now, to tell what action (on diversity and inclusion) is actually being taken as opposed to performative narrative.”

Lopez held an online summit on the Amazon-owned live streaming service Twitch in June, aimed at giving a platform to Black game streamers as well as industry representatives from the likes of Ubisoft and “League of Legends” developer Riot Games. Her organization began as a small Facebook group in 2015 but has since grown into a community of around 6,000 members, Lopez said.

Gender discrimination

This year, the issue of discrimination against women in the industry in particular has manifested itself in a number of ways.

Last month, Ubisoft announced plans to shake up its work culture in response to allegations of sexual harassment and discrimination at the company. According to Bloomberg, the French publisher’s now-former creative chief Serge Hascoet behaved inappropriately around women and even prevented a female character from becoming the only playable lead in the game “Assassin’s Creed Odyssey.” Hascoet was not immediately available for comment when contacted by CNBC.

Hascoet and two other top executives of the company resigned following an investigation into allegations of misconduct. When asked about the allegations in Bloomberg’s reporting, an Ubisoft spokesman told CNBC: “We don’t have anything else to share at this time.”

Meanwhile, the trailer for a full-motion video game called Gamer Girl received sharp criticism for its portrayal of a female game streamer whose actions are controlled by the player, which assumes the role of her livestream’s chat moderator. The trailer was subsequently pulled, but its publisher, Wales Interactive, claimed it was created “to raise the issue of the toxic environment which can often appear online behind the anonymity of a username.”

A string of controversies in the industry has exposed the gaming industry’s murky track record on diversity. It’s been years since the so-called Gamergate scandal, which saw women in the industry subjected to coordinated harassment. The episode at the time highlighted a toxic culture in gaming that enabled sexism and harassment of non-white male gamers and developers.

“The industry hasn’t progressed, especially with all the folks being outed as abusers, rapists and harassers on the (developer) side,” DePass said. “It’s far too common to see threats, hate and other vitriol flung at community managers, developers when they are more public facing or have any kind of social media presence.”

Sony-owned video game developer Naughty Dog faced an online backlash over its survival horror game The Last of Us 2, with one of the game’s voice actors, Laura Bailey, receiving death threats on social media. “I try to only post positive stuff on here,” Bailey wrote on Twitter, “but sometimes this just gets a little overwhelming.”

“The games industry have not been able to keep the Black, ethnic minorities, LGBTQ+ & women safe,” Stephanie Ijoma, founder of Black gaming and entertainment organization NNESAGA, told CNBC. “There is a lot of abuse in power in this industry which opens the floor up for incidents to happen.”

Investors have a role to play

There have been some positive steps around diversity, particularly in the creation of video games. Titles like The Last of Us 2 and Tell Me Why, a Microsoft exclusive from French developer Dontnod Entertainment, have won praise for increasing the visibility of LGBT characters.

And in the competitive e-sports scene, several top executives at professional gaming organization FaZe Clan recently quit to start a competing venture focused on bringing more women, people of color and LGBT people into the mix.

For Nicole LaPointe Jameson, CEO of Evil Geniuses, investors have a particularly important role to play in helping diversify talent in the industry. Jameson, who previously worked in private equity, said the bulk of investment that goes into e-sports tends to come from venture capital, or VC, investors.

“Part of the esports problem is there aren’t a lot of diverse owners and founders in the space,” she told CNBC. “Even though it’s changed over the past year, the type of investor profile that’s interested in a space like this tends to be venture.”

Jameson says it wasn’t easy for her to enter the space. “There was no one like myself, however you want to slice the pie: national background, demographic, age, gender, race,” she said. But, she added: “To be diverse is to be successful.”

Roberta Lucca, co-founder and chief marketing officer of British game developer Bossa Studios, also thinks investors need to play their part. Herself an angel investor, Lucca says a big focus for her has been identifying “underrepresented founders” in the space.

A screenshot taken from Bossa Studio’s upcoming video game Surgeon Simulator 2.

Bossa Studios

Lucca and fellow Bossa Studios co-founder Henrique Olifiers think that big triple-A developers need to be ready to take more risks in game development. Olifiers notes that the independent publisher created a diverse set of characters for its upcoming Surgeon Simulator 2 game.

Indie developers are “less constrained” by “established dogmas that take a long time to chip away,” Olifiers said. “The bigger a game, the more risk averse that production has to be. In doing so, naturally they tend to perpetuate dogma, whereas smaller games can be more risky in that regard — even though there’s no risk at all to being inclusive and broader.”

Demand for gaming has exploded during the coronavirus pandemic. According to analysis firm NPD Group, a record $11.6 billion was spent on video games in the U.S. in the second quarter, up 30% from the previous year. Major companies in the industry such as Nintendo and Activision have benefited as a result, posting better-than-expected earnings.

Source: https://www.cnbc.com/2020/08/14/video-game-industry-grapples-with-murky-track-record-on-diversity.html

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Illumina Buys Out Big Investors With $8B Acquisition Of Grail

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Gene sequencing firm Illumina announced plans on Monday to buy cancer screening startup Grail in a cash-and-stock deal worth $8 billion.

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Grail (Nasdaq: GRAL) was founded in 2016 by San Diego-based Illumina as a separate company and had raised about $2 billion, with investors including Amazon’s Jeff Bezos and Microsoft co-founder Bill Gates. The deal comes weeks after Grail filed to go public.

Illumina (Nasdaq: ILMN) is Grail’s largest shareholder, holding a 14.5 percent stake. Grail stockholders, including Illumina, will receive $3.5 billion in cash and $4.5 billion in shares of Illumina stock, the companies said on Monday.

Illustration: Li-Anne Dias.

Crunchbase News’ top picks of the news to stay current in the VC and startup world.

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Source: https://news.crunchbase.com/news/illumina-buys-out-big-investors-with-8b-acquisition-of-grail/

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Y Combinator Releases Data On Black, Latinx And Woman Founders

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Y Combinator today released three new lists on Black-, Latinx– and women-founded portfolio companies as a part of its startup directory designed to allow investors to seek out and invest in these companies. 

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“Today, we’re launching three new directory sections. In the aftermath of the recent Black Lives Matter protests, we’ve had many discussions within our community about how we can better support historically underrepresented founders,” Geoff Ralston, president at Y Combinator, wrote in a blog post

Founders of Y Combinator companies are self-reporting this data. Over time, more companies will be added, but as of Sept. 21, 2020, the overall stats are as follows: 

  • YC’s Black-founded companies have a combined valuation of $2.08 billion and raised $483 million (101 companies, 64 U.S. based).
  • YC’s Latinx-founded companies have a combined valuation of $13.5 billion and raised $3.9 billion (153 companies, 67 U.S. based)
  • YC companies founded by women have a combined valuation of $8.03 billion and raised $2.2 billion (256 companies, 202 U.S. based)

These findings reflect Y Combinator’s investments across the globe. Companies in the top 100 listed in Y Combinators directory include Quero Education, Rappi, Brex, Faire and Grin that are Latinx founded. Gingko Bioworks, PlanGrid, Lever and Front are founded by women. Embark Trucks, Twitch and Flutterwave have Black founders. 

Crunchbase adds Diversity Spotlight tags

Crunchbase recently launched Diversity Spotlight tagging for companies with underrepresented founders. The goal is to provide a single solution for the tech industry to source and fund companies with underrepresented founders. This data in Crunchbase is for U.S. headquartered companies to start. 

Y Combinator summer 2020 batch

Y Combinator launched its first program in 2005 with 10 companies. It has since hosted 31 batches over the past 16 years, with its most recent 2020 batch this summer hosting 198 companies virtually. 

The founder demographics for the most recent summer batch, according to YC, are as follows:

  • Women founders: 16 percent of the companies have a woman as a founder; 9 percent of the founders are women.
  • Black founders: 6 percent of the companies have a Black founder; 4 percent of the founders are Black.
  • Latinx founders: 10 percent of the companies have a Latinx founder; 10 percent of the founders are Latinx.

Will other investors follow suit on disclosing these numbers? You can see Diversity Spotlight tags added to U.S.-headquartered Y Combinator companies here.

Illustration: Dom Guzman

Cashierless checkout won’t merely restructure retail business models: It will disrupt the entire payments industry.

Markets have been rewarding companies with low carbon footprints, and penalizing those with high fossil fuel consumption.

Source: https://news.crunchbase.com/news/y-combinator-releases-data-on-black-latinx-and-woman-founders/

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The Crunchbase News Briefing: Mon., Sept. 21

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Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

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Nikola founder steps down amid regulatory probe, stock plunge

Electric truck startup Nikola Corp.’s shares fell as much as 37 percent in pre-market trading Monday. The plunge took place amid an SEC regulatory probe which has prompted company founder and chairman Trevor Milton to step down, according to reports.

In a statement, Milton wrote, “Nikola is truly in my blood and always will be, and the focus should be on the company and its world-changing mission, not me. So I made the difficult decision to approach the board and volunteer to step aside.”

Milton has been replaced by Stephen Girsky, the former General Motors vice chairman who oversaw Nikola’s stock listing and helped broker their partnership with the Detroit mega-corporation.

Nikola’s falling stocks have impacted General Motors, which took an 11 percent equity stake in Nikola earlier this month. GM officials said the company will continue to finalize its deal with the startup after Milton’s departure.

Playco raises $100M for gaming platform

Playco, a  newly launched developer of  instant games across a variety of platforms, has raised $100 million in a Series A funding round at a reported valuation of just over $1 billion.

The Tokyo-headquartered startup created by Game Closure co-founder Michael Carter and Zynga co-founder Justin Waldron.

Sequoia Capital and Mino Games founder Josh Buckley led the round, which comes as digital gaming sees continued strong growth as people seek more at-home activities amid the COVID-19 pandemic.

Other news

TikTok deal gets early nod, but ByteDance will hold as subsidiary: China’s ByteDance said on Monday that TikTok’s global business will become its subsidiary, even as Oracle and Walmart said over the weekend that they and U.S. investors would own the majority of the video app following a deal with the Trump administration.

Funding rounds

  • Mobile Premier League raises $90M: India-based gaming startup Mobile Premier League raised $90 million in a Series C round led by SIG, early-stage tech investor RTP Global, and MDI Ventures.
  • Marco Financial secures $26M: Marco Financial, a Miami-based financing platform built for small and medium-sized Latin American exporters selling to U.S. buyers, announced $26 million in pre-seed funding and credit. The funding includes an equity round, led by Struck Capital and Antler, and a credit facility underwritten by Arcadia Funds, LLC.
  • Ahana raises additional $2.3M: Ahana, the self-service analytics company for Presto, announced an additional $2.3 million in seed funding led by new investor Lux Capital with participation from existing investor GV, bringing total funds raised to $4.8 million. The San Mateo, California-based company raised the first part of the seed round in June led by GV. Presto software is an open-source distributed SQL query engine for big data.

Illustration: Dom Guzman

Gene sequencing firm Illumina plans to buy cancer screening startup Grail in a cash-and-stock deal worth $8 billion.

Markets have been rewarding companies with low carbon footprints, and penalizing those with high fossil fuel consumption.

Source: https://news.crunchbase.com/news/briefing-9-21-20/

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