The creators of Splitgate had a problem. Their new free-to-play video game, a take on the legendary arena shooter Halo with a teleportation twist borrowed from Valve's Portal, was gaining steam during its open beta period in July. But it was happening too quickly.
Splitgate was growing so fast and unexpectedly that the entire game was starting to break, as the servers supporting the game began to, figuratively speaking, melt down. The game went from fewer than 1,000 people playing it at any given moment in time to suddenly having tens of thousands of concurrent players. Then it grew to hundreds of thousands of players, all trying to log in and play at once across PlayStation, Xbox and PC.
"What we didn't take into account was the explosive organic growth," said Ian Proulx, the co-founder and CEO of Splitgate developer 1047 Games, in an interview this week with Protocol. "We projected linear growth, and obviously that's not what happened." The situation was so dire that the team had to take Splitgate offline in late July.
It returned in short order, albeit with long queue times for players to log in until 1047 could scale its back end to keep up with demand. But since the beta launch, Splitgate has amassed more than 13 million downloads. This week, the company announced it had raised an eye-popping $100 million at a $1.5 billion valuation, its third round of funding since May.
On a Discord call with the game's community of fans in late July, Proulx revealed that Splitgate grew from 400 concurrent players to more than 200,000 in a matter of weeks, outpacing even the team's wildest projections and growing faster than indie breakout hit Among Us. On Steam alone, counting only the PC platform, Splitgate hit a peak of 67,000 players August.
It's now fully stable and earning revenue through in-game purchases and a seasonal pass modeled after Fortnite and similar games-as-a-service titles. And the game's popularity earned Proulx and his development team the attention of established Silicon Valley investors. Lightspeed Venture Partners, known for funding social media giant Snap and fintech company Affirm, led the company's latest round, alongside Insight Partners and Anthos Capital. Previous rounds of funding include $11 million in July (per Proulx) and $6.5 million in May, and smaller angel and seed rounds before that.
The funding frenzy represents the venture capital community's newfound interest in the gaming sector, which grew at an unprecedented clip last year during the COVID-19 pandemic. Since the start of 2021, the game industry has seen a record number of deals totaling nearly $50 billion in the first five months of the year, according to investment bank Drake Star Partners.
The pace has kept up through the summer, with roughly $25 billion in investments, mergers and acquisitions in the second quarter of the year alone, according to the DDM Game Investment Review. New development studios are sprouting up left and right, and money is easier than ever to come by as investors see the growth of the game industry as a promising new opportunity. When it's clear something might be the next big hit, like Splitgate, investors come knocking.
Proulx said he had emails pouring in when it became clear Splitgate wasn't just a flash in the pan sensation. In August, he set up back-to-back meetings one weekend with interested parties. By the middle of the following week, they had a deal in place. "It was a very different position from the first round we did, where we were reaching out to everybody," he said.
Splitgate's journey over the past two years offers a modern roadmap for up-and-coming developers that don't want to walk the traditional path. In most cases, game designers and programmers join large development teams before striking out on their own to pursue independent projects or start up new studios with veteran talent.
But 1047 Games was founded by Proulx and his Stanford colleague Nicholas Bagamian, both of whom were just computer science students with no traditional game development experience. They launched the title in early access to get player feedback while working on the game out of Proulx's parents' house without any funding for the first six months. In time, it became clear Splitgate, once it was polished, could become a venerable success following in the footsteps of games like Rocket League and PlayerUnknown's Battlegrounds. That meant taking what works best in the mobile market and adapting it to console and PC platforms.
"We didn't always know we were going to go free-to-play. We wanted to take a Silicon Valley tech startup approach to a games business," Proulx said. "At the end of the day, all that matters is that if we spend a dollar on marketing can we make a $1.50 back? I think free-to-play made a lot of sense for that kind of mentality."
The team chartered a path toward an eventual beta release that would include for the first time the PlayStation and Xbox platforms. The availability on console, mixed with the existing buzz from Splitgate's PC community, created the perfect storm of viral popularity, sending Splitgate's player count through the roof and decimating its back-end infrastructure.
Now, with the new funding round, Proulx said the team will turn its attention to scaling its engineering division and hiring for many of the key roles that, as a startup, the company doesn't yet have but will need to keep growing. "We're like five engineers, and if you include all the artists and community managers, we're 35 [people]," he said. "We'd like to get to 30 engineers by the end of the year. We desperately need a marketing team. It's basically me."
1047 Games initially intended to launch Splitgate this summer, but the game's popularity kept the team in crisis mode while the launch window was perpetually shifted. Now, Proulx said he's rethinking the eventual Splitgate 1.0 launch.
"Technically, we're still in beta and there's a reason. Originally it was because of servers. But the reason now is that my vision of the fully launched Splitgate is very different from what it looked like two months ago," he said. "Our attitude is the sky's the limit."
