Loki Speaks up on Chapter 11

Traivor writes "Loki sent an email to all its customers about the chapter 11 filing. The most interesting bit is they claim to be making money." I've been rooting for Loki forever (and I've taken to buying all their releases even tho I don't have time to play them lately ;) Anyway, I've atached the email to this story so you can read it if you're curious.

The following is an email sent by Scott Draeker of Loki

Dear Friend of Loki:

As you may know, on August 3, 2001, Loki filed a Chapter 11 reorganization. As our valued customer, we wanted to let you know why we have elected to reorganize and how, if at all, it will impact our ongoing business.

Under US law there are two kinds of bankruptcy:

1. Chapter 7 is a liquidation. We have not filed a Chapter 7 and have no intention of doing so.
2. Chapter 11 is a reorganization. This will allow us to deal with our creditors fairly and equitably and at the same time continue to operate the company. We are still shipping products and porting new games and expect to be doing so for a long, long time.

Most of the debts we are restructuring through the Chapter 11 are well over a year old. They represent mistakes made by a young company. We've learned from our mistakes and become cash positive. Going forward we have every confidence that Loki will continue to be successful and grow.

We cannot say for certain how long Loki will remain in Chapter 11. It depends on many factors. However we do intend to bring the process to a conclusion as quickly as possible. Once our plan of reorganization is accepted by the court, our creditors will receive an agreed upon settlement and all other prepetition obligations will be fully and finally discharged.

During and after the reorganization your orders will continue to be honored. We will continue to provide end user support, bug fixes and new products. Negotiations are in progress to guarantee Loki a steady stream of additional AAA games to bring to Linux.

Most importantly, we'd like to thank each of you for your support over the years. Without our customers, we are nothing. The outpouring of support we have received in the last few days has been overwhelming, and we will continue to do everything we can to merit that support.

Kind regards,

Scott Draeker
President, Loki Software

Comments

Re:On the other hand

[tjwhaynes]

I've been dissapointed by Loki once recently. I was thinking of moving from windows to linux on my home gaming system, figured i'd be able to play tribes 2 in linux, since i had heard it was done. I didn't realize the windows cd isn't patchable (like q3a is). To make things worse, Loki only sells complete CDs, not patches. And after spending 70$ on the win version, i figured i may as well say in win than move to linux and pay it again. If he had, for example, been selling a 15 dollar patch, i may have migrated.

You obviously don't hang out on the Loki newsgroups do you? This must be the most asked, most discussed question on those newsgroups.

Simply put, it doesn't make any financial sense for Loki to do this. Selling games on the Linux platform will, at least for the immediate future, be selling to a much smaller market than the Windows platform. Therefore the economies of scale which allow the cost-cutting seen with Windows games are just not an option for Loki - if every Loki game could be run on Linux by buying the Windows version (often more cheaply) and patching it to run on linux, Loki would not have released as many games as it has and it would be filing for Chapter 7. Bust. Finito. Gone.

Even allowing people to pay purely for the patch rather than new physical media would cut any margins they currently enjoy to nothing. Out of the $15 you propose, you can forget about $10 dollars as tax and payment to the original vendor (id software, Dynamix, etc.) and only leave tiny crumbs for Loki. $35 would probably make about the right margin - you can buy most Loki games for that and get a Linux-specific manual as well.

Have I been disappointed with Loki? No - everything I have bought has run straight out of the box. Most problems are fixed promptly and the installation and patching is an easy, trouble free process. And quite frankly, Urban Terror rocks my world :-)

Cheers,

Toby Haynes

No

[ink]

I used to work with a game company that ported Linux games. What happened in our case is that the porting company buys the rights to port a game to a certain platform for a flat fee. This fee is paid to the copyright owners and then the porting company must meet quality control standards, after passing them they can go ahead and sell the game. They charge what they will and get all the money for each sale on the bet that they will be able to overcome the initial investment.

So, let's say that you buy the right to port title 'A' to Linux for US$200,000 and the right to port a less-popular title 'B' to Linux for US$35,000. You could easily lose money on the first deal and make it back up on the second one, even if it sells fewer copies. Game publishers will charge much more for 'hits' than duds, which is why the ported Linux games are usually pretty good titles, but not the cream of the crop titles (which probably cost much more to port than they could hope to recoup). Certain publishers are very harsh, which is probably why Halflife was never sold at retail....

Basically, the game publishers want money up front and they have no risk. The porting houses take on all the work and risk whenever they port a title; small companies like Loki and Aspyr can be hurt because they have no leverage -- it's a take-it-or-leave-it deal. Also, you probably won't see parity on title releases unless the developers believe in the moral proposition (id and Blizzard seem to be the only companies that do -- and id is the only one that will do it outside of Macintosh), because if the game is wildly successful the pulisher can make more money by squeezing the retail sales than by granting porting rights. After the game's sales dissipate they can get another injection of cash by selling the porting rights to smaller companies and let them assume the risk of sales. Hence, Linux is very tricky to play -- most users can just boot into Windows if they want to play a game badly enough (ahem, CmdrTaco + Diablo).