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[Vilanat]

I have stumbled upon Fig recently with Wasteland 3 crowd funding campaign they are running there and what caught my attention was the option to actually invest and maybe see a return.

The minimum fee is $1000 and the maximum is $2,250,000 invested money.

So, at first, the numbers Fig shown was that the "investors" get 31% of the game sales revenue, which means the money the game makes after steam's cut of 30% and after a certain Fig fee, until the amount the investors received reaches x1.36 of the invested money, or 3,060,000 and afterwords the "investors" only get 10% and up until that money goes below 10K for 3 months, or basically, until the game sells less than $150K a month for 3 months.

Well, it sounds a pretty good investment, i mean, they show a graph on their website that as soon as Wasteland 3 sell 380K copies, you break even and when it tops 500K you reach that x1.36 threshold. if it sells like Wasteland 2 did (~600K units), it could net you slightly more than 400$ for a 1K investment and if it does exceptionally well and sells 1 million copies, you can get a $800 return.
https://www.fig.co/campaigns/wasteland-3/invest

Pretty sweet. high risk, yes, since the game can flop or never get released, but hey, i have trust in InExile to at least achieve what they already achieved in the past.

But, and that's an interesting but, what they don't tell on that fancy webpage, is that the "Investors" are only actually Fig themselves, the actual investors that put their money down will only get a possibly, probably, maybe, if Fig chooses to since they totally aren't obliged to, only a dividend of 30% of the money Fig took. and that, well, that changes everything.
Long official offering filing page

This basically means that if you want to only break even, Wasteland 3 will have to sell around 3 million copies. Again, Wasteland 2 sold ~600K units, was cheaper and was met with good response, but not overwhelmingly great one. there is a low chance Wasteland 3 will surpass Wasteland 2, there is a very very low chance Wasteland 3 will sell more than 1 million copies. there is no chance in hell Wasteland 3 will sell 3 million copies.

So, did i totally read this document wrong? did i get the math wrong? or does Fig (Basically DoubleFine) are pulling an extremely unfair investment model?

[Levi]

Well it sort of depends on how long it takes to release I guess.  If it takes 5+ years its probably not worth it even if its successful, as your 1000 dollars could be earning safer interest in an index fund or something. 

If it takes 2ish years(like the wasteland 2 kickstarter I think) then its a lot more attractive of an investment.  Except that I'd trust Doublefine about as far as I could throw them.

Also considering how many game projects tend to fail(even ones by reputable developers), I'd personally avoid it like the plague.  If you aren't afraid of losing it and want to try it as an experiment then it could be fun though.

Edit:  I missed this:

But, and that's an interesting but, what they don't tell on that fancy webpage, is that the "Investors" are only actually Fig themselves, the actual investors that put their money down will only get a possibly, probably, maybe, if Fig chooses to since they totally aren't obliged to, only a dividend of 30% of the money Fig took. and that, well, that changes everything.
Long official offering filing page

This basically means that if you want to only break even, Wasteland 3 will have to sell around 3 million copies. Again, Wasteland 2 sold ~600K units, was cheaper and was met with good response, but not overwhelmingly great one. there is a low chance Wasteland 3 will surpass Wasteland 2, there is a very very low chance Wasteland 3 will sell more than 1 million copies. there is no chance in hell Wasteland 3 will sell 3 million copies.

As sleazy as they might be, I can't imagine they'd risk fraud charges for something like this.  I'd have to assume the graph they have on the first page is accurate.

Edit 2:

It looks like Fig takes about 5% of the revenue for themselves after the distributor takes their share.  So the 31% / 10% I assume would actually be 36% / 15% from the developers view.

The suspicious thing In my eyes is the "you stop getting returns after sales are down to 10,000$ over three months".  I'm not sure how fast that tends to happen, and it would give them a lot of encouragement to avoid having sales until AFTER they've reached that point, and the number of sales of wasteland 2 are probably more of a "All sales ever", so it might not be reasonable to expect to sell as many before discount-sales.

I know I avoid most games until I see a good 75% sale. 

[Neonivek]

To me... Once you get into Fig...

Perhaps you should stop thinking about Crowd funding and just get your game produced the normal way...

Isn't 30% payout on the low end for a game you front?

[Vilanat]

Well it sort of depends on how long it takes to release I guess.  If it takes 5+ years its probably not worth it even if its successful, as your 1000 dollars could be earning safer interest in an index fund or something. 

If it takes 2ish years(like the wasteland 2 kickstarter I think) then its a lot more attractive of an investment.  Except that I'd trust Doublefine about as far as I could throw them.

Also considering how many game projects tend to fail(even ones by reputable developers), I'd personally avoid it like the plague.  If you aren't afraid of losing it and want to try it as an experiment then it could be fun though.

Edit:  I missed this:

But, and that's an interesting but, what they don't tell on that fancy webpage, is that the "Investors" are only actually Fig themselves, the actual investors that put their money down will only get a possibly, probably, maybe, if Fig chooses to since they totally aren't obliged to, only a dividend of 30% of the money Fig took. and that, well, that changes everything.
Long official offering filing page

This basically means that if you want to only break even, Wasteland 3 will have to sell around 3 million copies. Again, Wasteland 2 sold ~600K units, was cheaper and was met with good response, but not overwhelmingly great one. there is a low chance Wasteland 3 will surpass Wasteland 2, there is a very very low chance Wasteland 3 will sell more than 1 million copies. there is no chance in hell Wasteland 3 will sell 3 million copies.

As sleazy as they might be, I can't imagine they'd risk fraud charges for something like this.  I'd have to assume the graph they have on the first page is accurate.

Edit 2:

It looks like Fig takes about 5% of the revenue for themselves after the distributor takes their share.  So the 31% / 10% I assume would actually be 36% / 15% from the developers view.

The suspicious thing In my eyes is the "you stop getting returns after sales are down to 10,000$ over three months".  I'm not sure how fast that tends to happen, and it would give them a lot of encouragement to avoid having sales until AFTER they've reached that point, and the number of sales of wasteland 2 are probably more of a "All sales ever", so it might not be reasonable to expect to sell as many before discount-sales.

I know I avoid most games until I see a good 75% sale. 

Yeah, i might have got that wrong, here's their example for how money for a full price AAA game would get divided:

Game sales price paid by customer to distributor (1)       $   60.00                 
Minus distributor's fee (assumed to be 30%) (2)           -18.00                  
Equals gross receipts to Fig       $   42.00                  
                                
Minus Fig Service Fee (assumed to be 5%) (3)           -2.10                   
Equals adjusted gross receipts       $   39.90                   
                                
Minus developer’s revenue share (assumed to be 70% of adjusted gross receipts) (4)           -27.93                   
Equals Fig’s revenue share (assumed to be 30% of adjusted gross receipts) (5)       $   11.97                   
Multiplied by a specified portion (assumed to be 30% of Fig’s revenue share)       x   0.30                   
                                
Equals aggregate dividends to Fig Game Shares holders                       $   3.60   
(to be divided evenly among all shares of the related Fig Game Shares series outstanding)

- as in, to be divided among all investors. if 2250 people invested 1000 each, that 3.60 gets you 0.0016$ for each fully priced unit. divide that by around 3, which is the projected average price they are expecting to sell Wasteland 3 in, with a starting price of 49.99.

So, since after around 510,000 units Fig's surpasses x1.36 (according to their graph), that means that for each $1000 a person invest in the game, he will get ~450$, and then it drops to 10% return to fig, so for each extra million copies, assuming they do manage to keep a 21.40 average net price (i assumed after steam's cut) and don't take 5% fee, the investor will get 285$, which basically means that in the best case scenario, a 1000$ investor breaks even after 2,500,000 copies sold.

[Levi]

Game sales price paid by customer to distributor (1)       $   60.00                 
Minus distributor's fee (assumed to be 30%) (2)           -18.00                  
Equals gross receipts to Fig       $   42.00                  
                                
Minus Fig Service Fee (assumed to be 5%) (3)           -2.10                   
Equals adjusted gross receipts       $   39.90                   
                                
Minus developer’s revenue share (assumed to be 70% of adjusted gross receipts) (4)           -27.93                   
Equals Fig’s revenue share (assumed to be 30% of adjusted gross receipts) (5)       $   11.97                   
Multiplied by a specified portion (assumed to be 30% of Fig’s revenue share)       x   0.30                   
                                
Equals aggregate dividends to Fig Game Shares holders                       $   3.60   
(to be divided evenly among all shares of the related Fig Game Shares series outstanding)

- as in, to be divided among all investors. if 2250 people invested 1000 each, that 3.60 gets you 0.0016$ for each fully priced unit. divide that by around 3, which is the projected average price they are expecting to sell Wasteland 3 in, with a starting price of 49.99.

So, since after around 510,000 units Fig's surpasses x1.36 (according to their graph), that means that for each $1000 a person invest in the game, he will get ~450$, and then it drops to 10% return to fig, so for each extra million copies, assuming they do manage to keep a 21.40 average net price (i assumed after steam's cut) and don't take 5% fee, the investor will get 285$, which basically means that in the best case scenario, a 1000$ investor breaks even after 2,500,000 copies sold.

I wonder if they are skipping the "Multiplied by a specified portion" bit?  I'm not even sure what the purpose of that is, since Fig already has their cut and the developer has their cut.  That would boost it up to more reasonable levels.

[Vilanat]

Well, i have read some more about it, it seems that they have different revenue sharing methods across games.

In Psychonauts 2 case, it's definitely how i described it here. in Wasteland 3 case it still not entirely clear since they haven't requested a SEC filing yet, but it could very well be that the entirety of the 31% goes to the investors and then investors recoup their investment at 380K units sold.

[ZeroGravitas]

Well, i have read some more about it, it seems that they have different revenue sharing methods across games.

In Psychonauts 2 case, it's definitely how i described it here. in Wasteland 3 case it still not entirely clear since they haven't requested a SEC filing yet, but it could very well be that the entirety of the 31% goes to the investors and then investors recoup their investment at 380K units sold.

The Wasteland 3 circular is here: https://www.sec.gov/Archives/edgar/data/1658966/000121390017002522/f253g2031717_figpublishing.htm

And the Phoenix Point one is here: https://www.sec.gov/Archives/edgar/data/1658966/000121390017006362/f253g2061217_figpublishing.htm