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Game News Wasteland 3 coming to Fig on October 5th, introducing two player co-op and cinematic conversations

Self-Ejected

Bubbles

I'm forever blowing
Joined
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For instance: the Psychonauts 2 agreement did not give Fig a cut of DLC revenue, while WL3's agreement does.

Since virtually every DLC is created using some form of "development resources" from the base game, it seems very sensible that the investors should get a cut of it. I wonder how Tim managed to wriggle out of that... probably related to the fact that his ex-COO is running the company.
 
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Mustawd

Guest
A bug-free RPG is an extremely tall order. I'm not sure what happens if InXile delivers a buggy game, though. I don't know if the contract can be terminated by Fig for that, and who gets paid or not if that happens.


The big word here is "materially", which means you'd have to sue to actually determine what the hell that means. Materiality, is used in auditing and that is a shifty concept as well.


Fairfax, some parts of the video were kind of dumb and the guy knows fuck all about PE, but it is really starting to seem like the "advisory council" has their fingers in all kinds of Fig pies. It's not necessarily unusual, as I've seen interconnected relationships like this in other PE, but it's definitely not talked about anywhere that I've seen.

Investors really should be reading these agreements very carefully.
 

Fairfax

Arcane
Joined
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Messages
3,518
Since virtually every DLC is created using some from of "development resources" from the base game, it seems very sensible that the investors should get a cut of it. I wonder how Tim managed to wriggle out of that... probably related to the fact that his ex-COO is running the company.
Indeed. One could argue Fig Funds are a smaller portion of Psychonauts 2's budget than in WL3's case, but it still makes the investment considerably worse, as DLC could make the game a lot more profitable. Maybe the mysterious "outside partners" are getting a cut instead.
The big word here is "materially", which means you'd have to sue to actually determine what the hell that means. Materiality, is used in auditing and that is a shifty concept as well.


Fairfax, some parts of the video were kind of dumb and the guy knows fuck all about PE, but it is really starting to seem like the "advisory council" has their fingers in all kinds of Fig pies. It's not necessarily unusual, as I've seen interconnected relationships like this in other PE, but it's definitely not talked about anywhere that I've seen.

Investors really should be reading these agreements very carefully.
So you finally agree that it's a shady structure? :M
They don't even hide the conflict of interest stuff (emphasis mine):

Our officers and our Director may have a conflict of interest or appear to have a conflict since our officers are also officers of our Parent and our Director is also a director of the Parent.

Our director is also a director of our Parent and our officers are also officers of our Parent. Because our Parent holds all of our common stock, its interests are expected to conflict in certain respects with the interests of holders of our Game Shares. Furthermore, since our Parent is also required to provide services to our Company under the Master Services Agreement, as long as such agreement is in effect, certain of its interests pursuant to that agreement are directly adverse to our interests. These differing interests could create or appear to create conflicts of interest when our officers or directors are faced with decisions that could have different implications for our Parent. We have not adopted any specific procedures for consideration of matters involving a divergence of interests among holders of shares of our Game Shares and our common stock, or among holders of different series of Game Shares. Rather than develop additional specific procedures in advance, our board of directors will exercise its judgment from time to time, depending on the circumstances, as to how best to:
  • obtain information regarding the divergence (or potential divergence) of interests;
  • determine under what circumstances to seek the assistance of outside advisers;
  • determine whether a special committee of our board of directors should be appointed to address a specific matter and the appropriate members of that committee;
  • and assess what is in our best interests and the best interests of all of our shareholders

I'd argue that talking to lawyers is more important than the investor's own knowledge when it comes to Fig. There's a lot that could go wrong, Fig and the Developer give very few warranties, and much of the wording is rather vague. Say Psychonauts 2 ends up in a DF-9 situation. It could turn into a huge mess in court, and then the profits of other Fig-funded projects may suffer for it.
The real trick is that Fig Publishing gets their cut regardless, so even if shit hits the fan, Feargus, Fargo and Schafer (which are members of Fig Publishing's board) will make money.
 

jungl

Augur
Joined
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Messages
1,420
wasteland 2 was mediocre they had to have vastly improve the formula from the previous game for 3 to be worth playing.
 

Mustawd

Guest
So you finally agree that it's a shady structure? :M
They don't even hide the conflict of interest stuff (emphasis mine):

The structure doesn't bother me. It's the agreements themselves. Why is it structured so differently from WL3? What's going to be the norm? Why are we giving Doublefine leeway to use money as they see fit?

There's no discussion of this in the agreement OR by Fig. So all you have left is to ask that question from Fig themselves. Which I really think investors should be doing.
 
Joined
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The speculation about money from one game being used in others comes from this part of Fig's filings IIRC:
It seems they can cover losses and other expenses of Fig LLCs using assets from another. In his posts, Fig's CEO did not deny that. He said Psychonauts 2's funds cannot be used in other projects, but he didn't say a word about profits.

So they can put all profits into other game and than claim W3 did not bring any profits, so Fargo can keep all the money and not have to pay to the investors?
 

Mustawd

Guest
I seriously doubt that. The fund will get audited, so they have to show profits. I would imagine doing that would be highly illegal.
 
Self-Ejected

Bubbles

I'm forever blowing
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Are the proceeds from the crowdfunding portion of the Figstarter counted as "revenue" for the purposes of paying back the investors?
 

Mustawd

Guest
Huh? I don't follow. Revenue is based on sales of the game on each specific platform.
 
Self-Ejected

Bubbles

I'm forever blowing
Joined
Aug 7, 2013
Messages
7,817
So if I pledge for the game on Fig and receive 4 copies as a reward, my pledge will not be considered when calculating inXile's revenue? And the same would apply to slacker backers? I would assume that this is the case, but I wanted to be sure.
 

Fairfax

Arcane
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Jun 17, 2015
Messages
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So you finally agree that it's a shady structure? :M
They don't even hide the conflict of interest stuff (emphasis mine):

The structure doesn't bother me. It's the agreements themselves. Why is it structured so differently from WL3? What's going to be the norm? Why are we giving Doublefine leeway to use money as they see fit?

There's no discussion of this in the agreement OR by Fig. So all you have left is to ask that question from Fig themselves. Which I really think investors should be doing.
Fig's CEO said they wanted to "reuse the investment structure for other campaigns", but they all seem different, so I don't know.
The other important question is: why are mysterious third parties investing in the game without using Fig? If Fig is a good deal, why would the "outside partners" avoid it? Do they get a better deal? Do they have a say in the game's development and/or design? Fig investors don't know.

body_width.jpeg


The speculation about money from one game being used in others comes from this part of Fig's filings IIRC:
It seems they can cover losses and other expenses of Fig LLCs using assets from another. In his posts, Fig's CEO did not deny that. He said Psychonauts 2's funds cannot be used in other projects, but he didn't say a word about profits.

So they can put all profits into other game and than claim W3 did not bring any profits, so Fargo can keep all the money and not have to pay to the investors?
It wouldn't be that simple.

According to the Offering Memorandum, here's how the money would flow:

0Xc5xD.jpg


The money goes through Fig Publishing first, then the LLC takes it and shares accordingly.

However, there's an order of priority for Fig WL3 LLC's revenue distribution.
1. Business expenses (the LLC's operation in general);
2. "to establish, fund and increase reserves and escrow accounts as determined by the Managing Member, from time to time, to be appropriate or necessary, all such determinations by the Managing Member to be made in the Managing Member’s sole discretion;"[basically the money that goes to the company's pockets after the expenses]
3. Pay investors.

If Fig Publishing and/or the LLC are indeed allowed/forced to use profits to pay for expenses of other Fig companies, then the director could write them off as business expenses and investors would either not get paid or receive less.
If Fargo wanted to keep the money to himself, the easiest way would be to not deliver the game at all, as nothing in the agreements says InXile has to release the game.

Are the proceeds from the crowdfunding portion of the Figstarter counted as "revenue" for the purposes of paying back the investors?
No. These are considered "Advances" and are not part of "Gross Receipts", which only includes the revenue from the game's sales through "Fig.co or approved Distributors".
 

tripedal

Savant
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Location
Ultima Thule
So 3,400,400/6.69 = 508,221 copies. Given Wasteland 2 has sold 616k (according to SteamSpy) + ??? on console, that seems like a target that will probably be achieved. Let's say it sells 700k so investors get an additional 2.16*200k = 432k for a total return of 53%.

But: when? And at what risk? Assuming 4 years of development, a discount rate of ~11% will give you NPV=0. This seems like a risky venture so I'm not sure if it's enough. OTOH this is presumably a countercyclical investment since vidya do great during recessions, so the diversifying effect could justify a low discount rate?
 

Kev Inkline

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A Beautifully Desolate Campaign Pillars of Eternity 2: Deadfire Pathfinder: Kingmaker Steve gets a Kidney but I don't even get a tag.
So 3,400,400/6.69 = 508,221 copies. Given Wasteland 2 has sold 616k (according to SteamSpy) + ??? on console, that seems like a target that will probably be achieved. Let's say it sells 700k so investors get an additional 2.16*200k = 432k for a total return of 53%.

But: when? And at what risk? Assuming 4 years of development, a discount rate of ~11% will give you NPV=0. This seems like a risky venture so I'm not sure if it's enough. OTOH this is presumably a countercyclical investment since vidya do great during recessions, so the diversifying effect could justify a low discount rate?
So where does the 80% of the further revenus go, after $3.4M is returned?
 

Mustawd

Guest
why are mysterious third parties investing in the game without using Fig? If Fig is a good deal, why would the "outside partners" avoid it? Do they get a better deal? Do they have a say in the game's development and/or design? Fig investors don't know.

The size of their investments most definitely gives them access and/or clauses that would not apply to smaller investors. This is normal. The opaqueness is also normal cuz PE.

Also, who knows in what they are invested in. They might be invested in a whole other vehicle unrelated to Fig (legally speaking). Don't think Fog would be required to disclose that as it's untelated to the offering and unrelated to Fig itself. Dunno.
 

Hegel

Arcane
Joined
May 12, 2009
Messages
3,274
They'll just inflate their projected and eventually realized overhead, since it's net points instead of gross points, good luck suing them. fig "investors".
 

Fry

Arcane
Joined
Aug 29, 2013
Messages
1,922
First they'd have to find one willing to work on a video game.
 

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