Today’s money flows
So, on the one hand, a couple of folks are making fun of Interplay for stating in an SEC filing that it would cost $75m to make Fallout Online.
On the other hand, Red 5, led by Mark Kern and made up of Blizzard vets, announced $18.5m in venture funding for what seems to essentially be a content play:
Mark Kern, Red 5’s chief executive and former team leader on “World of Warcraft,” said his California-based game studio will create original games for online game operators and distributors — much as Pixar Animation Studios did in the movie world with its animated films such as “Toy Story” and “Finding Nemo.”
“Pixar really showed that you can have a content-focused strategy,” Kern said of the animated film maker that is now owned by the Walt Disney Co.
Red 5 is already working on a massively multiplayer online game for Webzen Inc. The South Korean company is financing the development of the game, which Webzen will distribute.
In some odd way, the first set of stuff is an answer to the second, and vice versa. Two great tastes that do not go together. In any case, congrats to Mark & team. 🙂
And lastly, of course, comes Clay Shirky commenting on SL — or rather, on the hype surrounding it. He does it well enough, I see no need to add comment.
18 Responses to “Today’s money flows”
Sorry, the comment form is closed at this time.
On the one hand, I don’t know if I’d play Fallout Online. The world seems too bleak and depressing. I want a fun, welcoming world where bleak and depressing things happen. (Slight difference there!)
On the other hand, I wonder if the market is big enough for contractual content designers.
And lastly, yeah, more numbers about SL’s userbase would be fun to look at. 🙂
On this hand, hey, I never made fun of Interplay. I’m genuinely excited for them. I was just expressing confusion as to where a near-bankrupt company will get $75 million – even with a strong game license.
Heh, I should reverse the links. True, you were closer to excitement with some confusion. HRose was the one expressing incredulity and amusement.
I cought this over on Techcrunch today.
I wish them luck at Red 5.
@Cosmik
Well I’m not sure where you live but I live close to silicon valley/SF (Sacramento) and obviously we’re in development right now and going to different events and meetings etc. And I will tell you one thing, there is A LOT of money “flowing” as it were for new start-ups….with an IP like that they could likely get 75m from 2-3 VC firms in less than a week of meetings on Sand Hill Road.
@Allen Sligar
I’m living in the wrong city.
Uh, that’s not the Sand Hill Road I am seeing. Yes, there’s lots of money flowing. But not for basically making videogames. Especially not to the tune of $75m. You have to have serious track record and a much better plan than “outspend WoW” to get funded for that sort of cash. The Fallout IP is really not THAT valuable, and it’s far from the mainstream recognition of something like Warcraft.
I’ll stop packing my bags…
…until the next comment.
Well, if you read the SEC filing, they aren’t saying they need $75m up front. The breakdown is:
$5m - preproduction budget
$40m - production
$30m - launch costs
With dev to start in January, presumably the $5m is already spent. With a 3 year dev cycle that would be $13 1/3m per year. But it would be more likely that it would start smaller and ramp up, say, $7.5m year 1, $12.5m year 2, $20m year 3.
Most likely they’d get a round of funding for the first year or eighteen months or so with deliverables, and the vultures would then evaluate at that point whether to fund the rest. And they probably won’t have problems getting the $10-15m funded that that would entail.
Pack your bags, we’re going to Vegas!
Re: the SEC report… am I missing something, or is there a reason Sony isn’t on there?
I want a bleak, depressing world turned upside-down where the law is the criminal element and the underworld is the closest thing to a safehaven. I want to live in a world where everyone and everything is a prospective threat. I want that rush that comes from knowing every moment could be the last. I want to experience hesitation before stepping around a corner. I want to sulk, dread, and have all hope stripped away. Because I’m crazy, and I want to be challenged!
I don’t know if Fallout Online could accomplish that, but it’s a step in the right direction.
If you read the SEC filing in more detail, the production budget is $45m with $30 allocated for marketing and launch.
It’s trying to get funding by selling stock in Europe and be listed on the Euronext exchange.
If you use Red 5’s number, you’ll see that they only need about $20m for the first round. They can sell subsequent rounds at higher price later.
This indicates that MMO financing has become more mature and more available. How many VCs would fund a MMO developer 10 or 5 years ago?
Frank
I was under the impression that Webzen was paying for the development of the (first) red5 game. I’m wondering what the new money is for…
–Jeff
If you guys played the original Fallout games, you know the world isn’t “bleak and depressing”. More of a “darkly comic” flavor.
It’s bleak and depressing in the same way that playing an undead character in WoW is bleak and depressing, to help put it in perspective.
The Fallout IP’s core audience is going to mostly be PC gamers who got into it in the 90s with Fallout or Fallout II (Tactics really wasn’t a huge hit that I recall). They haven’t done much with the IP since then and so the current crop of younger gamers have never really been exposed to it yet. Some good marketing can fix that. I’ve no idea what they’re basing those numbers on, but I don’t think the strategy should be to outspend Warcraft.
It’s just my opinion as a player, but the MMO market is ripe for someone to come in with a well-built, well-polished, fun game with lots of content that’s in a completely alternate setting from traditional swords and sorcery. There’s a lot of players out there who are getting a serious case of “been there, done that” and who would definitely be willing to give something unique a try. Fallout Online could do that, and the IP has enough recognition and respect among older gamers to get the word of mouth engine going.
Anyway, interesting news. I’m skeptical about those numbers, and I think they’re probably overestimating on purpose for some reason. Either that, or they’re planning to do seriously push the envelope somewhere and are budgeting huge to make sure they can pull it off.
@Raph
Well you probably know like 9,000% more than most people do about getting funding for games so I’ll retract my statement as to games, but well there are some seriously stupid start-ups geting funded right now….I was tangentally involved in the first dot com bubble, and bubble 2.0 is less insane but still wierd.
@Morgan
Sounds like my last visit to LA where I got lost at 3 am….
@David
“It’s just my opinion as a player, but the MMO market is ripe for someone to come in with a well-built, well-polished, fun game with lots of content that’s in a completely alternate setting from traditional swords and sorcery.”
Thats called Pirates of the Buring Sea (Due June 07′)
Allen:
I’m definitely looking forward to Pirates – should be very cool. My biggest problem is going to be finding time in the day to play all the different games, since it’s hard to leave communities in the current games behind.
I was suprised to see Interplay actually saying outloud they expect 1 million customers by the end of their first year …
[…] Not as cool as a Gamma World MMO would be (I want my dual-brain methane-propelled mutated cactus!), but it could be fun anyway. Damion mentions it on his blog, with links. Raph did as well. […]
your blog is nice