Dienstag, 20. April 2010

The concrete shoes phenomenon

One of the things that always astonishes me is the how careless people seem to be about who is lending them money or to whom they give their money.
If your bank publishes a profit of 20% in its annual report, you probably start to think if the fees or rates they charge you are to expensive. On the other hand, you might come to a different conclusion if shares of said bank are part of your pension fund. So somehow we are all driven into
the mad hunt for high rates.

In order to make profit, somebody else must actually pay more than your costs. With that said, profit comes at the cost of overreaching somebody else. Of course we agree that we have to pay more money to someone who risks his money.

Nobody is surprised if in a gangster film, the poor debtor ends in concrete shoes when he fails to pay his instalments. In those films, the victim is either in the desperate need of money which nobody else wanted to give him or he was somehow seduced by giving him the money without a lengthyprocedure.
Common sense keeps us away from accepting such deals and makes us sceptic if terms are too good to be true.

One should expect that due to customer freedom, those companies who are a bit too greedy would be avoided by customers, while the contrary is the case.

The big and the bad

In nearly every market, profit oriented and non-profit oriented companies do exist. Of course the non-profit oriented companies, do operate on profit, but the profit is usually smaller and the money earned flows to the producer, while profit is reinvested to finance new products.
As a matter of fact, non-profit organisations usually have a much smaller monetary market share, than profit oriented companies. Which is caused by the fact, that market shares are usually measured in your earnings, not number of customers.

Like our Mafia guys, profit oriented companies are usually pro-active. They offer their services when we probably haven’t thought of using them. Once we have accepted, we might not seek better conditions, so they are using our comforts to their advantage.

The shy nerd and the smart investor

Developing a video game these days, requires large investments. Surprisingly the market nearly consists out of profit oriented companies, with only a few non-profit oriented teams in the independent scene.
Considering that developers are artist, one would think that they wouldn’t be too happy about customising their work to the needs of greedy shareholders.
So why aren’t there any non-profit founders in that market?
Simply because their two worlds don’t have a intersection.

Of course developers are no “shy nerds”, but they tend to stay in their scene. This Scene however is occupied by Publisher and profit oriented companies. So whenever they search for investors, they end up in the profit oriented market.

Giving Games back a bit of it innocence

Most non-profit companies, are charged to provide access to markets with high entry barriers. So giving access to a group of developers to the cost-intensive video industry would be a designated task for most of these companies.
To illustrate the current situation a bit drastically. The developers do the work, and the publisher makes the profit. In many cases the publisher even influences the developers work, to increase his own profit margine.

The problem is however that developers rarely get into contact with the non-profit market, and therefore the market hasn’t developed any recognisable capacities in this field.
When I talked to some IT Risk auditors I learned that they mostly deal with Business Software and that the contacts were established through their in-house IT department.

In comparison to older industries like the automobile industry, video games industry is quiet young so it will be interesting to see the product from non-profit backed up developers.

My complaint

Although financing is not my field, I have been invited to various factory tours, from Airbus to breweries, but I have never been invited to a video games studio. Perhaps that would be a start.

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