Results 1 to 13 of 13
  1. #1
    Lesser Hivemind Node
    Join Date
    Jan 2012
    Posts
    975

    UK: FSA (Finanicial Services Authority) investigating Project Cars devs

    http://www.eurogamer.net/articles/20...ng-and-the-fsa

    Oh boy.

    Its a long read.

    "Unregulated collective investment schemes, to use the FSA's lingo, are not covered by the Financial Services Compensation Scheme, the public body that bails out savers if a bank or financial service goes bust. So if an unregulated scheme goes bust or gets wound up by the FSA, and the business has no money left, investors will not get their money back."

    "Last year UKIE, the trade body for Britain's game publishers, issued a report that concluded videogame crowdfunding initiatives that work like investment schemes are prohibited under UK law."

    tl;dr

    From my understanding so far is that the FSA sees it as an unregulated investment scheme, Slightly Mad studios say that it isn't. So depending on the FSA's decision this could go either way.

    Note: there is NO mention of any wrongdoing from any of the relevant stakeholders - the studio, the members who paid and the FSA. Its just that their financing of the game is in a very grey area. To the studio's credit, they've complied with every request from the FSA and are keeping their community up to date.

    RPS members who've given some of their money to Slightly Mad studios, how's it looking from your end?
    Last edited by khaz; 19-04-2013 at 12:09 PM.

  2. #2
    Secondary Hivemind Nexus
    Join Date
    May 2012
    Posts
    1,651
    Yeah, hope it works out. Basically, it's the FSA/consumers going "wait, there is a lot of money and legal stuff involved, should this be regulated". So we either get (hopefully) clearer guidelines for businesses, or more protection/regulation for consumers.

    The thing is, this kind of scheme goes beyond pre-orders, and almost makes each customer a share holder I guess.

  3. #3
    Lesser Hivemind Node
    Join Date
    Jan 2012
    Posts
    975
    The problem with something like this is that if the FSA clears their scheme then they've set a precedent. And in these financial murky times, it's hardly something the FSA wants.

    I'm just glad the investigation is related to the regulatory side of things and not a criminal or fraud investigation.

    Also, that comment from the UKIE fills me with mirth for some reason. :)

  4. #4
    Secondary Hivemind Nexus neema_t's Avatar
    Join Date
    Nov 2011
    Posts
    1,359
    Quote Originally Posted by TechnicalBen View Post
    and almost makes each customer a share holder I guess.
    That's pretty much what they said; anyone who buys in to the project would receive a share of the profits. Personally I gave them 50 euros because I thought that was a reasonable price to pay for the full game and two years of pre-release development access, so that probably entitles me to a Chomp or a Freddo, but I think there are people who have put (possibly well) over 10,000 into the project - presumably because they saw it as an investment opportunity - so if the FSA rule that they won't be allowed a slice of the profit then I imagine SMS will be in some serious shit.

    This investigation has been going on for ages though, and last I heard the FSA were fine with it, but maybe that was misconstrued somewhere along the line.

  5. #5
    Secondary Hivemind Nexus Kelron's Avatar
    Join Date
    Jun 2011
    Posts
    2,068
    I wasn't aware of any investment aspect, at least for the lower tiers. I paid €25 for access to current and future versions.

    I can see why this would worry people who put serious money into the game, but for me it's no different to buying any other game.

  6. #6
    Lesser Hivemind Node
    Join Date
    Jan 2012
    Posts
    975
    In Eurogamer's article, they mention a guy who has bet 13,000 of his family's savings. Jesus.

  7. #7
    Secondary Hivemind Nexus
    Join Date
    Sep 2012
    Posts
    1,574
    Good. What they're doing is pretty much issuing preferred stock, and that should fall under the auspices of a regulatory agency.

  8. #8
    Hmmm. Whether he calls it an investment or not is completely irrelevant isn't it? It's just semantics. When people say it's an investment, they're simply trying to communicate that participants risk losing their money...or, to word that differently, not getting their money back. If kickstarter is crowd pre-ordering, this is crowd publishing. With the former, there is never any question of getting any money back. You're essentially donating to the project in exchange for tangible rewards, not a financial return, IF the project is successful. To most people, it's just like buying a game up front. To those who choose to purchase the eye-watering higher tiers of some projects (i.e. 1000s of dollars/pounds), they're not taking any financial risk in doing so. People are spending the money rather than investing it; they have already lost it. In that sense, Kickstarter is a lot cleaner than the sort of arrangement these guys are offering. Ultimately, if you're offering people a possible return on their money, however small the possibility, and however clear you are about the risks, you will always get people who invest what they can't afford and who are credulous as to the chances of success.

    That said, I'm not against this in principle. It's a cool idea, and a great way to give your customers a stake in your success. And it means studios don't have to engage with risk averse, return-on-investment obsessed publishers, who want to own everything and take none of the risk. It does need to be properly regulated though, and as with any investment, people need to know what they're getting into. Don't give them more than you can afford to lose.

  9. #9
    Secondary Hivemind Nexus
    Join Date
    Jun 2011
    Posts
    3,762
    Yeah there are issues with legality as there is no regulation around it. Oddly enough, it's now legal in the US, as of about two weeks ago: http://dailycrowdsource.com/crowdsou...nding-into-law

  10. #10
    Secondary Hivemind Nexus
    Join Date
    Jun 2011
    Posts
    5,686
    I've brought this up before - you cannot offer a 'stake' in anything, you cannot offer payback/profit because it's either investment (which requires licences and has rules) or gambling (same thing but different stigmas and different laws!)

    This is why Kickstarter and IndieGoGo specifically do not offer anything like that - it's a "pay for something and get something" deal.

    SMS have been under investigation for their approach to funding for a while now - I cannot see it passing muster as-is, it's clearly either investment or gambling and they're licenced for neither.

    The complexity is that it's obviously not just the UK involved in this - I'd imagine the worst case is they're forbidden from running the scheme in the UK (likely the EU as laws are broadly similar) and they could be forced into repaying anyone from those countries who's paid-in money.

    They can, of course, just redo it as a Kickstarter style 'no payback' think but people may be less interested and they'll certainly get less money.

    What amazed me is that they thought what they were doing would be OK - no-one with any sense would think "we can run a lottery without a licence" do they?

  11. #11
    Secondary Hivemind Nexus
    Join Date
    Jun 2011
    Posts
    5,686
    Quote Originally Posted by deano2099 View Post
    Yeah there are issues with legality as there is no regulation around it. Oddly enough, it's now legal in the US, as of about two weeks ago: http://dailycrowdsource.com/crowdsou...nding-into-law
    Legal within rules and oversight, which SMS and Kickstarter and Indiegogo currently don't have, of course.

    e.g. you can do it but "the man" wants to see it and take something from it :)

  12. #12
    Quote Originally Posted by trjp View Post
    What amazed me is that they thought what they were doing would be OK - no-one with any sense would think "we can run a lottery without a licence" do they?
    Indeed. The more I read of that article, the worse it gets:

    So could someone who put in €10 and did a lot of work on the game earn more than someone who put in €1000, played a couple of builds and then sat back? "All I can say is we have to evaluate it nearer the time of release. It is the kind of thing that would be put to the community as well.
    "It's not something where we've got some strange equation we would work out in the background, the number of posts times number of builds played. We would never do that. So how we would calculate what your activity is worth would be evaluated later on in the day, and the community would be made well aware of that in advance."

    How they can be taking money off people, promising a return on that money, with such a vague, ill-defined idea of how that return will be calculated after the fact, beggars belief. There are 80k contributors aren't there? How the hell are they going to evaluate how much an individual gets without some sort of metric to weight their contribution? All this crap about getting paid for the "work" you have done just smacks of a way to get around calling it an investment.

    EDIT: 10k "members" apparently. Still, enough to render the task nigh on impossible to do manually.
    Last edited by RandomTangent; 19-04-2013 at 03:41 PM.

  13. #13

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •