Quoted from flynnibus:
Missing from your math is how many games you need to sell to break even... plus the initial seed money. And they need more than 40 games built to make the EAs whole... 40 is just the next batch of games that didn't leave ARA initially.
In your numbers (to keep it simple).. 4.5k gross per game. They need to give away roughly 100 games to make the EAs whole right? (I forget how many prepaid EAs there are.. so use a round number)
100 games x 8k cost per game = 800k needed to make the EA games.
When selling and making 4.5k gross per title.. at 75% split... 3375 investor cut per game... leaving DP only 1125 per game sold to fund operations and the games to be built.
Or put another way... DP needs to sell 7 games to pay off ONE EA owed game.. and still is just net zero for DP. At 7: 1, they have to sell over 700 games to fund the EA builds... if you are even at spooky speed.. 10 games a week, that is a year and a half of building... plus the extra 10 weeks to build EA games.
Even after your initial seed money is paid off, you still only clear 2700 a game in your model.. meaning it still takes 3.5 games sold to pay off a EA game.
Now consider... how much capital you really need to build that many games. DP can't self fund the builds when it has to pay off the investor AND build EA games and doesn't have their own capital. So something has to give... They can't source parts in small batches.. they need big batches of like 100 or more.. That means capital investments of 850k or more are needed up front to build the next batch of 100 games. Someone has to front 850k, for upwards of several months.. and keep doing that. Because there is no money left to fund the next batch of games if you are paying off the investor and setting profits aside for EA games owed.
With your 75% split of 4500.. they need to sell 296 games for the investor to just break even on the initial 1 million seed money. But it will take nearly 2.55 million in capital to actually build that many games. And DP can't self fund the missing 1.5M dollars needed with just the 25% they are getting per game.
So you can see... 1 million may get them making some games.. but its not enough to actually pay off the investor, nor the EAs (or any other debts still owed to ARA and others). So you have to find the number of games that need to be sold, how quickly you can build them (to control your costs) and then... figure out if selling that many games at that price point is even market viable...
Here we are talking about selling over 700 games just to break even...
Even on this napkin math you can see how it's a hard sell to think it can work for the EAs as a whole.
I already factored in the money to make the EA games right off the start. There would be no delay, they would be the first games made. I said 1 million plus the 8500 times however many EA’s there are. Actually it would be more like 6500 since that is DP’s cost.
The investor would get 75 percent of the profit from the games after that until the initial EA payment was cleared. I also factored in building costs and factory costs. So the 1750 is what DP would put in there pocket after new parts/factory and investor was paid.
Either way I said I was spitballing. The point of my original post is there are plenty of millionaires with more money than sense and nearly 99% have never been on pinside or could give two shits about this forum. If someone wants to invest because they wanna be a part of a cool company and feel good about that or love the movie or whatever, it can absolutely happen.
It’s a long term investment. If DP was back on track, why would TBL be the only game developed. It would just be the first. Meanwhile they own 49% of the company there after.
All we have to do is look at JJP, before wonka, they have basically never been in the black. The investors just keep giving. It’s a long game. Not a quick turn around