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Bioware/Pandemic To Go Public

Posted by Zonk on from the i'll-buy-that-for-a-dollar dept.

1up.com is reporting that the newly allied studios Bioware and Pandemic will become publicly traded businesses. From the article: "One analyst isn't confident the companies will have any success. How can you possibly fail with U2's Bono at your side? Albeit seemingly unthinkable, Wall Street analyst Michael Pachter isn't optimistic. 'They don't have any chance of success,' he said. 'There's not an appetite to segment the different links in the value chain.' Everyone involved, though, is slightly more cheery about the plan, believing it's an important step for developers to receive proper compensation. 'The talent is not getting anywhere what they should,' says Pandemic president Josh Resnick. 'We're the film industry in the 1920's.'"

22 comments

  1. Seeing as Bioware in particular... by ben0207 · · Score: 1

    ...have made some of my most loved games ever, I wish them the best of luck. Even if the plan does lack even one iota of business sense.

    --
    cmd-q.co.uk - some sort of stupid fucking internet bullshit
    1. Re:Seeing as Bioware in particular... by joystickgenie · · Score: 2, Insightful

      I feel the same way. I really like the company and I agree with what they are saying, but it does seem like too much of a risk. I might buy a few stocks out of support, but nothing that I would be afraid of loosing.

  2. Contest by Supurcell · · Score: 3, Funny

    How will this effect the job I win from their Neverwinter Nights module contest?

  3. Say What?! by Dubpal · · Score: 2, Funny
    'There's not an appetite to segment the different links in the value chain.'

    Does anyone here speak broker? I'm very confused and babelfish isn't helping.

    --
    If you want a picture of the future, imagine a boot stamping on a human face forever.
    - George Orwell
    1. Re:Say What?! by vistic · · Score: 1

      They don't think there's any demand to break up the current system where games are developed and published/distributed by the same company... into a system where it's developed by one company and then published by someone else.

  4. What are the benefits? by LordZardoz · · Score: 3, Interesting

    As near as I know, the only reason to take a company public is for the owners of that company to make money by selling part or all of their stake in that company.

    I can see plenty of downsides. It opens them up to potential takeover by a publisher if they fail to hold onto more then 50% of their shares. It makes them answerable to shareholders, which may curtail creativity in favor of cutting a profit. But how does Bioware / Pandemic benefit as a company from this move?

    As a side note, Bioware / Pandemic are not the first pure developer to become publicly traded. Digital Illusions is also a publicly traded company, and have been for some time.

    END COMMUNICATION

    1. Re:What are the benefits? by Tankko · · Score: 5, Informative

      As near as I know, the only reason to take a company public is for the owners of that company to make money by selling part or all of their stake in that company.

      If is a good way for a company to raise money for growth. You might have a good solid business going, but if you had $10M in cash, you could grow the business by leaps and bounds. Going public is a way to raise that money.

    2. Re:What are the benefits? by bricklayer · · Score: 3, Informative
      Read the article:
      the companies are hoping the move will give them more leverage in negotiations with publishers
    3. Re:What are the benefits? by supabeast! · · Score: 1

      "As near as I know, the only reason to take a company public is for the owners of that company to make money by selling part or all of their stake in that company."

      I think that you just summed up the important benefit of going public. Porsches don't grow on trees.

    4. Re:What are the benefits? by 6350' · · Score: 2, Interesting

      A company generaly decides to go public to get cash to invest in the business. When a company goes public, they are essentially selling investors on a growth strategy for the business, and as well gaining the money to implement that strategy.

      Share price is a measure of many things, from the standpoint of the market, one of which being a vote, so to speak, of the future earning potential of the company and growth of value of a portion of ownership. The owners of the company are in effect foregoing long term gain by selling a portion of the rights to the company to outside investors - in hopes of ultimately coming out ahead of the game by seeing the worth of their remaining share being more valuable than if they had just kept full ownership.

      It's interesting to envision (IPO press releases aside) just what Bioware plans to do with a (hoped) sudden injection of a big wodge of cash. Perhaps it's just a simple strategy of having a larger game-making operation so that the weight of their (increased) product lineup gives them more voice in the market. Lone studios with one or two products, after all, can have a rough time of it out in the big bad world of publishing and distribution.

    5. Re:What are the benefits? by Targon · · Score: 1

      The real benefit is in bringing more operating capitol into the company. A nice thing is that if the owners set up the IPO properly, the owners can still hold on to a majority share no matter what else happens. It's not as simple as saying "This company is now entirely owned by the stockholders". If as a part of the initial filing, the current management is granted 75 percent of the company for example, then the public shares are only worth 25 percent of the company.

      It's true that going public will generally lead to a lot of money going into the pockets of the upper management, but in a good company, that upper management will feed money back into the company to help it if needed.

      Now, going forward, with all of the in-game advertising we are seeing these days, going public MAY help improve the prices that can be charged for in-game advertising, or even for web site revenues via advertising. With consoles, being a more recognized company may also help with contracts for console titles, though I don't see how a console manufacturer could ignore a Bioware developed title, the new joint entity doesn't have the name recognition yet.

    6. Re:What are the benefits? by The-Trav-Man · · Score: 1

      Won't this move lessen the ability to make decisions that make for better games in favor of more money? I suppose it's already a decision that is weighed heavily in the cashola direction, but what is the current status of the business? privately owned? One or few people who have an interest in the company making good computer games and succeeding in that arena in the long term? I'm not an expert on anything, but doesn't a public corporation put everying underneath short term benefit for its shareholders? Won't think make for less original games and more cash cow sequels and cheap run games? I have no idea whether it's a justified feeling or not, but that's my initial reaction at this news.

  5. How the hell would that work? by LordZardoz · · Score: 2, Interesting

    I just dont see how being publicly traded would put you in a better negotiating position with respect to dealings with a publisher. It can worsen your position, if the publisher were to buy up a non trivial proportion of your shares. Then in addition to being dependant on that publisher for funding, you may find yourself obligated to take a deal from that owner / publisher when you could get a better deal from a different publisher.

    The only way to improve your negotiating position with a publisher is to be in a position where you do not specifically need that publisher. There are not many ways to do that. If you can self fund the game, you can hold out for a more favorable deal. If you can pitch the game to multiple publishers, you can play them off one another and maybe get a bit of a bidding war for your game title.

    END COMMUNICATION

    1. Re:How the hell would that work? by November+1,+2005 · · Score: 0

      Let me guess - you aren't a stockbroker, accountant, CEO, or investor.

    2. Re:How the hell would that work? by MBraynard · · Score: 3, Informative
      You seem like a good kid so I'm going to school you.

      First, when someone buys 'non-trivial' portions of your shares, they may actually own you. But if they don't, or even if they do, they don't depend on you at all for 'funding.'

      With additional funding that comes from an IPO, you are betting that the games in your stable will be profitable enough to not sign your soul over to a publisher - you will negotiate terms more favorable to yourself by assuming more risk that the publisher would otherwise be assuming (in exchange for a much better return on the partnership).

      It might also be something else - the cash is needed to get talent to be able to make that bet on your stable, or you want to become a publisher in your own right or fund an alternative publishing method (like Steam).

      If a publisher did buy you out, that means you are really rich, which is the purpose of everything anyway, so mission accomplished.

    3. Re:How the hell would that work? by pete6677 · · Score: 0, Troll

      Let me guess, you're a naive know-it-all shithead who has no friends at all. Having read your posting history, I am qualified to say go fuck yourself.

    4. Re:How the hell would that work? by chrisbtoo · · Score: 1

      First, when someone buys 'non-trivial' portions of your shares, they may actually own you. But if they don't, or even if they do, they don't depend on you at all for 'funding.'

      You might want to re-read what LordZardoz said. Regardless of who owns a stake in whom, developers generally rely on publishers for funding (of projects).

      There are a ton of stories out there about how developers get short on cash and have to go crawling to their publisher for more, typically having to give up rights (or royalties) to their games in return.

      --
      Registering accounts later than some other chrisb since 1997
  6. Additional Linkage by Primotech · · Score: 5, Informative

    Just a heads up, I found this NY Times article much more informative than that 1Up 'piece.' http://www.nytimes.com/2005/12/16/technology/16ele vation.html?

    --
    Do Not Eat iPod Shuffle
  7. I'm confused by david.given · · Score: 1
    Albeit seemingly unthinkable, Wall Street analyst Michael Pachter isn't optimistic.

    I don't get this. Why is Michael Pachter unthinkable? I can think about him fine. And why is the fact that he's unthinkable at all related to the fact he's not optimistic?

    1. Re:I'm confused by NonSequor · · Score: 1

      The writer was using a voice recognition system and he has a lisp. While the voice recognition system managed to correct the other S's based on context, unsinkable was replaced with unthinkable.

      Michael Pachter is seemingly unsinkable. His body is divided into sixteen compartments that can be sealed off so that even if some of them are breached the others will remain watertight.

      --
      My only political goal is to see to it that no political party achieves its goals.
  8. Good luck! by Sv-Manowar · · Score: 1

    It's a shame that there is no real plan and there is not much business sense in it, as both of those companies have produced some awesome stuff. All I can say is that I wish them the best of luck in succeeding

    --
    Business Voyeur
  9. -1, Gun-jumper by chrisbtoo · · Score: 1

    So when I re-read the very next paragraph of MBraynard's post, I notice the point that IPOing would help out with the situation I'm rabbiting about.

    I should get back to doing that other thing.

    --
    Registering accounts later than some other chrisb since 1997