Gabe Newell Thinks Players Should Be Investors
Australian web show Good Game interviewed Gabe Newell about how he got Valve started, what he thinks of piracy, and investing in games. However, he had some very interesting things to say. He believes that gamers should be investors. Gabe talks in details,
What I think would be much better would be if the community could finance the games. In other words, ‘Hey, I really like this idea you have. I’ll be an early investor in that and, as a result, at a later point I may make a return on that product, but I’ll also get a copy of that game.
I’ve seen a lot of naysayers of this idea but I believe that Gabe is on to something. Probably not in the form he is talking about but convincing fans to invest into your projects has a lot of potential. How about letting investors be part of the development experience. Not just let them participate in betas but be part of consent feedback on development.
There is a lot of disadvantages of this idea like leaking out game information to early, fans are poor compare to the typical business investor, and just not enough money investment. However, I believe Gabe’s idea can evolve into something worth looking into.
I highly recommend watching this interview.
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I think he's on to something in principle, but there are quite a few things to consider (especially in the light of the Ponzi schemes lately [see Madoff]). Leave it to the guy going to business school to be the only commenter on investing…
Problems:
1) Yeah, gamers do not have the capital to invest, and their expectations out what the investment entitles them to would probably be much greater than the developers would allow.
2) Investing means you get the right to see the company's books. I don't think many developers that are privately traded are interested, but EA and Activision/Blizzard are public…
So basically you have to setup profit sharing. So if a company raises $500,000 in investment to develop a game, the developers themselves must front their own share of the money or else they work exclusively for the investors. Let's presume they could front $1,500,000 in this case. This is why you have to show open books. The troubling thing here is figuring out which games are going to make money. If I invest $1000 on a game with a 3 year production, I would expect $1331 back in three years or consider my investment a failure. Lets presume they make $30 on each game sold. To re-coop $2M, they have to sell 67K games. To make my profit, they have to sell 89K copies.
I made up pretty much every number, but it sounds reasonable to me. The main problem for the developers is how much funding do they actually need. Thanks to Valve for giving me something to propose to niche market companies for work!
How about if I pay $10 to be in the beta, under the proviso that my account has to log a certain number of hours of beta testing, and then I get a copy of the final retail release for free?
I think Gabe Newell saw what Bernie Madoff did with finances and wants to do the same thing, but with Quizno's sandwiches. If he can get $50,000 from the community, he can purchase at least 10,000 #25 Prime Rib and cheese sandwiches. And not just the sandwiches, but the full combo meal, half with chips and half with the cookie.
@mclaszj ha ha. I don't blame him, that sounds good.
I think he's on to something in principle, but there are quite a few things to consider (especially in the light of the Ponzi schemes lately [see Madoff]). Leave it to the guy going to business school to be the only commenter on investing…
Problems:
1) Yeah, gamers do not have the capital to invest, and their expectations out what the investment entitles them to would probably be much greater than the developers would allow.
2) Investing means you get the right to see the company's books. I don't think many developers that are privately traded are interested, but EA and Activision/Blizzard are public…
So basically you have to setup profit sharing. So if a company raises $500,000 in investment to develop a game, the developers themselves must front their own share of the money or else they work exclusively for the investors. Let's presume they could front $1,500,000 in this case. This is why you have to show open books. The troubling thing here is figuring out which games are going to make money. If I invest $1000 on a game with a 3 year production, I would expect $1331 back in three years or consider my investment a failure. Lets presume they make $30 on each game sold. To re-coop $2M, they have to sell 67K games. To make my profit, they have to sell 89K copies.
I made up pretty much every number, but it sounds reasonable to me. The main problem for the developers is how much funding do they actually need. Thanks to Valve for giving me something to propose to niche market companies for work!
How about if I pay $10 to be in the beta, under the proviso that my account has to log a certain number of hours of beta testing, and then I get a copy of the final retail release for free?
I think Gabe Newell saw what Bernie Madoff did with finances and wants to do the same thing, but with Quizno's sandwiches. If he can get $50,000 from the community, he can purchase at least 10,000 #25 Prime Rib and cheese sandwiches. And not just the sandwiches, but the full combo meal, half with chips and half with the cookie.
@mclaszj ha ha. I don't blame him, that sounds good.