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Cooperative investment and MMO: is there a way?
Ikkei
Member Posts: 169
From micro-credit to cooperative music funding, it seems this era is one in which small individuals can matter in the economy. They are able to gather quickly and efficiently to form huge numbers. The web only reinforces that fact. You can check out this example of cooperative music investment: http://www.mymajorcompany.co.uk/ (check "About" for more information)
The question is simple. Can we apply this model to online games, and more precisely MMOs?
Here's the idea as I envision it, but as I'm not really versed in legal aspects of business in the USA, it's very rough and conceptual, and needs a lot of ironing.
———
I hypothesize the following 2 structures:
- The editor, akin to mymajorcompany. I'll call it myMMOcompany (MMC) for the sake of discussion.
MMC selects MMO projects to propose to the public (after verification by a few professionals that the project is sound and financially viable). People that invest in a project only commit to do so until a certain threshold is reached and the project really starts. When that happens,
- The studio, akin to MMO studios. I'll call it PlayerWare (PW) for the sake of discussion.
PW hosts the projects that got enough investors. PW gathers the funds and hires professionals. This is where we're significantly different from modding and fan-made servers: we're business. The staff at PW is not different from the staff in any other MMO studio. However,
I also see an "assembly of investors", gathered within MMC, and its council of representatives. These are our sages. They make sure PW stays true to the project that people invested in, or that it evolves accordingly to their decisions. In this assembly, you would find the most educated investors that definitely have a say in how PW should position its products, which pricing policy and subsequent values it offers to players, and so on. This is a way to mimic the "be inside the music business" of mymajorcompany, without too much interfering in the development process itself which is much more technical, and much less obvious for amateurs, in game-making than it is in music-making—and should be left to the discretion of professionals, provided they're given clear objectives and limits.
———
Now, in my initial vision, there are two ways to go about this, and they don't really interfere (each leads to a very different PW, and both could actually exist at the same time, hosting discrete projects). I have my preference though, as you'll easily gather.
(note: from now on, "we" designates the hypothetical group of investors, you and me)
1. PROFIT-DRIVEN
To the question "Why do MMC/PW exist?", as companies, we can simply answer "for profit". It means that "how" we'll do it is thereby very likely to imitate the behavior of most companies out there, run by investors who care less about the product than the money they squeeze off the whole corporation—staff and customers.
2. GOAL-DRIVEN
Or we could answer that question (why do we do what do? why do we exist?) by "to make a MMO that will defend player values". First, make a good game; second, better it; third, never ever hinder the experience for the sake of profit. No NGE. No shady hidden costs beyond subscription. No spamming your friends (for Fb-like games). And so on.
"How" we do that MMO is more likely to respond to real players' expectations (including ours, since investors are very likely to be players themselves), but also to tend to the needs (means) and well-being (working conditions) of the staff. I surmise, very naively, that such a business (where investors are also direct customers, and goal-driven) is more likely to be decent with its staff than a company run by blind investors—that know little about the product or the staff.
Typical goal-driven (successful) companies are Nintendo, Blizzard, Bioware, Apple, IBM… They try to cater to a very specific need that they identified as "large enough" to commit their strength. It turns out successful goal-driven companies do find, in the end, tremendous profit, but they don't seem to seek it primarily: they defend a vision, and that's essentially what you're buying. At smaller scales, it's the personal story of most successful indie game companies (more common these days, on new smart formats such as iOS), that tried to "make something great" before they even wondered about huge profit. The only thing that matters, when you're goal-driven, is financial viability. It's primordial and sufficient to keep refining your trade and really try.
Should everyone be reasonable enough (investors not too greedy and customers willing to pay a fair price of about $15/month), a PW-MMO should not need more than 100k players to be sustainable. Remember, projects were chosen by players/investors in the first place. Some lame MMO reach that threshold. I'm sure there's a way for PW projects to be financially sustainable.
———
You may have guessed it, I see MMC and PW as typical goal-driven businesses, and I see them proposing the following "deal" to their investors and players:
- Every investor is entitled to get 101% of its investment back at least, provided it doesn't hinder the development of the game. For any subsequent profit, once deduced the operating costs (maintenance and further development), it will be divided in three equal parts: 1/3 for investors, 1/3 for the staff, 1/3 to reduce the price of the game (and thus get more players). Investors are also benefiting from the product itself, that's why they invest in the first place, so they should be willing to trade some profit in order for the product itself to be greater—which, in the end, may make them far richer than short-sighted greed.
- Players can invest significant time in a MMO where there will be no stupid NGE or wild RMTs, because the people that decide such things are players themselves for the most part, and they usually only invest in 1 or 2 games. This means that ruining a project matters a lot more to them than it does to blind-rich investors, who typically bet on dozens of games at all times, and don't really care about shutting down a few here and there to bank cash.
- If the quality standard is higher for players, it also is for developers, who should find in such companies a much better working environment than in typical game studios. Their job would always be to better the game, not hide shady marketing schemes. They'll get a fair share of the profit, if profit there is. And that's much more up to them, as a team, than it is in most other MMO studios.
Ok, that's already too long. I think the idea is explained well enough. What do you think? 
Comments
So many things wrong here.
The 1/3, 1/3, 1/3 you just need to drop that idea completely.
Epic Music: https://www.youtube.com/watch?v=vAigCvelkhQ&list=PLo9FRw1AkDuQLEz7Gvvaz3ideB2NpFtT1
https://archive.org/details/softwarelibrary_msdos?&sort=-downloads&page=1
Kyleran: "Now there's the real trick, learning to accept and enjoy a game for what it offers rather than pass on what might be a great playing experience because it lacks a few features you prefer."
John Henry Newman: "A man would do nothing if he waited until he could do it so well that no one could find fault."
FreddyNoNose: "A good game needs no defense; a bad game has no defense." "Easily digested content is just as easily forgotten."
LacedOpium: "So the question that begs to be asked is, if you are not interested in the game mechanics that define the MMORPG genre, then why are you playing an MMORPG?"
I would make a semi-educated guess that a corporation or LLC can be set up in the U.S. that would do this, with fairly normal business licensure and infrastructure.
You would have to adjust the voting powers of the board of directors.
The investment can be stock that would be privately traded. Often, it seems people think of stock only in terms of publicly traded stock such as NYSE, etc. but you can sell stock privately, see
http://en.wikipedia.org/wiki/Privately_held_company
That way you could have more control over who buys it, i.e. gamers.
Your assembly of investors would have voting rights, like shareholders normally have.
Part of your corporate charter (as they are called some places) would just include that you have to ask for public comment on designs.
I don't know much about it, I took the class in law school, but never worked in that area.
"Never met a pack of humans that were any different. Look at the idiots that get elected every couple of years. You really consider those guys more mature than us? The only difference between us and them is, when they gank some noobs and take their stuff, the noobs actually die." - Madimorga
@ ;astoria: thanks a lot for that input. You really put legal concepts (words) on those ideas. : )
I'll look into privately held companies.
@ waynejr2: I don't have much faith in the 1/3 thing as is. However there's a principle that this scheme was designed to uphold, that I would present as such: "investors, staff and customers all participate, somehow, to the success of a product: thus they should all benefit of that financial success." I don't know how to make that a pragmatic reality, though. I'm sure it's fair to start by refunding investors, then divide profit more equally, at least with the staff. I'm also sure that at no time should dividends hinder the operation of the product itself.
An alternative I had considered at first was to make the company a non-profit association of some kind. But I fear it could be counter-productive and may lessen the interest of investors, workers and customers alike.
What do you think?
You also mention "many things wrong", care to elaborate? As much as I'm sure this rough draft wasn't perfect, I'm confident it can be refined.
There are legal business categories for Cooperative Business style in UK, US and Canada. Both non-profit and profit.
I know I'm revisiting an old post but would like to revive it! I think there is a huge benefit to applying a cooperative business style to an MMO company.
I'm part of a very successful Credit Union and Co-Op Store (building, farm, tools etc supplies, and diesel/Gas). You have a minimal Equity Investment, I think it was $5 to join (required for Credit Union) or optional for store which you receive the "Member Discount". The Credit Union "shares" have a % return based on "company profit", i.e. account and transaction fees. The store provides the "Member Discount" in addition to % return of company profits based on Patronage , the more you buy the more the return. So really, it just makes sense to be a "Member/Owner"
The Patronage Return is what I think is the best. Additionally part of that Patronage return is allocated to your Equity and a part of it is returned via Deposit or Check/Cheque. The Equity can be withdrawn wholly or in part at anytime you wish. If you wish to "quit" the cooperative you need only withdraw everything. You can invest more in Equity to increase the companies growth.
The cooperative model is however set that every "owner/member" has One Vote per election/referendum regardless of investment. The granularity of voting is dependent on the company bylaws etc. Some times it is in the form of electing the Board of Directors/CEO for a year term at the Annual General Meeting. Other times there are "referendums" on major decisions. I think with an MMO cooperative both of those would play a similar role as well as a model that includes more feedback on content and direction through online blogs and online voting. We are after all in the 21st Century!!!
If I were to buy and/or subscribe to a game, for example $50 + $12/mth, and also bought some item mall stuff for $6, I would have a total patronage for the year of $200, If the company was doing good after salaries and expenses, the profits would allocated by the Board/CEO to include some portion to Equity/Return, lets say 5%. so you would receive $7 to your Equity in the Company and a check/cheque for $3. I think a combination of fee structures such as releases, subscriptions, item mall and custom services is the best approach; not with the intention of gouging but creating a reasonable profit to do great things!
Note that workers at the company would also be "customer/owners" and have a vote also. There would not be crazy uncontrollable Executive Salaries and bonuses! The workers would be reasonably compensated with proper salary and benefits to make them happy!
I'm working on creating this very Cooperative. If you are interested in finding out more please contact me. I don't promise anything other than sharing a dream!
How is it possible to assess the financial viability of a project if the financing is done by a second party after the assessment???
Suppose that you create such a company and raise enough money to make the game you want--or at least, enough that you could make the game if you spend it wisely. How do you figure out who you should hire? Creating a quality game takes some solid technical skills, not just a group of passionate gamers sitting around and discussing what they want the game to be like.
Most companies will have a hierarchical structure with a relative handful of people making hiring decisions (meaning, small compared to the total number of employees). Do you tell your "investors", thank you for the money, now leave us alone while we make the game? If so, why would anyone invest with you at all? And if not, input from your "assembly of investors" is likely to pull the game in wildly different and contradictory directions--and lead to critical decisions being handed down by people who fundamentally have no idea what they're doing.