Star Citizen Financials and New Investors

GrumpyCat

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Montoya

Montoya

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Shadow Reaper said:
Why does a company with $200M crowdfunding need investors?
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For most AAA games, the cost of marketing the game (so you can sell a lot of it) usually comes close or even surpasses the actual cost of making the game itself.

Eg GTA V cost $137M to make and they spent $127M on marketing.

The $200M CIG has from us backers is for game development, not for the marketing costs. This investment covers their marketing costs for SQ42:

"This investment helps secure our independence. We may not have the resources that an Activision or EA have to launch one of their tentpole games, but we now control our own destiny in marketing Squadron 42 "
 
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Radegast74

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Montoya said:
For most AAA games, the cost of marketing the game (so you can sell a lot of it) usually comes close or even surpasses the actual cost of making the game itself.
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For most *everything* the cost of marketing exceeds the cost of the product. FTFY!
 
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Shadow Reaper

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I do appreciate the straight answer, as I am curiious how this works. So next question, how did CIG US LLC raise support as an LLC? Normally you cannot raise support without selling shares and LLCs don't have shares. Normally investors will force LLCs to convert to an S or C corp before investment. So is CIG raising debt financing rather than equity? That would be an exceedingly risky thing to do so late in development, as they could lose the entire company.
 
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AstroSam

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Hm, interesting. I've never thought about "SQ 42 marketing", because I thought that the crowdfunding campaign is already a marketing success. But somehow it makes sense the longer I think about it...
Still, I think there will be a lot of critical voices saying, "What the fuck? He's already sold SQ42. He doesn't need a marketing campaign." I can also imagine that there will be fears that Chris will be pushed out and SC runs aground because of greedy investors.
Well...anything is possible. All we can do is trust in Chris' judgment and gut feeling. I wish him, CIG - and us - the best. So that this step will bring another 200 million into the account through successful marketing.
 
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Deroth

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Didn't @Montoya do a video recently explaining how the amount raised over several years is nothing compared to how much SQ42 and SC are likely to make per year when they release?

From reading the articles about this it seems to me these latest funds are specifically for mounting a small advertising campaign in 2019 for the release of SQ42 then use the profits from SQ42 to leverage for a larger advertising campaign starting around a year out from SC releasing.
 
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Shadow Reaper

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AstroSam said:
I think there will be a lot of critical voices saying, "What the fuck? He's already sold SQ42. He doesn't need a marketing campaign."
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I am continually surprised to find almost everyone I know knows nothing about SC. I'm sure a marketing campaign is warranted. They need to have custom vid up on TV spots to get people who would normally not even bother gaming. That will be expensive.

I can also imagine that there will be fears that Chris will be pushed out and SC runs aground because of greedy investors.
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So long as CIG is not publicly traded, and Chris retains a majority of the voting stock, he can't be removed except unless investors can show he did not act in their best financial interests. I sincerely doubt he is headed into trouble. This is his life's work and he's smart and focused.
 
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Montoya

Montoya

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AstroSam said:
"What the fuck? He's already sold SQ42. He doesn't need a marketing campaign."
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Majority of the people that will be playing SQ42 upon release have yet to purchase the game. Like normal people, they will wait for the actual game to release, read reviews, and then decide if its worth their hard earned money.
 
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sovapid

sovapid

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Shadow Reaper said:
I do appreciate the straight answer, as I am curiious how this works. So next question, how did CIG US LLC raise support as an LLC? Normally you cannot raise support without selling shares and LLCs don't have shares. Normally investors will force LLCs to convert to an S or C corp before investment. So is CIG raising debt financing rather than equity? That would be an exceedingly risky thing to do so late in development, as they could lose the entire company.
Click to expand...

You can just buy into an LLC. I've done it.

https://www.entrepreneur.com/article/77966

It is, except an LLC offers small-business owners even more attractions than an S corporation. For example, there is no limitation on the number of shareholders an LLC can have, unlike an S corporation, which has a limit of 75.
Click to expand...
 
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