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The Ethnographer’s Dilemma: To Understand a World That Is Not Your Own While Avoiding to Misrepresenting It Read chapter Read first chapter

2020 | OriginalPaper | Chapter

6. In the Venture Capital Market: Raising Funds and Dealing with Investors and Financiers

Author : Alexander Styhre

Published in: Indie Video Game Development Work

Publisher: Springer International Publishing

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Abstract

This chapter of the volume examines how developers finance the video game development work. All entrepreneurial business are by definition (in the Schumpeterian view) indebted, but the finance capital market for video game developers is thin, that is, there are few qualified professional investors with the sufficient degree of expertise needed to make qualified investments. In lieu of a professional investment market, developers use a variety of options including self-financing (at times on the basis of student loans, not exactly consistent with the legislator’s intentions), outsourcing work, research grants from the state or regional or local governments, or smaller investments made by other game developers or publishers with a positive cash flow. The video game industry is on aggregate level running at a profit, and the industry has been commercially oriented from the outset, that is, it has not been subject to subsidies or other policy-related support. Developers largely take pride in being “in the money” from the outset, and tend to describe, for example, the Swedish film industry as an unfortunate case of statefunded media production that undermines the integrity and creative freedom of participants as film production includes a considerable degree of red tape. Nevertheless, developers are concerned about the lack of a more qualified understanding of the video game industry and its significance for the economy in policy-making quarters. They would have appreciated at least less complex rules regarding, for example, international recruitment as the industry currently suffers from a shortage of qualified developers, that is, programmers.

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previous chapter Social Norms in the Developer Community: The Ambiguity of Money-Making
next chapter Expanding the Video Game Concept: The Perceptual and Epistemological Bases of the Digital Objects
Footnotes
1
LoPucki (1996: 6) refers to the ownership of claims against assets as a form of “avoidance of liability.” The traditional way to invest and own assets is to hold stock in public companies (what LoPucki 1996: 29 refers to as “business securitization”), but securitization and global securities markets enable investors to hold claims against assets, not entire businesses (“asset securitization” in LoPucki 1996: 29, vocabulary). The case of the investor who holds claims against a specific game and its projected future sales revenues is therefore not an idiosyncratic ownership contract, but rather reveals new ways of holding claims against assets rather than businesses per se. These changes from ownership in corporations to ownership of assets need to be understood within broader changes in corporate governance and corporate financing. For instance, Lund (2019) examines the recent tendency among, for example, Silicon Valley companies to issue both non-voting and voting stocks, which essentially protect top management and majority owners from the market for managerial control. This dual structure of the stock seems to be tolerated by market traders as non-voting shares trade at a relatively small discount to voting shares, “generally observed to be between 3% and 5%” (Lund 2019: 730). Similarly, Cohney et al. (2019) examine financial innovations such as Initial Coin Offering (ICO) as the recent shift to new ways for financing corporate development work. Such changes in corporate financing and the emergence of new corporate asset ownership contracts are predicted to generate new possibilities for technology-savvy entrepreneurs and developers (Lin 2014).
 
2
Needless to say, some of the indie developers were not equally impressed by the business counselling that was provided by the incubators. The CEO of the Company E, for instance, which develops casual games intended for mobile phones and tablets, was concerned about the lack of understanding of the emergent global casual game market: “The business coaches [in the incubator] didn’t know nothing about mobile games, and they always said like ‘I’ve got no idea!’ We couldn’t get proper help to address things we thought were problems.” Despite such criticism, it is reasonable to assume that indie developers who were not fortunate to acquire accurate business advice benefitted indirectly from the incubator activities.
 
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Metadata
Title
In the Venture Capital Market: Raising Funds and Dealing with Investors and Financiers
Author
Alexander Styhre
Copyright Year
2020
Book
Indie Video Game Development Work

Print ISBN: 978-3-030-45544-6

Electronic ISBN: 978-3-030-45545-3

Copyright Year: 2020

DOI
https://doi.org/10.1007/978-3-030-45545-3_6