Bioware/Pandemic To Go Public

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.'"

Comments

What are the benefits?

[LordZardoz]

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.

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Re:What are the benefits?

[6350']

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.

How the hell would that work?

[LordZardoz]

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.

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