Infinium Labs Owes $4 Million, Requires $68 Million to Stay Afloat

nz17 writes "Looks like Infinium Labs, 'maker' of the Phantom game console, can't manage its debt. According to GameSpot, the company's recently filed Securities and Exchange Commission papers show that Infinium currently owes $4 million as a capital deficiency, but requires an estimated additional $68 million to continue work until the end of 2006. However, Infinium remains chipper in the face of oppression, as it estimates its first year of sales will garner $35 million in revenue. Will the Phantom console launch on the projected date of November 18th, 2004, or will the system live up to its name?"

Comments

The odds?

[Hido]

If they get those consoles out more power to them, but looking at there track record and how the market is currently the odds are not in their favor I would think. They do not have much in the way of game developers backing them up, they do not have the finances now.

Unless your like M$ who had money to throw at it and who could deal with a loss of this magnitude, vaporware or not it seems to me like a sinking ship.

Re:$35mill?

[rsilvergun]

How exactly do you rack up $68M in debt developing a PC anyway? The personal computer is pretty straightforward as it is... most of the work has already been done.

Licensing fees. Games don't grow on trees after all, and Infinium probably had to cough up major dough for the right to market PC games. That, and I have no doubt the owners are drawing a hefty salary. Oh, and developing and mass producing a custom piece of hardware, even one based on off the shelf components, is pricey too. Microsoft pulled it off with cheap Mexican labor and bribing the local officials to ignore little things like safey and environmental regulations. I doubt Infinium has that kind of skill/money.

Re:$35mill?

[clambake]

The problem is that I can't see $35M revenue (not profit) paying Infiniums costs or paying any of that $68M debt. How exactly do you rack up $68M in debt developing a PC anyway? The personal computer is pretty straightforward as it is... most of the work has already been done.

You weren't around in the dot com days, I take it. I worked at a company that blew $250M in six months just buying rights to pop star's websites. Not the rights to any of the SALES or AD REVENUE, mind you, just the right to host and the website... that's right, PAYING to eat the costs of high bandwith sites without any of the possible benifit.

Bad Business Model From The Start

[Mr.Dippy]

I never understood why they went ahead and designed their own console/PC. The concept of actually downloading games and basically renting them with a monthly subscription could actually work. However, wouldn't it be more practical to just do this on a standarded PC? The hardware is already there. Why reinvent the wheel? And besides the market is already flooded with moderate to cheap consoles anyway. What parent or game junkie is going to be like "Well I already have a PC and a GC costs 100 bucks and a shinny new XBox is only $150 but I feel the need to blow 500 dollars on system that doesn't even allow me to own the games." WTF?

Re:$35mill?

[ghostlibrary]

"selling PC's ... for about $500 each ... they'd need to sell 70,000 consoles to make up that revenue."

It's worse than that-- likely they only get 40% of the cost, since they have to sell to distributors, who sell to retailers, who then have to sell at consumers. So the company makes maybe 40% of the cost.

They say you should retail price things at 10x your cost to make money. So they need to make their PCs for $50 to do this... eeps. They have to make them at less than $200 to profit. If revenue-per-item is $200, their profit is the difference between cost-per-unit (including operations cost) and $200.

They're screwed :)

Re:Enough with the Haiku

[Anonymous Coward]

Technically speaking, grandparents comment is closer to the poetic form of Senryu, which is in turn derived from a literary game not unlike the French "Exquisite Corpse". Unless you're writing in Japanese, the hard syllable limit is not really relevant - the idea is that the Haiku should convey an image, usually in two parts, with brevity.

However...

venture capital
fades into bleak nothingness
like fallen snowflakes

Re:$35mill?

[Ayaress]

It's redundant, but it's also ass-covering for when people start to whine. Remember: In a world where you get called a liar for saying you had a taco for lunch when it was technically a burrito, it's good to be excessively redundant.