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BelGarath

Game Banks

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What is GameBank? Now days everyone whines "Oh, why is there only RTS and FPS games". Mostly it is because publishers wants his money back with profit with minimal risks. Game designers wants to make exactly what they have in their mind, not what publisher says. Good solution for both could be game bank. Publisher loans the money needed to make the game. Publisher doesn''t have to take any risks and game developers can make what ever they want. Publisher gets loan back at interest rate of 5% and perhaps some piece of profit cake. What is the point of all this? At least gamers wouldn''t be blaming publishers of putting developer teams under heavy preasure of succeeding and they wouldn''t lose their money for nothing. Also this could make it easier to get in the game industry for new groups. Only problem could be the fact that there could be people who couldn''t payback. Well almost everyone can payback their apartment loans though... Some other things... I don''t know if systems like this exists already (Ok I know there is business loan for starting your own company =) but takeing this inside game industry might not be bad thing at all if it is legal. I also don''t know what kind of deals game developers can make with publishers... you request some money for your game and then what... It would be nice to get some reply from someone who has experiense in game industry but every reply is welcome.

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Should this have gone in the Business Of Gamedeveloping forum. Oh darn... noticed it too late... =) but please reply or isn''t anyone interested?

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Hmmm... I don''t think so.

Publishers wouldn''t have little or no risk in this scenario, they would have huge risk. If the game being developed fails, or if the game doesn''t even get finished, the development company goes out of business and the publisher loses their money cold. This would be a pretty common scenario I would imagine...

The current way it works, is similar, although the publisher has more control over who it gives money to, and therefore what is being produced. Any advance it gives to the developers is basically a loan against future royalties - they have to be paid back before the developers start earning any more money from the game.

How could you give any developer a loan and not subject them to the same standards that publishers require now (if you didn''t, the failure rate would be huge)? not only that, but the developer would still need to find a way to distribute their game, at least with the current system, the publisher has a real interest in promoting and distributing the game which it has given the developer an advance for.

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Maybe I didn''t made my idea clear enough. GameBank would give developers loan just like normal banks do when you want to buy your apartment for example. You will pay back in a few years. Each member of crew takes some loan. It is quite funny btw... If I haven''t understood totally wrong the largest expenses in game team is teams salaries. So everyone would take as much loan as he or she thinks to need in living during the game project plus some team expenses. If game fails to sell, GameBank gets that 5% profit from loans and that much team members have to payback (but they have spent some money in living). In failure team members propably have to get a new job but at least they could try it on their own. Perhaps this system is too cruel for developers?

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Guest Anonymous Poster
quote:
Original post by BelGarath
Maybe I didn''t made my idea clear enough. GameBank would give developers loan just like normal banks do when you want to buy your apartment for example. You will pay back in a few years. Each member of crew takes some loan. It is quite funny btw... If I haven''t understood totally wrong the largest expenses in game team is teams salaries. So everyone would take as much loan as he or she thinks to need in living during the game project plus some team expenses. If game fails to sell, GameBank gets that 5% profit from loans and that much team members have to payback (but they have spent some money in living). In failure team members propably have to get a new job but at least they could try it on their own. Perhaps this system is too cruel for developers?


How is this different from what existing small business loan programs provide?

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quote:
Original post by BelGarath
Maybe I didn't made my idea clear enough. GameBank would give developers loan just like normal banks do when you want to buy your apartment for example.


When you get a loan to buy a house or car, the thing you are buying becomes your collateral. If you don't make your payments, they repossess your property. What collateral would you have to provide for game development? If you haven't produced anything, you don't have anything of value, so what does the bank get?

[I don't know how small biz loan programs work, so the answer may lie there]


[edited by - Kooo on March 21, 2002 3:23:24 PM]

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There''s no need for a "Game Bank" to loan money to game developers. Real banks already loan money to people starting businesses.

If you do proper research, build a proper business plan, and approach a bank for a loan, you''ve got pretty good odds of getting the money. Obviously, you need good enough credit, and you need a business plan that convinces the bank you will succeed.

The fact is, if you can''t do enough prep work to get the money from the bank, you probably can''t complete the project anyway.

http://www.sba.gov/

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I doubt that you´ll find a bank who will take the risk of funding a single game project for that kind of interest rate - the risk is simply too great. Publishers do that now, since they have several projects going the can afford the loss of one or two.

and BelGarath: the idea of a personal loan for each member of the dev team is one of the worst imaginable - if every member has to stick up for his salary for 2+ years plus costs for equipment, technology and office space (which is not exactly marginal) you´d run up an enormous debt. If the game doesn´t work out (which games sometimes do, without obvious fault on part of the development team) you´re left with nothing plus a load of debt. Worst case: you´re broke.
I´ve actually seen this kind of system in effect, it usually ends with court procedings and a file for (personal) bankrupcy (which means they take everything you earn/own above a certain amount for about ten or twelve years).
Besides, I doubt that you could attract good workers with those conditions. I wouldn´t work for a company who tells me to fund myself for two years - with uncertain rewards in the end.

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