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Project Finance and Public Funding for Games

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Games lawyer Jas Purewal discusses two underrated sources of funding for games: project finance and public sources of funding. This was part of a games finance seminar organised by UKIE.

Games lawyer Jas Purewal discusses two underrated sources of funding for games: project finance and public sources of funding. This was part of a games finance seminar organised by UKIE.

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    Project Finance and Public Funding for Games Project Finance and Public Funding for Games Presentation Transcript

    • Project finance and public funding forgames in the UKJas Purewal26 April 2012
    • osborneclarke.comOverview• What is project finance and how can it help fund games?• Public sources of funding 1
    • osborneclarke.comAbout Osborne Clarke• Osborne Clarke is a leading UK/European law firm to the games industry• We advise the full range of games businesses, from start-ups and small developers to publishers• We advise on matters including: contracts, IP, funding, corporate/tax, employment and disputes 2
    • osborneclarke.comAbout me• Im a games lawyer at Osborne Clarke – I advise clients like Nintendo, EA, AppyNation, Dynamo and Supermono on contracts, IP, funding and disputes• I wrote a blog dedicated to explaining legal issues to devs: www.gamerlaw.co.uk• I like Twitter: @gamerlaw• I am not Phoenix Wright :/ 3
    • osborneclarke.comWhat is games project finance?• Finance provided to fund the completion and release of a specific game under an agreed structure.• Investment is limited to the project in question – it is not an investment in the developer or the IP generally. 4
    • osborneclarke.comHow does project finance work? Part 1Note: this is a basic summary - project finance is much more complex in real life! 5
    • osborneclarke.comHow does project finance work? Part 2• Typically (but not always), Publisher signs a publishing agreement with Developer.• Developer puts the IP into a special purpose vehicle ("SPV"), owned by Funder or Publisher.• SPV contracts Developer to develop the game.• Funder funds the game development costs.• Funder may require a completion bond.• If things go wrong, everyone has a degree of protection…(but it gets complicated in practice) 6
    • osborneclarke.comHow does project finance work? Part 3In theory:• The Publisher is happy because it doesnt have to fund the game.• The Developer is happy because it has funding.• The Funder is happy because it makes a (medium- sized) profit if all goes to plan.• The Completion Bonder is happy because its paid a fee for making sure the game is completed. 7
    • osborneclarke.comA few example of games made usingproject finance• Neverwinter Nights 2 (Obsidian)• Railsimulator (Railsimulator.com)• Urban Freestyle Soccer (Acclaim)• Made Man (Silverback/Mastertronic)Or just take a look at Kickstarter… 8
    • osborneclarke.com Opportunities and challenges for games project finance Opportunities Challenges• More controlled and less • Still in relatively early days invasive than equity (or debt) • Risks need to be managed investment • Historically focused on publishers• Publisher has less risk • Complex legal/financial rules• Developer retains IP control • Can be expensive start-up costs• Better deal for developer (?) • Developer still dependant on a• Can be combined with other third party for funding investment sources • Investment rules dont help (yet)• Promotes innovation? 9
    • osborneclarke.comWhos involved in project finance?Some examples:• Funders/Project managers: Fund4Games, Standfast• Bond providers: Film Finance Limited, IFG• Banks: Barclays Bank, HBoS(Source: NESTA - http://www.nesta.org.uk/library/documents/The_Money_Game_v7.pdf) 10
    • osborneclarke.comPublic source of fundingThere are still several sources of public funding, if you knowwhere to look (and dont mind getting knocked back…)1. EU funds2. UK government funds3. Other sources 11
    • osborneclarke.comPublic source of funding: EU funds• The EU makes funds available in UK via the European Regional Development Fund: • Abertay Digital Prototype Funding (http://prototypefund.abertay.ac.uk/) • North West England (http://www.thenorthwestfund.co.uk/funds/digital-creative) • Screen Yorkshire (http://www.screenyorkshire.co.uk/funding/)• You can apply directly to those funds for funding, or could apply directly to the Department for Communities and Local Government (but needs public sector help…?)• Expires in 2013? 12
    • osborneclarke.comPublic source of funding: UK governmentfunds• National Endowment for Science, Technology and the Arts • Used to provide games funding more widely • Now a charity-> funding must meet charitable objects• Enterprise Capital Funds: small grants to SMEs by government-backed funds (e.g. IQ Capital): http://www.bis.gov.uk/policies/enterprise-and-business-support/access-to-finance/enterprise-capital-funds• Creative Skillset: funding for training• National Lottery? Arts Council? 13
    • osborneclarke.comPublic source of funding: other sources• Competitions: • IGF: http://www.igf.com/ • Dare to be Digital: http://www.daretobedigital.com/ • Middleware, e.g. Unity: http://www.kongregate.com/unity_game_contest • Hacks, e.g. Gamehack: http://www.gamehack.co.uk/• Charities? (e.g. Wellcome Trust)• Try other indies – e.g. Indie Fund• Crowdfunding again 14
    • osborneclarke.comThanks! Jas Purewal Lawyer Osborne Clarke T +44 (0) 207 105 7268 jas.purewal@osborneclarke.com Twitter: gamerlaw 15