Investing in video game companies?

[mad825]

]The company made $500mill in sales, but investors were "disappointed". They don't want dividend cheques, they want growth, and that's what you won't get with AAA games publishers.

Well, the whole point of investing is to get dividends. What likely happened was that Activision gave this huge impressive power point presentation how they will be able to stuff their turkeys with $100 bills at the end of the year and instead the investors got a goose...Stuffed with $100 bills. One thing that companies don't want are investors placing their money somewhere else so they often get creative with figures. Some dodgy companies *cough*cough*TellTale*cough*cough would even resort to ponzi schemes to make their figures look good.

 

[KingsGambit_v1legacy]

]The company made $500mill in sales, but investors were "disappointed". They don't want dividend cheques, they want growth, and that's what you won't get with AAA games publishers.

Well, the whole point of investing is to get dividends. What likely happened was that Activision gave this huge impressive power point presentation how they will be able to stuff their turkeys with $100 bills at the end of the year and instead the investors got a goose...Stuffed with $100 bills. One thing that companies don't want are investors placing their money somewhere else so they often get creative with figures. Some dodgy companies *cough*cough*TellTale*cough*cough would even resort to ponzi schemes to make their figures look good.

Dividends are absolutely a legit reason, but it's not what most investors want. They won't want a few % ROI (return on investment), getting a cheque twice yearly paying out 0.3c a share or whatever.

Some people absolutely want to invest their money into "safe" companies. Companies that are proven to generate profits and thus dividends. But most investors want serious growth so that share prices increase. Someone who invested a couple of $1,000s in Apple in 1997 would be a millionaire today because of the crazy growth they experienced in the Naughties. If share prices double, your $1,000 becomes $2,000 and that's what these guys want, only not double, they want more!

It's why these guys are so shortsighted, they'll undermine gameplay and ruin the reputation of their games to make as much as they can in the shortest space of time. Nothing else matters. Not long term, not reputation, not quality, not loyalty, just short term profit. Buy low, sell high, move on.

I don't know about TellTale TBH....to my knowledge, I didn't think they were publicly traded before they went bankrupt?

 

[Kyrian007]

]The company made $500mill in sales, but investors were "disappointed". They don't want dividend cheques, they want growth, and that's what you won't get with AAA games publishers.

Well, the whole point of investing is to get dividends. What likely happened was that Activision gave this huge impressive power point presentation how they will be able to stuff their turkeys with $100 bills at the end of the year and instead the investors got a goose...Stuffed with $100 bills. One thing that companies don't want are investors placing their money somewhere else so they often get creative with figures. Some dodgy companies *cough*cough*TellTale*cough*cough would even resort to ponzi schemes to make their figures look good.

Dividends are absolutely a legit reason, but it's not what most investors want. They won't want a few % ROI (return on investment), getting a cheque twice yearly paying out 0.3c a share or whatever.

Some people absolutely want to invest their money into "safe" companies. Companies that are proven to generate profits and thus dividends. But most investors want serious growth so that share prices increase. Someone who invested a couple of $1,000s in Apple in 1997 would be a millionaire today because of the crazy growth they experienced in the Naughties. If share prices double, your $1,000 becomes $2,000 and that's what these guys want, only not double, they want more!

It's why these guys are so shortsighted, they'll undermine gameplay and ruin the reputation of their games to make as much as they can in the shortest space of time. Nothing else matters. Not long term, not reputation, not quality, not loyalty, just short term profit. Buy low, sell high, move on.

I don't know about TellTale TBH....to my knowledge, I didn't think they were publicly traded before they went bankrupt?

They weren't, they were an LLC, but that doesn't mean they don't have investors. It just means they just don't have investors in publicly traded stocks. A company like Telltale usually has investors in the corporate partnership sense. They get a license to make a game out of some other company's IP, they get an investment (some cash) and the IP, they do the work, and they and the investor split profits in some pre arranged way. Lionsgate had given them 40 million at some point. They were in talks with Netflix for some kind of similar deal. But they were advertising ridiculous levels of ROI that nobody could reliably deliver on.

 

[KingsGambit_v1legacy]

They weren't, they were an LLC, but that doesn't mean they don't have investors. It just means they just don't have investors in publicly traded stocks. A company like Telltale usually has investors in the corporate partnership sense. They get a license to make a game out of some other company's IP, they get an investment (some cash) and the IP, they do the work, and they and the investor split profits in some pre arranged way. Lionsgate had given them 40 million at some point. They were in talks with Netflix for some kind of similar deal. But they were advertising ridiculous levels of ROI that nobody could reliably deliver on.

Sure, you are right there. But if they are an LLC then there's no share trading so it's not the same thing in terms of investors and growth. They sold projects to investors and IP holders, profit or otherwise. But Joe Bloggs couldn't buy shares in the company and even investors weren't buying a stake in TellTale, just a stake in a project, the same as traditional games publishing.

In the case of an LLC experiencing growth, the private shareholders are the beneficiaries. That generally comprises the companies owners/founders and is the reason most (good) studios get bought up at some point. BioWare was owned and founded by the good Doctors, but it was eventually bought up by a holding company that EA later went on to acquire. The private owners sold their "shares" in the company to another company. Notch got $2bill in his pocket for selling Mojang to Microsoft since he was the sole owner.