Look! A cute kid with $6.5 million!
And a child will lead them — down the garden path. PlaySpan is garnering buzz because its cofounder, 12-year-old Arjun Mehta, hauled in $6.5 million in venture capital (although it's suspected that his father and CEO Karl Mehta is using Arjun as a mere promotional tool). Talk about a startup in need of adult supervision. Arjun makes teenage entrepreneurs like Jessica Mah and Comcate founder Ben Casnocha look like pikers. The founder's age, however, is distracting reporters from the real question: Why did this company snag so much cash?
PlaySpan's executives say it's a "publisher-sponsored in-game commerce network." Whatever that means. In-game item sales are the hot new trend in massively multiplayer online games. Since these virtual items — say a shiny coat of dragon-scale armor — can be made at virtually no cost to the publisher, they're extraordinarily high in margin. Some developers are, in fact, now offering their games for free, making ends meet by shilling fashion accessories. Since open-market trading of these items on, say, eBay is often deemed "illegal" by the developers, it makes sense to create a sanctioned forum for sales — similar to Sparter, LiveGamer and a bunch of other external marketplaces.
PlaySpan isn't forthcoming about how its commerce network will actually work, but the very idea is plagued by problems. For one, replicating PlaySpan's software tools isn't exactly difficult when looked at in the wider context of game development. Also, PlaySpan encourages users to chat on third-party servers about a wide variety of games — hardly a boost to the developers' goal of winning players' exclusive loyalties. It's like a company that comes in and offers to set up kiosks in a mall's parking lot, diverting shoppers before they even set foot inside. All the big multiplayer games, like World of Warcraft, have their own proprietary commerce systems. In-game traffic is too valuable to hand over to a third party.
Why get into gory details, though, when you have a story about a cute kid who's got a startup while he's still in elementary school? PlaySpan has made garnering publicity look like child's play.