The promise and problems with film-style financing for games
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.