The fact that any bank considered lending to a tiny company like this with no revenue stream is actually a positive sign. As for pledging all their "assets", that is completely standard. They have no assets to speak of - their "IP" is 100% worthless without future sales, which will never happen if the game doesn't get released. And further, because the money was raised from crowdfunding, the only equity holders that might suffer are the creators.
It's really important to understand finance if you want to understand the world and it's not that hard.
I should point out that this is not necessarily a bad thing, nor is it clear what the loan is for. What this tells us is that money has been loaned and secured against assets owned by CIG - this is fairly common practice in the case of commercial loans.
To bank with Coutts you must have at least £1,000,000 in tangible assets and in any event they are selective about their clientele; which implies CIG is doing well.
To be honest as much as the terms are huge, they didn't go to a loan shark neither a shitty bank. It's the bank that manage the assets of the Queen. I don't think they give loan that easily hence the huge collaterals.
"they didn't go to a loan shark neither a shitty bank. It's the bank that manage the assets of the Queen. I don't think they give loan that easily hence the huge collaterals."
Irrelevant. Why would they care which bank the money comes from?
It would be careless to take any deal on less favourable terms than you could get elsewhere, which implies this Coutts deal was the best they could get.
It could easily be a deal on a REALLY good rate to extend their runway well into the release cycle of a finished game, but the lack of disclosure implies otherwise.
Anyone here old enough to remember the original boo.com?
That was also an emperor-has-no-clothes fiasco of epic proportions. Which is ironic, because their problem was that they couldn't sell any of the mountains of clothes they had in storage.
Seems like incredibly poor budgeting given that they had $150M and couldn't deliver even a limited version of the game.
Maybe I'm underestimating the costs somehow, but you could easily pay pretty high salaries for 100+ people's time over a few years of development with that kind of money. I wonder what they did with it?
> couldn't deliver even a limited version of the game.
They have but the limitation is that the game is barely playable on populated servers. 3.0 (the next release) seems to be a push to make the game playable.
Not very surprised, the game has been a trainwreck in the making from the beginning. Total scope was just way too overambitious, and people weren't going to plow hundreds and thousands of dollars into spaceship jpegs forever.
Precisely, and this has been painfully obvious for a long time. Not even to me (I don't really follow the game) but to a few people whose opinion I respect, including multiple video game journalists.
Why is it the hip and cool thing to call the entire project a train wreck without any actual supporting evidence?
Half the subreddit seems to be die hard acolytes while the other half seem to be extremely bitter vets of a game that hasn't been launched.
The biggest game development project ever, with extraordinary transparency, and shoddy bloggers are still making money throwing out talking points about how it's a train wreck barely half way through development.
Again: without any actual proof. However, if there is any, I will gladly change my opinion.
"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.
I know SC initial funding is unprecedented, but is taking out what amounts to a line of credit really that uncommon? It doesn't necessarily mean the initial 150M has dried up -> thus the sky just may not be falling?
The terms of the loan we're really, really unfavorable. They essentially pledged every piece of IP they have to get the loan. It's not the kind of loan you take if your company is healthy and has easy access to financing.
> Porter became CEO of ION Storm and the Dallas Observer said "He turned down a deal with Compaq computers that would have paid ION 75 cents to $1 for every Compaq computer sold with Dominion already installed, and would have guaranteed ION a minimum of $1.5 million."
It's funny to think that selling your game for $1/each is a standard thing these days for mobile games. They only ended up selling very few of the games in retail and obviously should have took this deal.
Thanks for the link, interesting story.
I would love an office with a 'crash room' to have power naps in. That's the main thing I miss from working at home.
The game designer suddenly gets $150m and rather than iterating, he goes for the dream.
I looked him up and he apparently has produced AAA games before so what's the deal here? Shooting for the moon on the first go in any software development processes is a recipe for disaster.
Ahhh Star Citizen. The first crowdfunding campaign I ever backed, and I backed it to the tune of $120-150 (I don't even remember). I figured it was a gamble, but their demos were and continue to be extremely impressive, and what's life without a little risk? I doubt all the other backers will be so forgiving, however. Things are likely to get pretty ugly if the company folds.
In the first video the barrel roll [0] followed by a person in an EVA suit in the interior of a (different) vessel [1] made me wonder about zero-gravity spatial relationships.
(Before continuing, please excuse my ignorance in the subjects of gravitational physics and aeronautical nomenclature. Also, I do not intend to troll. I'm honestly wondering. I'm also a little embarrassed at the brainteaser-like character of my question.)
Presume a human being is inside a vertically asymmetrical vessel with no interior atmosphere. The vessel is at rest with regard to a nearby (< 1 million kilometers) planetary system (similar to ours) and the vessel is in (essentially) zero-gravity. If the vessel accelerates around the axis that runs stem to stern (executes a barrel roll) will the occupant spin with the vessel or will the vessel spin around the occupant?
Not surprised. The whole enterprise seemed fishy from the start. I contributed to the Kickstarter but basically gave up on it once they moved to their new campaign website and their business model became so complicated I didn't know what they were offering or I was buying anymore. Endless offers and perks with no have in sight didn't help.
Should kickstarter have a clause for failed software projects to be open sourced/the source code/assets be given to the backers?
(Not sure what the non-technical users could do with it, but at least they could get what work has been done so far)
Of course I'm not implying Star Citizen has failed, this is just a general thought
Funny how everyone loves to jump on the hate wagon against this game and company, even on HN - you get a clickbaity sketchy article from neogaf and suddenly everyone is a banking expert?
They already released a response, but it's kinda sad that they have to justify stuff like this to "journalists" all the time.
Most interesting thing about SC is Amazon has a game publishing arm and star citizen is using lumberyard. I hope that AGS has an interest in keeping it's most high profile client alive. Some of my most nostalgic childhood memories are playing privateer with my brother.
Having someone who could say no to chris would probably be an overall win for everyone.
Ortwin: 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.
Please don't use two spaces to quote text. That quoted text is barely readable on desktop, and unreadable on mobile, because of the horizontal scrolling.
I agree. Let's see what their statement is.
They are however quite late with the 3.0 upgrade that was first expected at the end of 2016 (as was the release of Squadron 42, the single player campaign).
We're still waiting for both of them.
Wouldn't we all love a breakdown on how someone spends that kind of money. So far the game is solid. But I wonder if someone had their eyes on another WOW killer.
$150M isn't that much of money if you consider their studious locations, game scale and quality of their marketing materials. I guess they spent a lot more money on marketing and communications with community since it's the only reason they managed to get so much money through crowdfunding.
For instance one of best and largest games recently produced is Witcher 3. It's cost about $81M [1] (half budget is marketing and probably localization, not sure what is source on this) and more than 250 [2] in-home developers (and 1500+ [3] people in total include localization) worked on it. And this is developers from Poland with significantly lower salaries and overall burn rate.
Now for instance about year ago Chris Roberts announced [4] they have following studios working on game: Frankfurt (50), Manchester (180), Los Angeles (60) and Austin (50). So it's about 350 developers and even if you take something like $80,000 burn rate per employee it's going to be a lot of money and actual number likely higher than that.
Is being a "WOW killer" worth it anymore? Activision doesn't even release the subscription numbers anymore (most likely because they've fallen so much since WotLK).
This is not abnormal at all (in itself). If you were going to lend money to a software company, what else would you take as security other than IP?
A floating charge is just there to establish the bank as a preferential creditor in case they default. Otherwise if the company became insolvent, the bank would only be entitled to its share of what is left of the assets in proportion to what they had lent. If the bank expected them to default then they would not have lent them any money! A floating charge does not mean necessarily that the bank would be entitled to those assets, if they were of a higher value than what the bank had lent them, for instance.
I just took a look at the December 2015 accounts and they show that they burnt £1m in the year, and had £1.1m left. Again, the bank will know their provisional 2016 numbers and their forecast by now, and would not have lent them money that they didn't have the cashflows to repay.
The game may be rubbish, the project may be a failure, but a registration of a charge is not a cause for concern in itself. Maybe for instance, the company saw an opportunity that needed more cash?
I'd expect the loan is effectively borrowing against anticipated Squadron 42 sales (the single player game) to keep development moving faster. God forbid they delay that again.
Once that's out they can pay the money back and continue work on Star Citizen's persistent universe.
As to the ongoing debate over whether the project is "a train wreck", it would be prudent to wait another month or two for alpha 3.0 to land. This contains the first procedural moons, landing locations, significant overhauls to networking, more fleshed out NPCs/missions, initial version of cargo hauling, and more.
If they can't deliver on that then by all means get all doom-and-gloom. But it's not that far off to wait. Official schedule still has it targeted for July, but a slip back to August won't surprise anyone.
tl;dr It's an advance on a tax rebate (for SQ42 development) and avoiding currency conversions. The collateral specifically excludes Star Citizen. The primary collateral is the tax rebate which the UK government probably isn't going to default on.
[+] [-] hackerfakenews|8 years ago|reply
It's really important to understand finance if you want to understand the world and it's not that hard.
/thread
[+] [-] macspoofing|8 years ago|reply
[+] [-] shmerl|8 years ago|reply
[+] [-] nunez|8 years ago|reply
[+] [-] Belphemur|8 years ago|reply
I should point out that this is not necessarily a bad thing, nor is it clear what the loan is for. What this tells us is that money has been loaned and secured against assets owned by CIG - this is fairly common practice in the case of commercial loans.
To bank with Coutts you must have at least £1,000,000 in tangible assets and in any event they are selective about their clientele; which implies CIG is doing well.
To be honest as much as the terms are huge, they didn't go to a loan shark neither a shitty bank. It's the bank that manage the assets of the Queen. I don't think they give loan that easily hence the huge collaterals.
[+] [-] headmelted|8 years ago|reply
Irrelevant. Why would they care which bank the money comes from?
It would be careless to take any deal on less favourable terms than you could get elsewhere, which implies this Coutts deal was the best they could get.
It could easily be a deal on a REALLY good rate to extend their runway well into the release cycle of a finished game, but the lack of disclosure implies otherwise.
Anyone here old enough to remember the original boo.com?
That was also an emperor-has-no-clothes fiasco of epic proportions. Which is ironic, because their problem was that they couldn't sell any of the mountains of clothes they had in storage.
[+] [-] Normal_gaussian|8 years ago|reply
[+] [-] problems|8 years ago|reply
Maybe I'm underestimating the costs somehow, but you could easily pay pretty high salaries for 100+ people's time over a few years of development with that kind of money. I wonder what they did with it?
[+] [-] avaer|8 years ago|reply
[+] [-] ohyes|8 years ago|reply
[+] [-] zamalek|8 years ago|reply
They have but the limitation is that the game is barely playable on populated servers. 3.0 (the next release) seems to be a push to make the game playable.
[+] [-] TulliusCicero|8 years ago|reply
[+] [-] shadowmint|8 years ago|reply
I'm not following this at all, but I can't see anything particularly obvious that's a 'train wreck'.
They have a game. It's playable, if not particularly good. Some people are playing it (or something? Someone is posting gameplay videos anyway).
I have zero investment in it so I don't really get it; I see a lot of unhappy people making :( faces.
Games take time and money to make. They're making it. It's not done yet. They're keeping in touch with people and releasing regular updates.
I mean, what do you want them to do? Not make it? Make it faster? Communicate more? Communicate differently?
That's really good compared to some crowd funding people... isn't it?
...? Where's the drama?
[+] [-] norswap|8 years ago|reply
[+] [-] LMYahooTFY|8 years ago|reply
Half the subreddit seems to be die hard acolytes while the other half seem to be extremely bitter vets of a game that hasn't been launched.
The biggest game development project ever, with extraordinary transparency, and shoddy bloggers are still making money throwing out talking points about how it's a train wreck barely half way through development.
Again: without any actual proof. However, if there is any, I will gladly change my opinion.
[+] [-] screecwe|8 years ago|reply
https://i.redd.it/3yddemsdku5z.jpg
"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. "
[+] [-] adrenalinelol|8 years ago|reply
[+] [-] mrmcd|8 years ago|reply
[+] [-] redm|8 years ago|reply
[1] https://en.wikipedia.org/wiki/Ion_Storm
[2] https://en.wikipedia.org/wiki/Daikatana
[+] [-] dmix|8 years ago|reply
It's funny to think that selling your game for $1/each is a standard thing these days for mobile games. They only ended up selling very few of the games in retail and obviously should have took this deal.
Thanks for the link, interesting story.
I would love an office with a 'crash room' to have power naps in. That's the main thing I miss from working at home.
[+] [-] ethbro|8 years ago|reply
Although the moral there is Warren Spector is a far better game creator than John Romero.
[+] [-] madamelic|8 years ago|reply
The game designer suddenly gets $150m and rather than iterating, he goes for the dream.
I looked him up and he apparently has produced AAA games before so what's the deal here? Shooting for the moon on the first go in any software development processes is a recipe for disaster.
[+] [-] TulliusCicero|8 years ago|reply
The deal is that he's one of those guys who makes you go, "Oh, that's why publishers exist."
[+] [-] antisthenes|8 years ago|reply
[+] [-] ethbro|8 years ago|reply
I'm guessing you haven't played a little series called Wing Commander?
[+] [-] Merad|8 years ago|reply
[+] [-] git-pull|8 years ago|reply
- Imagine: Star Citizen: https://www.youtube.com/watch?v=lJJ9TcGxhNY
- Star Citizen - MISC Freelancer Commercial: https://www.youtube.com/watch?v=vO7RxsZpcKc
- Star Citizen: Consolidated Outland Mustang Commercial : https://www.youtube.com/watch?v=BR07oZC0QHU
- Introducing the 2944 Aurora: https://www.youtube.com/watch?v=UvDs7RDKCag
Full playlist: https://www.youtube.com/playlist?list=PLVct2QDhDrB0QRjv9oN02...
[+] [-] mistersquid|8 years ago|reply
(Before continuing, please excuse my ignorance in the subjects of gravitational physics and aeronautical nomenclature. Also, I do not intend to troll. I'm honestly wondering. I'm also a little embarrassed at the brainteaser-like character of my question.)
Presume a human being is inside a vertically asymmetrical vessel with no interior atmosphere. The vessel is at rest with regard to a nearby (< 1 million kilometers) planetary system (similar to ours) and the vessel is in (essentially) zero-gravity. If the vessel accelerates around the axis that runs stem to stern (executes a barrel roll) will the occupant spin with the vessel or will the vessel spin around the occupant?
[0] https://youtu.be/lJJ9TcGxhNY?t=106
[1] https://youtu.be/lJJ9TcGxhNY?t=116
EDIT: Change "subject" to "subjects".
[+] [-] ferongr|8 years ago|reply
[+] [-] whatever_dude|8 years ago|reply
Weird that Roberts didn't know better.
[+] [-] bananicorn|8 years ago|reply
[+] [-] Cynosaur|8 years ago|reply
They already released a response, but it's kinda sad that they have to justify stuff like this to "journalists" all the time.
https://robertsspaceindustries.com/spectrum/community/SC/for...
[+] [-] mter|8 years ago|reply
Having someone who could say no to chris would probably be an overall win for everyone.
[+] [-] DavidTWco|8 years ago|reply
[+] [-] DanBC|8 years ago|reply
[+] [-] ino|8 years ago|reply
[+] [-] umdobchob|8 years ago|reply
[+] [-] Tepix|8 years ago|reply
[+] [-] brador|8 years ago|reply
This is nothing more than a Redditor losing control and spreading a false rumor that has been fanned by news sites.
Also dangerously close to Libel.
[+] [-] norswap|8 years ago|reply
[+] [-] ngold|8 years ago|reply
[+] [-] SXX|8 years ago|reply
For instance one of best and largest games recently produced is Witcher 3. It's cost about $81M [1] (half budget is marketing and probably localization, not sure what is source on this) and more than 250 [2] in-home developers (and 1500+ [3] people in total include localization) worked on it. And this is developers from Poland with significantly lower salaries and overall burn rate.
Now for instance about year ago Chris Roberts announced [4] they have following studios working on game: Frankfurt (50), Manchester (180), Los Angeles (60) and Austin (50). So it's about 350 developers and even if you take something like $80,000 burn rate per employee it's going to be a lot of money and actual number likely higher than that.
[1] https://www.gamespot.com/articles/this-is-how-much-the-witch...
[2] https://www.develop-online.net/interview/the-wild-road-to-th...
[3] https://www.vg247.com/2016/01/13/over-1500-people-worked-on-...
[4] https://www.youtube.com/watch?v=w9T48l7Oq0Q&feature=youtu.be...
[+] [-] adrenalinelol|8 years ago|reply
[+] [-] carterschonwald|8 years ago|reply
[+] [-] spraak|8 years ago|reply
[+] [-] jimnotgym|8 years ago|reply
This is not abnormal at all (in itself). If you were going to lend money to a software company, what else would you take as security other than IP?
A floating charge is just there to establish the bank as a preferential creditor in case they default. Otherwise if the company became insolvent, the bank would only be entitled to its share of what is left of the assets in proportion to what they had lent. If the bank expected them to default then they would not have lent them any money! A floating charge does not mean necessarily that the bank would be entitled to those assets, if they were of a higher value than what the bank had lent them, for instance.
I just took a look at the December 2015 accounts and they show that they burnt £1m in the year, and had £1.1m left. Again, the bank will know their provisional 2016 numbers and their forecast by now, and would not have lent them money that they didn't have the cashflows to repay.
The game may be rubbish, the project may be a failure, but a registration of a charge is not a cause for concern in itself. Maybe for instance, the company saw an opportunity that needed more cash?
[+] [-] wlesieutre|8 years ago|reply
Once that's out they can pay the money back and continue work on Star Citizen's persistent universe.
As to the ongoing debate over whether the project is "a train wreck", it would be prudent to wait another month or two for alpha 3.0 to land. This contains the first procedural moons, landing locations, significant overhauls to networking, more fleshed out NPCs/missions, initial version of cargo hauling, and more.
If they can't deliver on that then by all means get all doom-and-gloom. But it's not that far off to wait. Official schedule still has it targeted for July, but a slip back to August won't surprise anyone.
[+] [-] wlesieutre|8 years ago|reply
tl;dr It's an advance on a tax rebate (for SQ42 development) and avoiding currency conversions. The collateral specifically excludes Star Citizen. The primary collateral is the tax rebate which the UK government probably isn't going to default on.
[+] [-] dang|8 years ago|reply