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30. Re: THQ Postmortem Feb 1, 2013, 13:52 Beamer
killer_roach wrote on Feb 1, 2013, 12:46:
In short, meet the new boss, same as the old boss.


And anyone saying that the capital would be there has never sought capital. Why would a venture capitalist give money to a video game company when it can go to a safer investment? How much money could a studio get if it hadn't done a big release in the past? The "past sales" thing is nice in all, but that money tends to come all at once. If you're a company like Epic, incidentally one of the few studios mostly self-financing AAA games (long history my butt, it's basically Valve and Epic doing this, now), you get paid every release. So Gears of War 25 comes out. It sells $500 million in its first 3 months. Even if you assume that they go entirely Steam Epic gets, at best, 70%. So Epic now has 350 million dollars. Nice payday, but they now have literally no income for the next 2.5 years, until the next title comes out. And if that title flops that's it, they're done. Zero income, but enormous expenses to make something new.

Which, of course, is why the big independents out there happen to be companies that have diversified. CryTek? Licensing. Epic? Licensing. Valve? Steam. Bungie? Will be ruined if whateverthehellthey'redoingnext doesn't sell.

While we can completely argue that publishers today are screwing their model up, they have a distinct purpose: risk distribution. A developer usually runs by the skin of its teeth because its income is so spiked and unpredictable. But this isn't true for publishers. They have so many releases that their income is staggered and much more predictable. They have so much capital that they can absorb losses without too much of a flinch (so long as they also have hits.) They SHOULD be using this to, you know, take risks. They should be fostering talent. They should be rolling with punches, balancing hits and losses. Maybe they aren't now. But their value is 100% a safe source of capital rather than betting the entire company with each and every release.
Music for the discerning:
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