Star Citizen’s 2022 financials offer additional information about investors & their expected return

Kyleran

Found this story over on MoP, and Slap said we needed more SC threads so here we go. Look like Cloud Imperium /Roberts Industries is much more beholden to the Calder Bros than many realized. (So much for crowd funded efforts not being beholden to investors)

"... as additional reading and untying of the report has found important details about what CIG’s investors board looks like – and what those investors expect in return.

The Calders in question are Clive and Keith Calder, who invested in CIG in 2018 and 2020;"

Kyle-> Apparently in the next few years they and other investors have the right to exercise a "put" option so even money is betting SQ42 Pre-orders will be announced at this year's CitizenCon to help cover the debt. Looks like 4M orders would pretty much cover the debt.

"In the case of the Calders, they have until March 2025 to exercise the option, or all investors could wait until 2028 to cash out, which would see an ROI of about $130M at the stated six to seven per cent interest value of their initial purchase price.

What this ultimately means for CIG is explained in the report, which admits the company does not have the cash to pay off investors at the moment:"

Kyle-> You'll want check out the full article over on MoP.

https://massivelyop.com/2024/03/19/star-citizens-2022-financials-offer-additional-information-about-investors-and-their-expected-returns/

Kyle-> BTW, I love their disclaimer on every SC article.

"Longtime MMORPG gamers will know that Star Citizen was originally  Kickstarted for over $2M back in 2012 with a planned launch for 2014.

As of 2024, it still lingers in an incomplete but playable alpha, having raised over   $650M from gamers over years of continuing crowdfunding and sales of in-game ships and other assets.

It is currently the highest-crowdfunded video game ever and has endured both indefatigable loyalty from advocates and immense skepticism from critics.

A co-developed single-player title,  Squadron 42, has also been repeatedly delayed."

Slapshot1188

I’m still totally unclear why they ever got involved with the Calders… $600M is obscene money.  Why would they sell off a stake when they have this gravy train rolling?

At the end of the day though… my gut tells me Roberts will make a video saying he needs people to pony up and save the day.  And they will. 

Kyleran

There was an interesting article from the Nosy Gamer linked in the MoP story about the terms of the investment, which many may recall was supposed to be:

"Money to be used for marketing and business development initiatives as Squadron 42 and Star Citizen head towards launch."

"Squadron 42 roadmap released and is expected to be feature complete by the end of 2019 with alpha/beta in 2020."

Now this was back in 2018 yet only just this past week has there been any real mention of "launching" much of anything.

Some key points:of the financials/audit  included:

"Cloud Imperium UK Ltd.'s financial accounts for 2022 have provided a fair bit of content this year. First, the accounts were not filed on time with UK Companies House. When the accounts finally showed up in March we discovered an audit by a new accounting firm found discrepancies dating back to 2015"

Details on the put option

"A contingent liability exists with respect to 1,877,400 of the 11,715,800 issued shares as at 31 December 2022. The holders of the 1,877,400 shares have the right to put their shares back to the Company for repurchase at a minimum return premium of 6% per annum on the initial purchase price. For 1,599,900 shares they also have a value formula based upon the three years' average revenue leading up to the start of the exercise period.

Here's where we learn how much Cloud Imperium spent on SC in 2022 ($130M references the exercise of the put option, which RSI refused to recognize as a liability on their books for the reason below)

To put the $130 million figure into context, CIG spent $129.4 million in 2022. The money involved warranted the following paragraph:

Another reason for not recognising is due to the nature of the put terms, as if exercised the put proceeds would be payable out of available cash in excess of that required to effectively operate the business and thus that liability would remain undischarged until such available cash became available.

https://nosygamer.blogspot.com/2024/03/new-details-about-calders-investment-in.html?m=1

MaxBacon

Kyleran said:

To put the $130 million figure into context, CIG spent $129.4 million in 2022. The money involved warranted the following paragraph:

Another reason for not recognising is due to the nature of the put terms, as if exercised the put proceeds would be payable out of available cash in excess of that required to effectively operate the business and thus that liability would remain undischarged until such available cash became available.

A lot of words to say the 101 simple: Investors can't cash out their investment upon money used for the operative costs. As the company was very 1:1 on income vs operative costs, there was literally no money for them to get to start with even if they called the option.

They cash upon profits, and CIG has been reinvesting the higher income they been getting every year back on operations.


As it would, or at least should, surprise nobody, the company has liabilities towards its investor, and any return here will be obviously progressive.

olepi

It would be the ultimate irony if CIG has to shut down because they ran out of money after paying off their investors.

"Due to lack of funds, we will be unable to release either SQ42 or SC. We regret any inconvenience this may have caused."

Kyleran

That was really my point, RSI isn't sitting on top of a pile of cash outside of what is necessary to ensure daily operations as some have inferred in the past.

Like Max said they more or less spend what they take in.

Which makes me wonder if recent cost cutting moves have been in response to a slow down of or a projected slow down of revenues coming in this year.

Could also be as some have suggested a trimming down to focus mostly on the minimal marketable product (MMP) features for both SQ42 and SC as the deadlines for the investor options grow closer, especially the 2028 one.

As pointed out, 4M pre-orders of SQ42 at $70 would cover the put options and they've got quite a bit of time yet to make it happen.

olepi

Do you think there are 4 million people who would pre-order SQ42 before it is released? Aren't the SC backers supposed to get SQ42 also? There are still 4 million more su..., er, customers left?

Slapshot1188

olepi said:

Do you think there are 4 million people who would pre-order SQ42 before it is released? Aren't the SC backers supposed to get SQ42 also? There are still 4 million more su..., er, customers left?

Original backers... up to a certain date, get SQ42 included.  It was split off at some point years ago.

But yeah, 4M is a big number.  Then again, Sandi is by far the most talented person in the company.  And I will die on that hill.

Kyleran

olepi said:

Do you think there are 4 million people who would pre-order SQ42 before it is released? Aren't the SC backers supposed to get SQ42 also? There are still 4 million more su..., er, customers left?

If someone had predicted Palworld would sell 25M units in its first month of early access I would have scoffed and thought them a fool.

Or that SC backers would actually keep giving more free money year in and year out the longer the development cycle took with nary a release date in sight I would have shaken my head in utter disbelief back in 2018.

What do I know about the buying behaviors of gamers? Certainly nothing like my own, that's for sure 

While I've not donated any money yet, show me a few flashy gameplay streams and offer to give me extra "stuff" which triggers my FOMO and I'm likely to preorder a Premium edition of SQ42 if they are in the $150 range. 

I'll also predict the earlier SC backers will only get the "basic edition" of SQ42 for free. 

Likely higher tier editions will be offered only to backers who are in for a specific minimum amount, or will be sold as an add-on, maybe for a discounted price.

As Slap noted, Sandi is the "Master" when it comes to raising money and I have no doubt she'll meet or even well exceed in coming up with the cash when the time comes.

Scot

Where's the forum PvP wars? Boring and moving on.

Just kidding guys, kidding!

Kyleran

Scot said:

Where's the forum PvP wars? Boring and moving on.

Just kidding guys, kidding!

Quiet you, we're trying to have an intelligent conversation about SC / SQ42  here.  

This community...I tell you... 

Thread will die in a day with less than 100 views most probably. 

Slapshot1188

Kyleran said:

olepi said:

Do you think there are 4 million people who would pre-order SQ42 before it is released? Aren't the SC backers supposed to get SQ42 also? There are still 4 million more su..., er, customers left?

If someone had predicted Palworld would sell 25M units in its first month of early access I would have scoffed and thought them a fool.

Or that SC backers would actually keep giving more free money year in and year out the longer the development cycle took with nary a release date in sight I would have shaken my head in utter disbelief back in 2018.

What do I know about the buying behaviors of gamers? Certainly nothing like my own, that's for sure 

While I've not donated any money yet, show me a few flashy gameplay streams and offer to give me extra "stuff" which triggers my FOMO and I'm likely to preorder a Premium edition of SQ42 if they are in the $150 range. 

I'll also predict the earlier SC backers will only get the "basic edition" of SQ42 for free. 

Likely higher tier editions will be offered only to backers who are in for a specific minimum amount, or will be sold as an add-on, maybe for a discounted price.

As Slap noted, Sandi is the "Master" when it comes to raising money and I have no doubt she'll meet or even well exceed in coming up with the cash when the time comes.

I fully expect the hard "upsell" to start soon.  I can almost guarantee there will be add ons with "Behind the scenes discs", Soundtracks, signed boxes and physical discs, T-Shirts and all the rest.

Wargfoot

Slapshot1188 said:

Kyleran said:

olepi said:

Do you think there are 4 million people who would pre-order SQ42 before it is released? Aren't the SC backers supposed to get SQ42 also? There are still 4 million more su..., er, customers left?

If someone had predicted Palworld would sell 25M units in its first month of early access I would have scoffed and thought them a fool.

Or that SC backers would actually keep giving more free money year in and year out the longer the development cycle took with nary a release date in sight I would have shaken my head in utter disbelief back in 2018.

What do I know about the buying behaviors of gamers? Certainly nothing like my own, that's for sure 

While I've not donated any money yet, show me a few flashy gameplay streams and offer to give me extra "stuff" which triggers my FOMO and I'm likely to preorder a Premium edition of SQ42 if they are in the $150 range. 

I'll also predict the earlier SC backers will only get the "basic edition" of SQ42 for free. 

Likely higher tier editions will be offered only to backers who are in for a specific minimum amount, or will be sold as an add-on, maybe for a discounted price.

As Slap noted, Sandi is the "Master" when it comes to raising money and I have no doubt she'll meet or even well exceed in coming up with the cash when the time comes.

I fully expect the hard "upsell" to start soon.  I can almost guarantee there will be add ons with "Behind the scenes discs", Soundtracks, signed boxes and physical discs, T-Shirts and all the rest.

Hater.

Slapshot1188

Wargfoot said:

Slapshot1188 said:

Kyleran said:

olepi said:

Do you think there are 4 million people who would pre-order SQ42 before it is released? Aren't the SC backers supposed to get SQ42 also? There are still 4 million more su..., er, customers left?

If someone had predicted Palworld would sell 25M units in its first month of early access I would have scoffed and thought them a fool.

Or that SC backers would actually keep giving more free money year in and year out the longer the development cycle took with nary a release date in sight I would have shaken my head in utter disbelief back in 2018.

What do I know about the buying behaviors of gamers? Certainly nothing like my own, that's for sure 

While I've not donated any money yet, show me a few flashy gameplay streams and offer to give me extra "stuff" which triggers my FOMO and I'm likely to preorder a Premium edition of SQ42 if they are in the $150 range. 

I'll also predict the earlier SC backers will only get the "basic edition" of SQ42 for free. 

Likely higher tier editions will be offered only to backers who are in for a specific minimum amount, or will be sold as an add-on, maybe for a discounted price.

As Slap noted, Sandi is the "Master" when it comes to raising money and I have no doubt she'll meet or even well exceed in coming up with the cash when the time comes.

I fully expect the hard "upsell" to start soon.  I can almost guarantee there will be add ons with "Behind the scenes discs", Soundtracks, signed boxes and physical discs, T-Shirts and all the rest.

Hater.

Am I a hater if I buy that stuff?  Because I am definitely in for a T-Shirt...

https://robertsspaceindustries.com/pledge/SC-Classic-Tshirt/S

Just need the SQ42 version

Kyleran

Slapshot1188 said:

Wargfoot said:

Slapshot1188 said:

Kyleran said:

olepi said:

Do you think there are 4 million people who would pre-order SQ42 before it is released? Aren't the SC backers supposed to get SQ42 also? There are still 4 million more su..., er, customers left?

If someone had predicted Palworld would sell 25M units in its first month of early access I would have scoffed and thought them a fool.

Or that SC backers would actually keep giving more free money year in and year out the longer the development cycle took with nary a release date in sight I would have shaken my head in utter disbelief back in 2018.

What do I know about the buying behaviors of gamers? Certainly nothing like my own, that's for sure 

While I've not donated any money yet, show me a few flashy gameplay streams and offer to give me extra "stuff" which triggers my FOMO and I'm likely to preorder a Premium edition of SQ42 if they are in the $150 range. 

I'll also predict the earlier SC backers will only get the "basic edition" of SQ42 for free. 

Likely higher tier editions will be offered only to backers who are in for a specific minimum amount, or will be sold as an add-on, maybe for a discounted price.

As Slap noted, Sandi is the "Master" when it comes to raising money and I have no doubt she'll meet or even well exceed in coming up with the cash when the time comes.

I fully expect the hard "upsell" to start soon.  I can almost guarantee there will be add ons with "Behind the scenes discs", Soundtracks, signed boxes and physical discs, T-Shirts and all the rest.

Hater.

Am I a hater if I buy that stuff?  Because I am definitely in for a T-Shirt...

https://robertsspaceindustries.com/pledge/SC-Classic-Tshirt/S

Just need the SQ42 version

Damn, no decent polo option, else I might have picked one up.

Tiller

Incoming $2000 keychain with free ship unlock.

Arglebargle

Slapshot1188 said:

olepi said:

Do you think there are 4 million people who would pre-order SQ42 before it is released? Aren't the SC backers supposed to get SQ42 also? There are still 4 million more su..., er, customers left?

Original backers... up to a certain date, get SQ42 included.  It was split off at some point years ago.

But yeah, 4M is a big number.  Then again, Sandi is by far the most talented person in the company.  And I will die on that hill.

Of course Sandi's gotten caught BSing her 'two marketing degrees' before.   But if Sandi is the CIG marketing guru, I would have to agree. 

Sandmanjw

LOL, 130 million spending in one year. 

What most of these kick starter/crowd funded games would dream of, for full release of their games.

Hell, maybe even most companies, crowd funded or not, would like that for a full budget.

Still scratching that hole in my head that started in 2018, trying to understand gamers.

Scot

Sandmanjw said:

LOL, 130 million spending in one year. 

What most of these kick starter/crowd funded games would dream of, for full release of their games.

Hell, maybe even most companies, crowd funded or not, would like that for a full budget.

Still scratching that hole in my head that started in 2018, trying to understand gamers.

Don't scratch that too hard, trying to understand gamers has already cost me some hair.

Babuinix

Sandmanjw said:

LOL, 130 million spending in one year. 

What most of these kick starter/crowd funded games would dream of, for full release of their games.

Hell, maybe even most companies, crowd funded or not, would like that for a full budget.

Still scratching that hole in my head that started in 2018, trying to understand gamers.

That's actually a very low number for 4 studios and ~1.300 staff across the world. 

Rockstar UK studios (around the same number of developers of the entire CIG):

Spent on employment costs alone:

2021: 280+ Millions (1,320 staff)

2022: 433+ Millions(1,461 staff)

2023: 416+ Millions (1,554 staff)

Source: https://find-and-update.company-information.service.gov.uk/company/03312220/filing-history

Which is is why if you see someone claiming Star Citizen to be the most expensive game ever you can dismiss him has another ignorant gamer without a clue.  

Arglebargle

'Deflection for 100, Alex'

Games released by Rockstar during the tenure of CIG's self proclaimed development:

LA Noire

Max Payne 3

GTA5

GTA Online

Red Dead Redemption 2

Red Dead Online

GTA compilation release

All these were done on multiple consoles, and PC.  And, in addition to other ongoing projects, GTA6 is in long term development.  Want to guess if that releases before Star Citizens 'release'?

So yeah, they are a big conglomerate production house with a ton of employees. Employees who work on different projects.  Not a company trying to do one game (two if you are charitable).

So, if you see someone trying to tell you that Star Citizen isn't the most expensive game development ever, you should get yourself some salt.

Sandmanjw

Babuinix said:

Sandmanjw said:

LOL, 130 million spending in one year. 

What most of these kick starter/crowd funded games would dream of, for full release of their games.

Hell, maybe even most companies, crowd funded or not, would like that for a full budget.

Still scratching that hole in my head that started in 2018, trying to understand gamers.

That's actually a very low number for 4 studios and ~1.300 staff across the world. 

Rockstar UK studios (around the same number of developers of the entire CIG):

Spent on employment costs alone:

2021: 280+ Millions (1,320 staff)

2022: 433+ Millions(1,461 staff)

2023: 416+ Millions (1,554 staff)

Source: https://find-and-update.company-information.service.gov.uk/company/03312220/filing-history

Which is is why if you see someone claiming Star Citizen to be the most expensive game ever you can dismiss him has another ignorant gamer without a clue.  

Most expensive CROWD FUNDED game ever....is what I have seen the most. Accurate yes?

And as per usual,  comparing a company, Rockstar Games ,which over A decade after its release, GTA V has generated close to $8 billion, with hundreds of millions in annual revenue, to what? 

Babuinix

Arglebargle said:

'Deflection for 100, Alex'

Oh but hurt from a reality check? 

Deflection indeed

Babuinix

Sandmanjw said:

Most expensive CROWD FUNDED game ever....is what I have seen the most. Accurate yes?

And as per usual,  comparing a company, Rockstar Games ,which over A decade after its release, GTA V has generated close to $8 billion, with hundreds of millions in annual revenue, to what?

That'll be Minecraft son.

And Yes, I posted the last 3 years of Rockstar (UK) studio expenses. The last released game was RedDead2 who's main studio is Rockstar San Diego (USA).

GTA's are UK studio's baby, and yes, the last 10 years, last 3 included, have been spent developing VI.

That's it, an yes, in the last 3 years of employee costs alone are more than the entire 10 years expenses of CIG.

Deal with it.

Wargfoot

Reading about financials is like reading about the underlying database technology (blockchain) or what version of the web it will use (web3) - all these things are boring and none of them have anything to do with the game.

What kind of money do you think is backing New World - Amazon could hire every game developer on the planet but the piles of cash don't mean jack squat.

Do you know the database strategy of your last 5 favorite games? 
Any of them?

I sure don't - and I don't care.
Is. The. Game. Good.

Each person has to answer that for himself, the rest is smoke and mirrors.

Sandmanjw

Babuinix said:

Sandmanjw said:

Most expensive CROWD FUNDED game ever....is what I have seen the most. Accurate yes?

And as per usual,  comparing a company, Rockstar Games ,which over A decade after its release, GTA V has generated close to $8 billion, with hundreds of millions in annual revenue, to what?

That'll be Minecraft son.

And Yes, I posted the last 3 years of Rockstar (UK) studio expenses. The last released game was RedDead2 who's main studio is Rockstar San Diego (USA).

GTA's are UK studio's baby, and yes, the last 10 years, last 3 included, have been spent developing VI.

That's it, an yes, in the last 3 years of employee costs alone are more than the entire 10 years expenses of CIG.

Deal with it.

Did you really say that it cost more to make Minecraft than what they have spent on SC?

Just wow.

But no, of course you are still trying to talk all around the development costs right? 

Right, how did that go? Deflection indeed....Another game that makes billions, compared to a game that has what again?