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The promise and problems with film-style financing for games
The promise and problems with film-style financing for games
September 20, 2012 | By Staff

September 20, 2012 | By Staff
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    5 comments
More: Console/PC, Business/Marketing



While there's been a lot of talk about alternative financing for game development, the conclusion of Yann Suquet -- who holds a masters in corporate financing and researched the topic for Gamasutra -- is that it's not a good fit for games.

Suquet is a former Ubisoft associate producer, and knows how game development works. Having extensively researched film financing, he's convinced that developers looking for alternative ways to get their games funded are not going to get what they want due to significant differences in the two industries.

"Project finance is unlikely to change the dynamics in our industry and modify the balance of power between publishers and studios," writes Suquet -- who concludes that many of the commonly-cited benefits would not come to fruition.

For example, he writes that "motion picture studios do not co-finance relatively risky movies" using new financing methods. Though it was a common perception in Hollywood, empirical study shows that it is not the case. He argues that game innovation would not be fueled by external financing.

Another major concern, he writes, is that "investors seek profitability first."

"Their most important considerations are time and budget, and they will make sure the studios meet those objectives first."

This is anathema to an industry that prides itself on "finding the fun" and where iteration is a best practice.

Studios would also have just as hard a time controlling their IP, he believes. Even if you accept the premise that "financiers are probably not interested in owning the IP," they'd sell those rights back -- and publishers would easily be able to outbid developers.

"And even if the studio were able to outbid the publisher, it would only own the financier's part of the IP, and would have to buy back the remaining part from the publisher," he writes.

In short, the model is not a good fit. To find out the precise details of why, read Suquet's full and extensively-researched feature -- live now on Gamasutra.


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Comments


Michael Rooney
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"This is anathema to an industry that prides itself on "finding the fun" and where iteration is a best practice."

So are we implying that the movie industry doesn't pride itself on entertaining people?

Not that I think the studio model is best, I just think it's silly to think that the movie industry is as different from the game industry as the article implies.

I think the larger thing that both industries have to deal with is the availability of content to large audiences, making niche markets much more profitable and quality more important. It's something that film, tv, games, and even books are all contemplating right now. More than likely they will settle on similar solutions; the differences being between episodic vs unbroken content not medium.

Yann Suquet
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Hello Michael,

That quote is actually not from me and is not in the article.

My point in the article is that there are structural differences in the two industries - mainly on the side of production - that make applying Slate Financing Arrangements (the latest in film project financing) not as promising in the games industry as studios might hope.

Let me know what you think of the whole paper if you get a chance to read it.

Cheers,
Yann

WILLIAM TAYLOR
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"So are we implying that the movie industry doesn't pride itself on entertaining people?"

I don't think that's what the article was implying at all. The author mentioned time and budget being key things in film production/financing and brought that up in contrast with how games are made. Sticking to a strict budget and timeline is the opposite of how most games are made, especially indie titles.

I believe the author is saying that seeking indie film style funding in a medium that has major issues with delivering on things that are key to indie film funding (budgets and schedules) might not be the best fit.

Michael Rooney
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"I believe the author is saying that seeking indie film style funding in a medium that has major issues with delivering on things that are key to indie film funding (budgets and schedules) might not be the best fit."

I think you misunderstood me. I am saying this is a problem that every medium is having. The funding/distribution model for books, tv, movies, music, and games is changing. It is not unique to games; it is medium agnostic.

Yann Suquet
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Hello William,

It's actually great that I was misquoted, because it opened up on interesting questions. The one you raise William is very interesting and would deserve research on its own.

But focusing on my paper, I'm not saying that the film industry is not trying to entertain people nor am I talking about the different approaches in film and games production. There is a lot of iteration going on in both - just like in any creative process, and budgets and timelines are often exceeded in films as well.

My point is that the games industry often looks to more mature creative industries for inspiration on business models - and film project finance has raised particular interest.

I'm analyzing Slate Financing Arrangements (the latest in film project finance) and how they would look in games. I find that they are not adapted at all, and this as a consequence of differences in structure and not as a consequence of differences in the creative process.

And I'm opening up on the fact that the games industry doesn't need other more mature creative industries to find new business models: there is plenty more going on and changing in the games industry itself than in the movie industry. And that changes dynamics already.

If you get around to reading my full paper, let me know what you think !

Thank you both heaps for your interest !

Cheers,
Yann


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