I like the idea as well and the font design. I also think the colors should be changed, but not for the reasons stated above.
I think it's always a bad idea to have alternating colors across a word or even sets of words. It reduces comprehension. You have to look more closely to "get" what you're seeing.
Consider if you will the average consumer at a store. At a distance of 5-6 feet - the farthest average distance that someone walking down an isle will be at as they are scanning the shelves- the eye sees an entire wall of games, presumably. You want your product title and cover art to stand out among those. The eye needs something simple to lock onto.
Using multiple colors alternating on each letter simply "muddies" things at a distance and make it part of the background "noise".
Don't take my word for it - go to a game store and look at the titles on the boxes and you'll see what I'm talking about.
Occasionally you can get away with a "fade" effect. With a lighter color up top shading to a slightly darker tone at the bottom.
The choice of color also depends on the artwork behind it.
That's pretty much why City of Heroes (and Villains, and Going Rogue) went with that bold white or silver letters surrounded by a dark color. That stood out very nicely. It was very easy to see on the shelf.
Where you can apply some color is in the surrounding elements. I notice you have the letters raised as if on blocks and we see the color of the "blocks" as a blue. THAT you can color. Leave the actual letters white.
The "flying chevrons" behind the logo can also be colored. And you can get away with making them alternating colors. Though it's safer to also make them a single color as well.
So - your second design is the better one, because of the unified colors across the letters. But I would either go with all-gold, all-light blue, or all-white on them. Preferably white.
Just my thoughts from a design perspective.
