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Flagship Studios' Founder Discusses Its Demise
1Up is running a lengthy interview with Bill Roper, founder of Flagship Studios. The game company, known primarily for its Hellgate: London and Mythos titles, announced massive layoffs last month, and is now simply winding down and taking care of a few final issues. Roper gives quite a bit of detail regarding the financial machinations of a game developer and the current status of the games' code. Co-founders Max Schaefer and Travis Baldree gave a related interview recently as well.
"The subscription money we did get, we all poured directly into keeping the game online, keeping it up and running. But the development demands far outstripped the revenues. There just wasn't a good contemplation early on of how that would work. It wasn't like: This is the budget that comes in every month; we'll do whatever we can do with that. We just said [that] development will get done out of the revenues, and whoever pays for development, they get paid back out of the revenues. And there wasn't really enough revenues coming in to cover the expected and required development."
Even with the bugs it was quite playable I found. The missing content was the annoying part to it, but you couldn't really find out about that until you bought it.
Initial release quality is important if you want to have an impact with game review magazines. Not everyone bases their buy decision off these magazines, but I think enough do for it to really hurt a game if they get a couple bad reviews. Especially in the PC game market where there are so many new games released every year, and where gamers are generally more literate (sorry xbox gamers, but it's true).
“Common sense is not so common.” — Voltaire
My understanding is that Mythos was free to play... Maybe developing a free game at the same time as you're trying to develop a for-profit game was an issue. It seems like you'd want to spend your money making the profitable game and then make freebies once you've got a revenue stream going that covers your costs...
You are using English. Please learn the difference between loose and lose; they're, there, and their; your and you're.
Like he said in TFA, they didn't have a post-release plan or budget, and they never bothered to figure out if they'd be cash-positive, or even if they'd be profitable.
Which is really stupid, because if they had spent just a few weeks or months putting together a solid business plan, they could have come up with the financial statements necessary to either a.) show considerable growth potential and attract VC funding or b.) convince themselves the idea was unworkable and quit while they were ahead.
With the combination of their previous resumes at Blizzard and a solid business plan, they would have been fighting off VCs with a stick. Unfortunately, they did none of that, and ended up having to rely on loans using the keys to the kingdom (IP for the games) as collateral. This means that once the loan holders decided to call in the collateral, they were utterly hosed and had nowhere else to go.
I could see this story showing up in an Entrepreneurial Management course as a case study in how not to start a company.