do any devs operate like nonprofits?

I

inlimbo

Newcomer
i doubt any game developer could get officially recognized/tax exemption unless they were deeply entrenched in educational software, but that's not what i mean. are there any devs that follow that model regardless? it seems like it would support more risk in the industry without threatening a sinking ship outcome.

privately held, massively profitable companies like valve have lots of security and can afford chance endeavors, but even they seem a little reigned in by customer approval.
 
How do you mean? In that they never turn a profit, work paycheck to paycheck, or are one game away from bankruptcy? Lots of independent studios would fit that description.
 
not in such cynical terms, no. i'm talking a dev that yields fair wages across the board and forgoes profit bonuses in favor of reinvesting that money in the company's future, ensuring some level of job security and giving it leeway to focus on projects that interests it.
 
Not really. Games are a hit driven industry. If you're interested in job security, the closest thing is to work for a large publisher like EA and Activision, who have the financial wherewithal to withstand repeated product failures and are willing to invest in talent over the long term.
 
this isn't a question of my employment interests or even job security, exactly. but financial security allows a large independent studio to take risks and job security will attract employees who otherwise might balk at the idea of less competitive salaries and a lack of bonuses. it'd be nice to hear of one working this way.

edit: and it'd be healthy for an industry that's largely driven by sizable teams, but one that's ballooning toward toward collapse, whether you consider the excesses of publishing giants or the flood of worthless mobile games. modest indie devs just don't have the means to rescue that terrible monster, so reform has to come from within
 
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Big publishers, while not working exactly this way, are similar. They tend to own a lot of internal studios as well as contracts with 3rd parties. When an internal studios makes a big hit those profits go toward all the other studio titles that don't. iirc 70% of games don't make a profit, 30% do or whatever the numbers were. (Kind of like how college football supports the swim team). Hence in a big pub like EA or Activision the individual studios have less Independence but then again are bankrolled by their owner. Not exactly what you were asking, but close?
 
it's one way - maybe admirable in one sense - but it's also a calculated move to keep that publisher "at size," so stock price remains steady and investment continues. it doesn't encourage real growth of those subsidiaries - it keeps them afloat so they can be shuffled into whatever project could turn a profit while ignoring risks that need to be taken. EA deserves credit for mirror's edge and skate, however
 
inlimbo said:
not in such cynical terms, no. i'm talking a dev that yields fair wages across the board and forgoes profit bonuses in favor of reinvesting that money in the company's future, ensuring some level of job security and giving it leeway to focus on projects that interests it.
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All of the current big publishers reinvest large sums of money into the business. And the more successful devs have a large cash balance held by the company itself (Blizzard for example) for use in developement projects.

I think you are not quite understanding non-profit type of business activities. Non-profit organizations generally try to operate where any incoming revenue matches outgoing expenses (utilities, maintainance, paychecks, etc.) as much as possible. Hence no profit and no money that can be reinvested into the organization. That fact that many supposedly non-profit organizations don't operate this way is another discussion entirely as those actually are making a profit.

Basically any money a company can re-invest into the company is profit. Any good company will also maintain a large cash reserve (Microsoft, Intel, Apple, etc.) to buffer the effects of a recession or downturn in business. Without those cash reserves a company risks going bankrupt if a recession or economic downturn lasts longer than their available cash holdings and/or credit goodwill among creditors.

Game publishers generally don't have large cash reserves, that's why they're always dependant on blockbusters to fund developement of the rest of their game portfolio. Most developers also don't have a large reserve, hence why there are very few independant developers and even fewer developers that aren't completely dependant on their publisher. Off hand I can only think of one AAA developer who is completely non-dependant on their publisher (Blizzard).

Profits are the only thing a company can use to re-invest in itself. And the only thing that they can use to fund new developement as well as to buffer against the very real potential of a product not selling as well as projected.

If a developer or publisher operated as a non-profit organization, the first product to undersell projections would lead to the company going out of business and ceasing to make games.

Regards,
SB
 
you're generally right, but many true non-profits do retain surplus revenue to ensure their continued existence and meet their long-term goals. in the case of those that provide valuable social and medical services, the reasons for this are obvious and serve no corrupt agenda.

while it's impossible to put any game dev into the same category as a free clinic or public hospital, the basic idea stands. provided an upstart is in good funding (like valve initially was) and management or an established dev decides to alter its business practices, the blow from a failed project can be cushioned in the same way as one to an industry giant

edit: it's not a guarantee that said company will survive and it's not a purely self-sustaining business model, but in a creative industry it does cater to a freer work environment. and more devs need both the security and the freedom to push ideas beyond outright stagnation or simple novelty
 
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How many creative industries have non-profit setups? Are they common in film or musical production?

And completely unrelated to the topic, can you please get a keyboard with a working shift key, or use the working shift key you already have. Thanks.
 
inlimbo said:
i doubt any game developer could get officially recognized/tax exemption unless they were deeply entrenched in educational software, but that's not what i mean. are there any devs that follow that model regardless? it seems like it would support more risk in the industry without threatening a sinking ship outcome.

privately held, massively profitable companies like valve have lots of security and can afford chance endeavors, but even they seem a little reigned in by customer approval.
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The thing that drives many people to start game developers is to make some money on the project. That is quite incompatible with a non profit goal and a trust ownership structure.
 
inlimbo said:
not in such cynical terms, no. i'm talking a dev that yields fair wages across the board and forgoes profit bonuses in favor of reinvesting that money in the company's future, ensuring some level of job security and giving it leeway to focus on projects that interests it.
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Reinvesting profits is a normal act for most businesses. In fact for most companies it's the most common way to distribute net income. This has nothing to do with being non profit, but a very normal way for companies to retain capital for investments. In particular for high risk industries such as game development which do not have a free access to debt markets.

Usually, (in terms of public) only Companies with stable cash generation actually pay dividends. This is mostly a result of the fact that shareholder who do not care about votes can easily create their own dividends by selling of shares in liquid stocks and that a good company should be able to profitably reinvest cash. The only motivation lies with smaller companies where the owners cannot obtain profits through alternative ways aside voting %.

It also has nothing to do with job security as that's primarily a result of the companies unreliable cash flow generation (which is simply a result of the industry they are in).

Working for a big publisher might increase job security somewhat, however all the internal studios are ring faced and the publishing company will ever let it survive should it jeopardize the holding company's finances..
 
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Acert93 said:
Big publishers, while not working exactly this way, are similar. They tend to own a lot of internal studios as well as contracts with 3rd parties. When an internal studios makes a big hit those profits go toward all the other studio titles that don't. iirc 70% of games don't make a profit, 30% do or whatever the numbers were. (Kind of like how college football supports the swim team). Hence in a big pub like EA or Activision the individual studios have less Independence but then again are bankrolled by their owner. Not exactly what you were asking, but close?
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This is just a ring fenced structure for the parent company to be able to survive when internal studios flop (they are separate legal entities). It also has nothing to with the question above and is simply a result of basic portfolio mathematics which suggest that diversification is a good idea. On a consolidated basis however, this is what it looks like. It also doesn't matter a lot because the companies are equity funded to a large degree, so for the most part you loose ur own money. However the parent holding company can choose not to pay for employee wages owed and legal obligation such as office rentals etc by letting the subsidiary go bust

The thread starter however does not seem to know what non profit means. Reinvesting funds has nothing to do with being non profit..
 
i'm using nonprofit as a rough approximation. i'd say you're not reading between lines or any of the followup posts here. anyway, i won't be using my shift key any time soon, so do what you will
 
hollywood and the riaa aren't going to support anything like this on a large scale, but the nice thing about music and film is that they have much broader appeal, so smaller projects are in better company. studio canal is in a unique position in that regard. a band like fugazi is notorious in part for rarely charging more than five bucks for a concert, though their tours were still in turn profitable.

if you're getting into game development to make a living, fine. if you're getting in to make millions, you're doing it for the wrong reasons, even if we have lots of people to thank for doing just that

edit: lots of musicians and filmmakers also have day jobs
 
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inlimbo said:
i'm using nonprofit as a rough approximation. i'd say you're not reading between lines or any of the followup posts here. anyway, i won't be using my shift key any time soon, so do what you will
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I didnt read follow up posts at first that u got right.

All companies (more or less) like explained above reinvest at least part of their profits into future investments. It has nothing to do with profits as dividends and investments is not part of a company's p&l.

I further answered that devs usually retain profits and explained why (high risk industry without debt capital availability)
 
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you're right on all counts, but i was asking for a dev that operates with strict limitations on its funds, wages reduced to modest income and less in the way of the tiered hierarchy that dominates industry. all profit should go toward the future of the company and the retainer of its team, not into anyone's pockets
 
Inlimbo said:
you're right on all counts, but i was asking for a dev that operates with strict limitations on its funds, wages reduced to modest income and less in the way of the tiered hierarchy that dominates industry. all profit should go toward the future of the company and the retainer of its team, not into anyone's pockets
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... why?
 
so that even for an upstart there's breathing room; freedom to experiment with game mechanics, structure, control outside the whims of the general public and with enough of a team to follow through. in other words, to let a dev make a well-funded game without focus testing it into the ground. some devs have this luxury already - most do not
 
Yeah I would echo the why for that.

For small scale indie developed games like you get in the PC humble Indie bundles there might be less incentive to make money, but even there I don't really see any developer getting into this with the thought of not trying to make a big payday.

And once you get above bargain basement game developement it's all for profit as the monetary investment risk is too large to try to play it safe.

In other words, if you're only investing 10 or 20 thousand USD into a game with a dev team of 2-3 people then sure you can manage expectations and costs with only a small amount of risk. That's why iPhone game developement is so popular. Small investment, small price (99 cents), but if enough people download it you just made a fortune.

Once you start getting into the 100k-900k USD and 1 million USD+ developement ranges however, noone in their right mind would invest that amount of money without expectations of making a profit.

And unlike the music industry, you can't make back money through music gigs, merchandising, or photo-ops in general unless you're riding a blockbuster game title. Whereas with the music industry even local bands with no national appeal can make a profit by doing local gigs, local merchandising, etc.

And then you have to throw in the scale. If you have a multi-year developement schedule, you're either fronting a lot of your own money up front or you're relying on a publisher keeping you afloat during those 2-3 years. A significant investment.

It's easy to sit on the sidelines and wonder why noone wants to put up 100-500k (for a small budget game) of their own money without expectations of making a profit on it. But when it's your own money, you'd either have to be extremely rich or not very good with money to invest that long term and expect no return on your investment. Worst case, you lose it all with a flop of a game. Best case in your "no profit" scenario is you only make back what you invested.

There's not a sane person in the world that would do that. :)

Regards,
SB
 
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