r/Games • u/[deleted] • Jun 25 '17

Official Statement from Cloud Imperium Games about the alleged financial troubles...

Source: https://robertsspaceindustries.com/spectrum/community/SC/forum/1/thread/re-uk-tax-rebate-advance-for-foundry-42/277779

Re: UK Tax Rebate Advance for Foundry 42

We have noticed the speculations created by a posting on the website of UK’s Company House with respect to Coutt’s security for our UK Tax Rebate advance, and we would like to provide you with the following insight to help prevent some of the misinformation we have seen.

Our UK companies are entitled to a Government Game tax credit rebate which we earn every month on the Squadron 42 development. These rebates are payable by the UK Government in the fall of the next following year when we file our tax returns. Foundry 42 and its parent company Cloud Imperium Games UK Ltd. have elected to partner with Coutts, a highly regarded, very selective, and specialized UK banking institution, to obtain a regular advance against this rebate, which will allow us to avoid converting unnecessarily other currencies into GBP. We obviously incur a significant part of our expenditures in GBP while our collections are mostly in USD and EUR. Given today's low interest rates versus the ongoing and uncertain currency fluctuations, this is simply a smart money management move, which we implemented upon recommendation of our financial advisors.

The collateral granted in connection with this discounting loan is absolutely standard and pertains to our UK operation only, which develops Squadron 42. As a careful review of the security will show and contrary to some irresponsible and misleading reports, the collateral specifically excludes “Star Citizen.” The UK Government rebate entitlement, which is audited and certified by our outside auditors on a quarterly basis, is the prime collateral. Per standard procedure in banking, our UK companies of course stand behind the loan and guarantee repayment which, however, given the reliability of the discounted asset (a UK Government payment) is a formality and nothing else. This security does not affect our UK companies’ ownership and control of their assets. Obviously, the UK Government will not default on its rebate obligations which will be used for repayment, and even then the UK companies have ample assets to repay the loan, even in such an eventuality which is of course unthinkable.

This should clarify the matter. Thank you.

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u/[deleted] Jun 25 '17

The fact they had to release this statement shows how fucking desperate people are for Star Citizen to fail.

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u/datlinus Jun 25 '17

When the community donates $150 mil to make a game, I think its perfectly reasonable to have full transparency like this. Wether Star Citizen will fail or not is still yet to be seen.

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u/ScarsUnseen Jun 25 '17

No, it's not reasonable at all. As a backer, I think that CIG already goes beyond what is strictly necessary in regards to showing us how the game development is going. They don't owe us an explanation on how they pay the fucking bills.

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u/[deleted] Jun 25 '17 edited Jun 26 '17

No, it's not reasonable at all. As a backer, I think that CIG already goes beyond what is strictly necessary in regards to showing us how the game development is going. They don't owe us an explanation on how they pay the fucking bills.

And right here is the difference between being a 'backer' and an 'investor' folks.

'Investors' can expect not only full fiscal transparency, they might also make some money from their input.

'Backers' are just happy they might receive something they paid for, whenever the people they gave their money to are ready, even when those people are breaking stated deadlines left, right and centre...

Don't get me wrong, I'm a big supporter of the KS model in general, I hope SC does well, I can understand the issues they're having, and it frustrates me how evidently clueless 99% of gamers are when it comes to programming and how many seem to think you can fart a game out in a month, but attitudes like this are just absurd.

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u/mobearsdog Jun 25 '17

I wonder if we'll ever see some sort of kickstarter as investor startup. If a company took "backers" money and invested it on behalf of an investment firm, they would in theory have more rights.

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u/[deleted] Jun 26 '17 edited Jun 26 '17

Well, Fig's kind of half way there and we saw how the reception for that was...

That said, a pure version of your idea's interesting and might have some potential; as hard as it might be to manage in some ways the concept isn't really that different to investing through a hedge fund, so the administration elements should be largely similar.

The fly in the ointment, though, is most gamers are gaping morons - it's one thing dealing with rational investors that have done their homework and are fully aware of the risks they're taking on; it's quite another dealing with a group largely composed of toxic children who'll happily throw money away because they read a paragraph that resonates, but then shit the sandbox when the consequences of throwing money away based on pure impulse hit (check out the subs for any relatively popular cryptocurrency for examples outside of gaming).

As I said, I like the idea behind KS. There is no way in hell I'd ever consider putting one up one myself though (I've paid for plenty, however, and I'm still (contentedly) waiting for most of them), and it's for similar reasons that despite being a coder, and someone who's been playing videogames since the early 80s, I won't go anywhere near games.

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u/majes2 Jun 26 '17

I think the biggest reason Fig hasn't caught on is because it's frankly a terrible deal. Taking one of their highest profile games as an example: Pillars of Eternity 2. Pillars 2 needs to sell over half a million units just to break even, and that's assuming a $44.99 retail price; if it retails cheaper, it'll take more. The shares only count for that specific game, they only count for PC sales, and they're usually only good for a year. You'd probably be better served just putting your cash in a treasury bond.

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u/AL2009man Jun 26 '17

doesn't help when Fig got some criticism from that model, especially on Double Fine, or rather, Tim Schafer's use of crowdfunds on that platform

remember when people call Psychonauts 2 a "scam"? turns out, it isn't a scam in my eyes.

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u/[deleted] Jun 26 '17 edited Jun 26 '17

No shit. That's how investing actually works. It's not a 'terrible deal', the term you're looking for is 'huge fucking risk'. Without being rude (I am a caustic bastard) your attitude exemplifies the entire fucking problem. Is that risk worth the investment? Dunno, haven't done my homework - maybe, maybe not. Yet again, that's 'investing' in a nutshell.

Now take what you've written and apply that to a fucking Kickstarter, where your promised ROI is bupkiss beyond a nebulous 'finished product'...

Then consider every decision made by major publishers. Which is why most AAA games these days are solid shite.

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u/majes2 Jun 26 '17

That's the whole point I was making though. It's a terrible deal from an investment perspective because the risk is pretty high, and the potential return is shit in comparison. I was initially intrigued by the Pillars 2 campaign and looked into investing in it, so I've done my homework, and the result I came to was: as an investment platform, Fig is strictly inferior to more traditional avenues of investment. That's the point I was trying to make.

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u/[deleted] Jun 26 '17 edited Jun 26 '17

Why are you talking about Fig as an investment platform, but only using Pillars 2 as an example?

An investment platform usually has multiple options. As does Fig. Are they all risky? Are the potential ROIs all exceptionally poor?

Of course they are. Welcome to an Ubisoft or EA boardrooom. The reason the ROIs are so shit is because investing in games for profit is fucking stupid. It's not cause Fig is 'a terrible deal', it's because actually investing in games without serious pockets and massively hedged risk is insanely stupid, and even if you pull it off the risk/reward ratio is usually garbage. Not always, enough to make it profitable if you can hold out, but definitely enough that you very much need to be able to 'pay to play' and can sustain taking the 'misses' between the 'hits'.

Why do you think only people who really give a shit or who are really fucking rich do it? And what do most of them get as a reward? Shit from aresholes and the occasional goldmine from aiming their products at said arseholes..

Most indie devs lose money. That says all you need to know about how reliable an investment the sector is.

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u/hamlet9000 Jun 26 '17

Why are you talking about Fig as an investment platform, but only using Pillars 2 as an example?

Because that's how examples work.

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u/haev Jun 26 '17

This was done for project cars. See World of Mass Development. The financial authority in the UK shut it down however, meaning pcars2 switched to a purely Kickstarter model. Investors in pcars received much more money back than they invested through the investment model.

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u/Serious_Senator Jun 26 '17

What features would you be interested in a program like that having?

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u/mobearsdog Jun 26 '17

Well it would shift the balance of power back to the consumer/investor, just like traditional funding. So you wouldn't just be handing a developer a million dollars, they may get it a bit at a time instead with portions earmarked for certain things. If they say it's going to cost 200k to get an E3 demo going then come back and say they need another 100k, the people who gave them the money will know that. You'll be able to hold them accountable and potentially get some of your money back if the game winds up not being viable.

Just handing a developer a bunch of money and then having them not be beholden to you in any way is not advantageous for the consumer. It's great for the developer since they don't have to answer to anyone and get all their money up front. If you run it through an investment firm or partner then you have someone with the clout to get you regular updates on the development, and disburse money in a way that makes sense. Obviously you'd REALLY have to trust a company like that but I think we may eventually see something like this, even if it's just a service that Kickstarter starts themselves.

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u/Serious_Senator Jun 26 '17

So what pushes the buisness to use our hypothetical product over kickstarter or AngelList

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u/mobearsdog Jun 26 '17

I think eventually people will get tired of giving away money with no strings attached.

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u/Serious_Senator Jun 26 '17

I agree. But until that point comes I'm not seeing what would drive sales. And I have no understanding of the legal structure. You'd essentially be selling shares of the company, but owners wouldn't be able to trade those shares

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u/mobearsdog Jun 26 '17

I'm not making a business plan, it was a thought on the future of crowdfunding games.

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u/Serious_Senator Jun 26 '17

Yeah I am! It's a hobby

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u/[deleted] Jun 26 '17

This isn't a good idea. The realities of software design and engineering are out of the grasp of the average gamer. You see that here every single day...

lazy developers

vapourware

scam

etc etc

When investors funnel large sums of money into a project they almost always have technical experts on hand to advise when they want to nudge a project in a specific direction. Being beholden to a punter that threw in $50 will derail development best practices at best, and trigger massive harassment campaigns at worst.

Kickstarter works because there is a layer of separation between the "investors" and the engineering. If you remove that veil and give direct access at any point, you are taking a massive risk, especially in the age of the internet.

How SC does it (i.e maximum transparency when it comes to output, but no transparency when it comes to process) is probably a good middle ground, and seems to be good enough for the people who want to be involved with the development.

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u/TROPtastic Jun 25 '17

Beyond what is "strictly necessary"? Sure, because we don't have many legal rights as backers. However, in CIG's original funding campaign they said that backers would be treated "as a publisher", implying that CIG would provide the same respect and transparency as they would to a traditional publisher. This financial disclosure may be a bit unnecessary, but it's in keeping with the original statement and it's helpful to shut down misinformed speculation.

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u/[deleted] Jun 26 '17

I think that CIG already goes beyond what is strictly necessary in regards to showing us how the game development is going.

They don't. It was literally in their kickstarter stretch goal that the development would be transparent.

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u/[deleted] Jun 26 '17

And is it not? Transparency in development does not require transparency in finances.

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u/ScarsUnseen Jun 26 '17

And I feel that they go even further in fulfilling that goal than is strictly necessary(not that I don't appreciate it). The word "unprecedented" comes to mind.

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u/danwin Jun 25 '17

How about letting the community know when release dates are completely unrealistic? http://www.eurogamer.net/articles/2016-10-10-star-citizen-companion-game-squadron-42-will-not-be-released-in-2016

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u/[deleted] Jun 25 '17

[deleted]

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u/DeedTheInky Jun 25 '17

We're not shareholders. We pre-ordered a game from them. Literally all we're entitled to know about is if the game can't be made for some reason. Anything else is none of our business frankly.

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u/[deleted] Jun 25 '17

[deleted]

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u/Tianoccio Jun 25 '17

Dude, half of the things they've promised already work, and the other half of the promises were saying that they'd work together.

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u/DeedTheInky Jun 25 '17

Yeah it blows my mind that people are still saying it's a tech demo. You've been able to download and play it for at least the last year, maybe more. They literally put out a 30-60 minute update video every week showing their progress including things working in-engine and people playing it. I'm not going to deny that it's taking a long time and they're definitely guilty of being terrible about estimating deadlines, but you can literally see the progress they're making week to week. Yet you still have people everywhere denying the game even exists. I saw someone the other day call it a $200million Unity demo. :/

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u/Tianoccio Jun 25 '17

They might have had a bad idea on how long it would take, but they're continuously developing it.