Wednesday, May 01, 2013

Math is Hard Werk

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So.. math nerds.. let's talk about investment returns. I have 80,000 Euros (roughly $115,000 with current exchange rates) invested pCARS currently.  Due to the FSA issue, SMS has had to split off the next gen platforms into a separate budget, completely separate from the legacy platforms (PS3, XBox, PC).  It stands to reason that even though we expect there to be more units shipped on the legacy platforms than the new, the mere existence of the game on the new platforms means that there will be fewer legacy units shipped, right? My return will be less than if there was no new platform units shipped, because I have no investment in the budget of the new platform development.

So - an idea struck me. What if I take 50% of my investment in the legacy platforms and put it towards the budget of the new platform development?  Doesn't that increase my return? I think one variable that we need to know is the budget of the new platform development. Once I have that, I think I can setup a spreadsheet to do some calculations and see what happens. If the budget for the new platform is very low, say 1.5 million Euros, then it would make sense for me to shift all my investment into the new platform sales because I'll own more than twice the percentage of the returns than I do on the legacy.

SMS is working up the structure for investments into the new platform now, and should be opening it up to new investment soon. They'll need to determine the budget when they do that. That'll be the key I think.  SMS has been required to offer refunds on the current investments, so for me to switch 50% of the investment into the new platform, all I'd need to do is have a new contract drawn up.

ed- Errr.. it's a 50/50 SMS/investor split on the new platform instead of 30/70.

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