Guess I should drop over and check on how Limit Theory is coming along.
So many depressing stories in this genre, but I still have hope in Josh putting something together.
Maybe. I haven’t checked in months out of fear.
To me that’s the most troubling–it’s a lot of collateral to put up for what sure looks like a very small loan. If you’re putting up EVERYTHING to secure a small loan, that implies…yikes. Payment to necessary creditors (keeping the lights on?) or making payroll…
Maybe, but then again if you’re going to give a loan to a company with no product yet and no valuable physical assets (I assume they lease their buildings), wouldn’t you take security over everything they’ve got, regardless of their status? It could go either way really.
Yes, but if you’re CIG, under what circumstances are you willing to take that collateral risk? Either you’re so incredibly sure you’re going to have no problems paying back on time (in which case, why risk the loan?) or that sort of risk is your only alternative.
Well, if they can’t pay back the loan they’re totally screwed anyway. It’s not like they could bounce back from Star Citizen being a failure (whatever that means given its funding model). The risk is totally binary.
And yet it’s the same behavior that 38 Studios took at the end of their run, is it not? 38 Studios, with a monthly burn of $2-4 million was trying at the end to squeeze out tax credits for $7 million for an MMO that was at least 12-18 months away.
And many more happier ones, I’ll have you know. Sir.
Oh sure, it could totally be a bad situation (arguably, we knew they were in a bad situation before this). I’m just not sure we can read much into the extent of the security, rather than the existence of the loan. In my opinion, if they were going to get a loan at all, it would be with an extensive security package like this. But I do think we should bear in mind that, unlike 38 Studios, CIG do at least have revenue coming in, even if it could easily dry up.
They should just learn from Croateam: why pay payroll when money is tight when you can instead, just. . . NOT!
Right. You’re looking at it from the loaning institution’s perspective, and your logic there is sound.
I’m curious about looking at it from Cloud Imperium’s side of things. As you note:
- They have a revenue stream coming in
- This loan is not for a great deal of money
But…
- The collateral associated with this loan means forfeiture and likely liquidation of all assets if it defaults.
So…considering point 1, that they apparently do generate revenues, why does CIG need a small loan? How close or over on 30-60-90 day terms are they with creditors, in other words?
And given: revenue stream (apparent, at this point we don’t know that amount), loan size (loan appears to be small-ish)…Why would you put your entire project at risk of forfeiture and liquidation?
If the answer to the right of the equals sign is “This is all fine,”, those are the elements of the equation left of that sign that right now aren’t adding up for me.
Only question now is whether Derek takes the high road or goes “nyaa nyaaah nyahh toldja so”.
My guess is he’ll start out trying to be professional and “saddened for what it means for the industry” and whatnot and then swiftly descend into schadenfreude and mocking.
Does this at least indicate is that non-sale run-rate of 1.5-2.5mill is not covering current operating expenses?
Maybe they have lump sums in long term investment or non-liquid assets, forcing a short term loan, but the timing still seems weird in that they have had five months of predictable revenue from which to plan asset liquidation or prepare other contingency. Unless, maybe the run-rate sustains, but they have some other debt milestone or balloon payment due which the short term loan will cover?
One other explanation mentioned was hedging - with the decline in the pound, perhaps the cost of the loan is less than the cost of bringing money into the UK with a poor conversion.
Hah nice, checkmark on “saddened for what it means for the industry”. On the edge of my seat-- will the mocking commence?
Wait up a sec, maybe Derek ain’t all that bad after all!
I think this counts as a nyaa nyaa toldja so.
@sharaleo: Derek has substantial character flaws, primarily that he can’t allow any random jerkoff to speak ill of him on the entire internet without responding and fanning the flames. But he isn’t crazy, he isn’t like Cleve.
He’s fighting all the scams: from questionable gaming projects to US politics. He’s a one man machine against the system.
The biggest difference between 38 Studios vs CIG is that CIG has already been paid for a product they have yet to deliver. All that revenue coming is is based upon the promise of delivering a product to the consumer - if they actually finish the game it’s already been “prepuchased” by a huge number of people so the only upside for revenue growth is either recurring payments, subscriptions, or lots and lots of new players. IE finishing the game might really not bring much in the way of new revenue. 38 Studios could at least barely plausibly argue that on release they could sell 3-5 million copies, even if that were fantasy at best. CIG might claim that this would be the hit of the century, GTA V style, and promise hundreds of millions of recurring payments from SpaceWhales or something, but i’m not sure the game is really built around a model they can monetize in that way.
He’s not the Derek we want, but the one we need. The Dark Knight.
Derek 2020.
A bit sad to hear I wont be playing Wing Commander 6(?) in 2018, but it didn’t come as a surprised considering they had fucking starship doors in their office instead of a released game.
Also what i will surely find ironic in the coming chaos is that Roberts will still have defenders in the gaming world for years after squandering 150m but Sean Murray will be a dead man walking in gaming communities forever for his Great Crime of releasing a fully functional game with a great soundtrack that is boring because His Public Statements. Which, if it does pan out that way, would be another example of how social media transmutes saying something bad into a transgression worse than doing something bad.
