I hadn't realised this. So the primary aim of the crowdfunding campaign was to demonstrate a desire for a new space game, not to fund it.
Well, golly. I'm glad they didn't let themselves get greedy.
Star Citizen Thread v6
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I hadn't realised this. So the primary aim of the crowdfunding campaign was to demonstrate a desire for a new space game, not to fund it.
Well, golly. I'm glad they didn't let themselves get greedy.
Don't investors usually want a return on their investment though?
If CR spends all their money, and the backers money, and needs to pay for running costs of servers, staff, etc, i don't think the sale of cosmetics will cut it.
Of course, since we have never seen any evidence of such investors, maybe they never actually game any money... or maybe they did, and that money is part of the fund counter.
So much for transparency then.
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Absolutely. My impression is that actually nobody outside this company can tell how much funding this company actually had or has at all. This simple fact is messed up by all sides though, who make up claims to proove their points (the company has enough cash to make the game vs. the company will die soon). All baseless arguments.
One should also be careful to not confuse the making of the game and financial success. If the company made about $150 millions, it is a very, very profitable enterprise. If they are clever, and I don't see anything speaking against that, they don't have to pay anything of that back. They made that cash and it doesn't matter in any way, if the game comes out or not. I would call that an inviting environment for investors, especially between 2013 and 2016.
That's just it: they're not profitable. They have zero profits. They have made no dollars.
What they have done is collect $160M in deferred income in the form of pre-orders. They therefore have $160M worth of liabilities that have to be sorted out before any kind of profit can be counted. They also have an unknown amount of costs over the last six years. Before the game is out — if ever — they will incur further costs. Some, but far from all, of those costs will be covered by whatever deferred income they can scrape together in the meantime. A best-case guesstimate puts the daily cost at about $100k — any day where they earn less than that is a day they're in the red. Outside of the occasional special-sales spike, they haven't been anywhere near that in ages. So they're definitely not a profitable company at the moment.
Even on the off chance that they manage to deliver something that frees them from the obligation to offer refunds, they still have to cover running costs and continued development and it doesn't seem very likely that they'll see that many additional customers — they've already reached their market and not made a huge splash. To make $150M, they'd have to double their income to date, minus whatever is owed for loans and potential investments and the like to actually finish the game and keep it going. I don't see that happening.
In fact, if anything, I'd almost say that it was more inviting for investors back in 2013–2015, when the money kept flowing in way above what the company could have cost at the time. At least it would be far more inviting than it is now that they've grown way out of proportion with what they're actually capable of producing or able to cover with their monetisation.
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How do you know how much they paid for the development and marketing so far, and how much of the funding could be forwarded to the people involved through salaries? How do you know the millions of dollars they received where only burnt, but not used to generate additional income?
In what way are they accountable to deliver a product that fits a specific definition of 'a game'?
(btw, as I see it, they already delivered their product and received payment for that. Additionally, vocal parts of the fanbase are ok with losing their cash anyway.)
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I think what Tippis say here is that they don't generate income from not preselling stuff. Problem with preoders/preselling is that you can't really see it as income if you don't deliver. Ok, some people might be ok with losing some money - but that's a death spell for any *future* income. That's the whole point. It just permanently poisons/sours all experience.
Thing is they can't just release something and claim that something is fulfilment of their promises. Majority of gamers will send them packing. Can they get some new clients who does not know history? Maybe. Are they enough to support CIG with their huge expensive costs? Nope, nope, nope. Even without seeing numbers it is quite clear they can't sustain game that way.
What we see with SC and CIG is classic Kickstarter meltdown. It has happened before and will happen again. In this case it is just sheer size of money involved that will go kaput.
At this point CIG wrapping up - even position it as a end of phase - and not releasing anything resembling a game will kill SC for good.
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It still is no good idea to confuse to points with each other
- financial income and profit
- the production of a complete game
Crowdfunding established a rift exactly here, because people didn't pay for already produced product anymore, but funded a production process that is said or marketed to generate a certain outcome. Common sense tells you that the outcome of the production process can only be guessed. The product can be good, bull or even never come into being.
If the production process fails the transaction was still already done and money was made through the production process. Salaries were paid, infrastructure was bought, investment capital was acquired etc., etc.
Maybe it also has to be distinguished between the profit of the company and the profit of individuals. If the whole thing was a zero sum game for the company, this doesn't mean that it was not profitable for the indivuals who received payment through that company. This is nothing uncommon in any way: people ruin companies, but make a huge profit in the process. Why should it be different here?
- financial income and profit
- the production of a complete game
Crowdfunding established a rift exactly here, because people didn't pay for already produced product anymore, but funded a production process that is said or marketed to generate a certain outcome. Common sense tells you that the outcome of the production process can only be guessed. The product can be good, bull or even never come into being.
If the production process fails the transaction was still already done and money was made through the production process. Salaries were paid, infrastructure was bought, investment capital was acquired etc., etc.
Maybe it also has to be distinguished between the profit of the company and the profit of individuals. If the whole thing was a zero sum game for the company, this doesn't mean that it was not profitable for the indivuals who received payment through that company. This is nothing uncommon in any way: people ruin companies, but make a huge profit in the process. Why should it be different here?
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It's pretty standardised for the entire industry. The only point of uncertainty is how much above this best-case scenario they actually are. They have a crapton of unusual and undisclosed costs that would make that picture a whole lot bleaker, even before we get into the morass of taking rumours of poaching and overpaying developers into account.
They're not a bank.
One is wholly contingent on the other. It's not that they're being confused — it's that some like to try to separate the two and suggest that profits can be calculated before you know the full cost or before the income has actually been earned.
It really doesn't, and rulings have already been made to that effect. You're paying for a product and a failure to deliver means you now have a case to get your money back. Whether you actually can or not is a separate matter.
Just because it's crowdfunding does not mean that the basic rules and definitions of accounting and finance no longer apply, no matter how much CIG and the backers wants to talk about their income as “profit”. Nor does it bypass consumer protection laws, no matter how much CIG and the backers try to give that impression.
Oh, and remember: only a very tiny portion of what they've collected is regular crowdfunding to begin with. The vast majority is just plain old pre-orders handled through their store. The obligation to deliver is there regardless, but it means that the whole crowdfunding evasion has even less of an impact on the whole situation, and it's a pretty insignificant detail to begin with.
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The SC subreddit discusses FailureToReport's $7300+ refund video https://www.reddit.com/r/starcitize...retoreport_talks_feature_creep_cig_behaviour/
Some of the responses....
Some of the responses....
Well yeah, you guess what costs they had, but on what basis.
And I emphasize it again: Profit has already been made, if the publicly stated income is correct. They sold a product to people, they actually sold concepts and graphics to people for several hundred US-Dollars. They employed workers to produce marketing material and sold this to people. That is making profit like every other company is making profit. The only difference here is that the sold product is not the actual product, but the promise for a product that is defined in very vague manner. Honestly, I doubt that larger chunks of that money will be paid back, on what basis exactly is this supposed to happen?
All this doesn't change that individuals working for or through this company received salaries for their work. I am not sure how much the salary is for top-level positions at CIG.
"The greatest ship picture collecting game ever developed, from Chris Roberts"
That kind of says it all really. Shame.
And I'd been following the tale for two years and was starting to have serious doubts/think about a refund; as the game was supposed to have been released by then!
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As a formally and officially certified non-lawyer, I'll handle this one: noone knows. We're dealing with a relatively recent type of transaction, between a company spread out over different continents 'selling' to customers on different continents using third-party infrastructure spread out over multiple continents. If SC fails dramatically (suppose they would stop today) you're probably looking at multiple lawsuits in multiple countries, with very likely multiple outcomes even when the facts are absolutely identical. Considering CIG basically was founded by CR and his long-term lawyer buddy, I think eventually some janitor in Kyrgyzstan will end up taking the blame.
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No: it's not profit. CIG have not made any profit yet. Profit is essentially defined as "a financial gain; the difference between the amount earned and the amount spent in producing the goods/services." CIG can only talk about profit after they've produced the goods - in this case, the game - that their customers have bought. Right now, they've got 160 million dollars' worth of pre-orders that they are expected to fulfill. Essentially, people have loaned them that money on the expectation that they can deliver on their promied obligations.
No: it's not profit for CIG. See my point above. Other, external companies contracted to CIG would've made a profit out of this but CIG haven't yet.
They promised a game but you're right: it is potentially vague. If they ever release the game, some of their customers will be happy, some will not. Some will ask for their money to be returned which takes us to the next point...
I'll absolutely agree with you on this one! There can be no large-scale refunding process as the vast bulk of the money is presumably gone. If enough people ask for their money back, CIG will go bust as they won't have access to sufficient funds to honour these requests.
I would suggest that the salaries are way, way, way too high for people who clearly haven't the vaguest idea of what they're doing and how to actually develop and release a video game.
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Ignore the trips to Monaco and the matching Porsche limited editions, Ignore the millions the Roberts family skimmed off the top to satisfy whatever whim or Hollywood fantasy they had going. That's not profit. Those are legitimate business expenses if you're a grifter. Of course on paper CIG will be a perennial money-loser until it's dissolved, but the Roberts family will continue to do very well out of it before that happens.
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dayrth
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People are no doubt receiving salaries (at different levels) but this is not generally considered profit. It is rather remuneration. As far as the company is concerned, it has received income. A lot of income, but this should not be confused with profit. To profit you produce a product or offer a service. That production or service incurs a cost. You then sell the product or charge for the service. Your price/charge minus the cost is your profit.
If you have taken money for a product, but are still developing the product then you know how much you have taken, but don't yet know how much the production will end up costing, so you can't claim profit. If the cost of production ends up more than the money you have taken then there will be no profit. There will be a loss.
Edit: Ninjad by ajcrean
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Average salary is around 10.000 USD if you take the article linked in this thread somewhere as a guideline? So top level positions around 15000 maybe?
As a formally and officially certified non-lawyer, I'll handle this one: noone knows. We're dealing with a relatively recent type of transaction, between a company spread out over different continents 'selling' to customers on different continents using third-party infrastructure spread out over multiple continents. If SC fails dramatically (suppose they would stop today) you're probably looking at multiple lawsuits in multiple countries, with very likely multiple outcomes even when the facts are absolutely identical. Considering CIG basically was founded by CR and his long-term lawyer buddy, I think eventually some janitor in Kyrgyzstan will end up taking the blame.
https://image.slidesharecdn.com/ims...ated-marketing-summit-chicago-82410-2-728.jpg
Well, or some janitor in Kyrgyzstan will find them and have a little chat with them Russian style
Again: industry standards. This is not some great unknown mystery — it's a well-established and well-known area and we have CIG's own numbers to confirm that. The only part we don't know is how much above that standard their production costs since they haven't made those numbers public.
Emphasise all you want — it won't change the facts. They have made no profit by definition. The full cost of the project is not in yet, and the income they have has yet to be earned. There is nothing to even being to calculate profits from.
You're confusing revenue for profit, and you've left out the entire problem of liabilities. CIG has made a lot of revenue. All that revenue has produced liabilities that they have yet to cover. Meanwhile, they're accruing costs that have to be counted against once those liabilities have been sorted out and the revenue is actually earned.
That's not how profit works, nor is it how you make a profit. A profit is what you get when you subtract your costs from your revenues.
They've presold an entire game and a ton of virtual goods. They have yet to actually produce and deliver any of that. They are paying wages and subcontracting services to keep the production going, but they have yet to actually give people what they've paid for. It doesn't matter one whit whether the people believe they've gotten their moneys' worth — that only has a bearing on how many of them will be part of any legal tangles should the delivery not happen.
It is also not relevant to the discussion of profits other than to highlight that they keep accruing costs that they need to cover in order to make any kind of profit at some point.
Yes. We have different opinions about what the product is in the case of Star Citizen.
Although the company's official narrative is to collect funds to pay for the production of a game, I would not call that game, whatever it is supposed to be in the end, the product.
The product was and is the promise for the product that you can buy in the store. Or to formulate it even more abstract, you pay for work that has to be done to produce a product (in whatever exact form), you don't pay for a specific product.
A crowdfunding company is not prepaying infrastructure and workforce to produce something and then sell it to make a profit.
A crowdfunding company sells the promise for a product to pay for infrastructure and workforce to produce something. Only in an idealist world such a company would spend all the funds received on producing a product, not making profit in the process.
Is there a official list of the number of the expenses for employees and facilities somewhere, giving clear data over all the years from 2011? I haven't seen that yet.
My impression is that nobody actually knows the basics even. The question "How many people work for CIG?" gets complicated already when you take the outsourced work into account (video production, parts of the software, creation of 3D-models etc.). There is a lot of guessing going on about how much the company has spend already and how much cash is left. The funny thing is that all this guesswork happens without having any clear facts about these aspects. Nobody knows how trustworthy the funding-counter is, are there other sources of income, are there loans, are there buffers of any sort, is Roberts a multi-million-dollar guy who can just pump another 10 Million Dollars into the company, what are several hundred people exactly doing and what is their salary, etc. Nobody knows anything about this stuff, neither fans nor critics.
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