Innovative Funding model

[Anonymous]

a new article posted on gamesindustry.biz highlights an innovative model for funding game development, as it insulates publishers from the risks to some extent, and so may actually encourage them to fund more projects

http://www.gamesindustry.biz/content_page.php?section_name=dev&aid=2988

[Anonymous]

BTW this is the same funding model reported on in this month’s (February) edition of Devlop magazine

[Anonymous]

[Anonymous]

Hi Guys,

Yes on the face of it the F4G’s approach has strong appeal…

However what they are a little less up front about is the fact that they are still very risk adverse.

Firstly they require the studio they are funding to secure completion bonding… completion bonding is very difficult to secure and usually is only successfully obtained by an experienced studio with a good track record.

They aslo require the publishing deal to be in place – so your studio needs to be way beyond any demo stage and must be in a position to show an agreed publishing deal.

Also there is a charge to the studio/publisher for the funding facility.

There is in my opinion a better fund operating out of Germany which operates along similar lines to F4G’s but actually charges no fees for the funding facility they provide.

The German fund (Attaction) requires the same risk adverse assurances – but at least do not charge you fees on the fund – as they are operating along the lines of supplying their investors ‘tax write-offs’ rather than the ROI approach adopted by F4G’s.

However the bottom line is that both organisations are very risk adverse – the developer must already have the publishing deal and completion bonding in place.

Examples of more innovative funding approachs however have not proven very successful –

The Capital Entertainment Group (US) – headed up by Kevin Backus (who is now CEO of Infinium) – had a much more innovative approach and was attempting to fund innovative concepts before a publishing deal was secured – however unfortunately CEG went to the wall.

START! Games in the UK was founded along the same principles as CEG – but it has also stopped looking for new projects.

So it looks like the risk adverse model is in vogue – which is great if you have a studio with a good track record and a publishing deal in your back pocket…. but in the cold light of day – from a developers perspective this approach is not that innovative.

For the publishers who adopt this funding model its a nice way to fund a game off balance sheet…. However it remains to be seen if the publishers will consolidate their portfolios by putting the ‘freed’ up capital into increasing their marketing budgets (they have to make the money in order to pay the funds back!) – or if the publishers actually put more titles on the shelf… time will tell…

Regards,
Mike.

[Author]

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