New Finances for the Games Industry
I’ve been meaning to do this update for a few days - but that has been useful to run this topic by a few people. My interest has been sparked by attending a BSAC event on Monday night in the West End, which focused on new models of funding for the games industry, and ways in which developers in particular can access investment, without having to sign exclusive deals with publishers.
BSAC’s involvement was to suggest that the games industry can learn a thing or two from films and the ideas of slate and portfolio funding, better bonding practises, and other financial safeguards, to ensure that investors get their money back whether a game is a hit or not.
In addition there was a theme (I expect to do with the presence of Tiga) of empowering developers by giving them less restrictive partnerships with financiers - ie someone who is interested in return on investment, not on the content of the game.
So - it seems one of the key challenges for games companies going forward will be raising finance for games. This is something that has traditionally involved successfully pitching ideas to publishers but will now include convincing investment bankers to take a percentage stake in a company or property.
There are a few companies doing this already but are the skills needed for this financial world present already in games, or will they need to be developed?
If an indication is needed we can look at Real Time Worlds, who have raised over $100m in independent finance recently. What will they use it for? Well, I’d think that a fair whack of that has already gone on buying the rights for All Points Bulletin back from Webzen. This effectively gives RTW back control over their key property, a bigger say in how it is published and maintained, and presumably, a more healthy slice of the profit pie.
More developers are starting to think like this - and with big publishers like Eidos switching to a ’studio led’ structure it seems probable that anyone working at the higher levels of a games company is going to need to know more about the financial sector than they do now.
So what do those running (or thinking of running) their own games project need to know? Quite a lot. And quite a lot of things that are outside their current expertise. Will the games industry look to external experts to raise money or train existing staff? We’ll be finding out. One option already on the table with our industry skills forum is to look at the model of Skillset’s Film Business Academy and replicating this MBA style model for games and really getting the financial side of the industry sorted, ensuring that UK companies are getting the finance they need.
Photo: ‘Money‘ creative commons image from Flickr user Tracy O.
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