5 ms·

> They've taken essentially a complete loss on this entire project It's a genius financial and strategical move, predicated by having a lucky monster success e

by mbesto 9y ago

> They've taken essentially a complete loss on this entire project It's a genius financial and strategical move, predicated by having a lucky monster success elsewhere in the company that required a quick influx of resources (Fortnite). They can effectively write off a failed game over the next 5 years, and reduce their tax burden as a result. They then act as a "benevolent" actor to the gaming development community by giving away assets that have no financial incentive to them. So they get a nice influx of resources and get to advertise to a new pool in the same breadth. That's a win-win. EDIT: I should also note - I was a benefactor of shifting my payment from Paragon to Fortnite. Given that it had no variable cost to give me $20 worth of skins in Fortnite, that's a pretty solid user acquisition strategy.

Erlangolem 9y ago
Deleted
- gmueckl 9y ago
  Paragon was/is already a F2P "monster".
sbarre 9y ago
I don't see why benevolent needs to be in quotes in your comment. Regardless of whatever financial or tax upside they get from doing this, the upside the game development community gets is the same. They are doing something they really didn't need to do, and as GP pointed out, most companies don't do.
- mbesto 9y ago
  > I don't see why benevolent needs to be in quotes in your comment > most companies don't do. Because most companies are for-profit entities. Most companies don't do this because they aren't in this specific situation. Most gaming companies have really delicate economics (high up front capital costs, with less than guaranteed returns). Call me cynical all you want, but the idea that video gaming companies (of all industries) are somehow out to provide benevolently for it's software developing community is laughable at best (see EA, Ubisoft, Zynga etc). The video gaming market is rife with abusing long hours out of it's employees.
  - rootlocus 9y ago
    > see EA, Ubisoft, Zynga etc You're cherry picking a handful of awful companies for the sake of making a point about the entire industry.
    - mbesto 9y ago
      I take it you haven't worked in the industry? There's literally an industry term for it ("crunch") because it's so bad. https://www.gamasutra.com/view/news/257143/Working_time_among_video_game_developers_Trends_over_200414.php https://www.gamasutra.com/view/news/257143/Working_time_amon... http://www.gameinformer.com/themes/blogs/generic/post.aspx?WeblogApp=features&y=2018&m=01&d=16&WeblogPostName=crunch-the-video-game-industrys-notorious-labor-problem&GroupKeys=&PostPageIndex=2 http://www.gameinformer.com/themes/blogs/generic/post.aspx?W... https://kotaku.com/crunch-time-why-game-developers-work-such-insane-hours-1704744577 https://kotaku.com/crunch-time-why-game-developers-work-such... https://venturebeat.com/2016/03/20/why-crunch-time-is-still-a-problem-in-the-video-game-industry/ https://venturebeat.com/2016/03/20/why-crunch-time-is-still-... https://www.nytimes.com/2017/10/25/opinion/work-culture-video-games-crunch.html https://www.nytimes.com/2017/10/25/opinion/work-culture-vide... https://www.gamasutra.com/blogs/PaulTozour/20150120/234443/The_Game_Outcomes_Project_Part_4_Crunch_Makes_Games_Worse.php https://www.gamasutra.com/blogs/PaulTozour/20150120/234443/T...
      - kosei 9y ago
        Asking employees to work long hours in order to meet deadlines is not unique to the games industry.
        plussed_reader 9y ago
        It's not an ask when made a condition of employment.
      - always_good 9y ago
        You built your own straw man. Nobody said that video gaming companies "are somehow out to provide benevolently for it's software developing community." If we were talking about Epic Games giving $100 to each American, that wouldn't follow either. But if you can't acknowledge that some decisions are more well-meaning than others, you're just sour grapes.
- aaronharder 9y ago
  I'd argue benevolent belongs in quotes. Not to question the very clear upside to the game development community. But rather to acknowledge that Epic is likely anticipating the benefits to itself as a company will be higher than the costs.
  - falcolas 9y ago
    I would disagree that a prerequisite of a corporation being benevolent is losing money. There was no requirement of giving away the assets in order to gain the tax benefits.
- wwalser 9y ago
  "As with all of Epic’s internally developed assets, the Paragon assets are only licensed for use in Unreal Engine 4." This is marketing for their game engine. They don't have to do it, sure. But SaaS companies don't have to provide free blogs, webinars and e-books either but we don't pretend they are benevolent for doing so. Don't get me wrong. I think more art assets available in the game dev community is a good thing. I think more free stuff from one company (Epic in this case) will beget more free stuff from their competitors (Unity mainly). I'm just pointing out that this isn't free for the sake of being benevolent. It's free for the sake of capturing market share.
  - abiox 9y ago
    > I'm just pointing out that this isn't free for the sake of being benevolent. It's free for the sake of capturing market share. this seems like it could be a false dichotomy. it's not obvious why it can't be both.
    - wwalser 9y ago
      Benevolent: "(of an organization) serving a charitable rather than a profit-making purpose." That's not how this word works. We can use another one. I hasten to add, again, that I'm attributing nothing pejorative. I'm glad Epic have done this. It's great marketing that may be helpful to lots of people.
      - abiox 9y ago
        "benevolent" wasn't being used to describe the organization, it was being used to describe a particular action.
        awesomepeter 9y ago
        The issue is this action isn't benevolent. It's nice, but as said previously it's to promote their engine. So they will profit from it indirectly. If on the other hand they would release the assets without strings attached (for use with any game engine / in any way) then I'd say this word would apply.
- brann0 9y ago
  Indeed. Tired of people associating benevolence with no monetary reward whatsoever.
Cthulhu_ 9y ago
And hopefully get more devs to use their platform (Unreal Engine) using these assets as their entry point, giving them dank licensing money if there is a good game amongst the many mediocre ones.
tyrust 9y ago
>reduce their tax burden Why do people always make this argument? Loss is loss. You're financially better off if you make money, even if you have to pay taxes on it.
- Kiro 9y ago
  Yeah, I don't understand how this reduces anything. Can someone explain?
  - simaracode 9y ago
    You basically can take a Tax deduction on capital losses, meaning paying less tax (Super simplifying the complex US Tax Code) https://www.investopedia.com/articles/investing/062713/capital-losses-and-tax.asp https://www.investopedia.com/articles/investing/062713/capit...
  - tyrust 9y ago
    You pay taxes on capital gains. Suppose that Epic made P income from Paragon and I income from everything else. They are taxed at T. So if they return P to customers, that's a loss. So they will pay (I - P) * T in taxes and end up with (I - P) * (1 - T). Suppose they kept P, that's gain. So they will pay (I + P) * T in taxes and end up with (I + P) * (1 - T). So even though they pay less in taxes ((I - P) * T < (I + P) * T), they will end up with less money ((I - P) * (1 - T) < (I + P) * (1 - T)).
    - mbesto 9y ago
      Whoa, even I couldn't follow this :) Basically, what it means is the following: Year 1 - I spent $10M on Paragon (let's pretend I've made a single dollar from it). I therefore have negative -$10M in profit, so I pay zero taxes. Year 2 - I shut Paragon down. I still have $10M in losses from Paragon. Fortnite does $30M in Revenue and it cost me $20M to build Fortnite in Year 2. Theoretically I profited $10M in year 2 and I'd have to pay ~30% (thats not the real number, so don't correct me) of that in taxes, so I really only get to keep $7M of that to reinvest. But I get to carry my loss forward from Year 1 onwards. So in theory I get to keep more of my profit due to a smaller tax burden. Generally speaking this is usually done over 5 years. So I'd take $10M and amortize it $2M ever year. Meaning Year 2, instead of paying 30% of $10M, I would pay 30% of 8M, so $2.4M versus $3M. It's obviously way more complicated than this, but this is the gist.
CyberDildonics 9y ago
It still takes time and energy to package and release something to the public, even if it is assets.
barking 9y ago
I come in peace. You're not a benefactor given that you are the one who benefited

by mbesto 9y ago

Erlangolem 9y ago

Deleted

gmueckl 9y ago
Paragon was/is already a F2P "monster".

sbarre 9y ago

I don't see why benevolent needs to be in quotes in your comment. Regardless of whatever financial or tax upside they get from doing this, the upside the game development community gets is the same. They are doing something they really didn't need to do, and as GP pointed out, most companies don't do.

mbesto 9y ago
> I don't see why benevolent needs to be in quotes in your comment > most companies don't do. Because most companies are for-profit entities. Most companies don't do this because they aren't in this specific situation. Most gaming companies have really delicate economics (high up front capital costs, with less than guaranteed returns). Call me cynical all you want, but the idea that video gaming companies (of all industries) are somehow out to provide benevolently for it's software developing community is laughable at best (see EA, Ubisoft, Zynga etc). The video gaming market is rife with abusing long hours out of it's employees.
- rootlocus 9y ago
  > see EA, Ubisoft, Zynga etc You're cherry picking a handful of awful companies for the sake of making a point about the entire industry.
  - mbesto 9y ago
    I take it you haven't worked in the industry? There's literally an industry term for it ("crunch") because it's so bad. https://www.gamasutra.com/view/news/257143/Working_time_among_video_game_developers_Trends_over_200414.php https://www.gamasutra.com/view/news/257143/Working_time_amon... http://www.gameinformer.com/themes/blogs/generic/post.aspx?WeblogApp=features&y=2018&m=01&d=16&WeblogPostName=crunch-the-video-game-industrys-notorious-labor-problem&GroupKeys=&PostPageIndex=2 http://www.gameinformer.com/themes/blogs/generic/post.aspx?W... https://kotaku.com/crunch-time-why-game-developers-work-such-insane-hours-1704744577 https://kotaku.com/crunch-time-why-game-developers-work-such... https://venturebeat.com/2016/03/20/why-crunch-time-is-still-a-problem-in-the-video-game-industry/ https://venturebeat.com/2016/03/20/why-crunch-time-is-still-... https://www.nytimes.com/2017/10/25/opinion/work-culture-video-games-crunch.html https://www.nytimes.com/2017/10/25/opinion/work-culture-vide... https://www.gamasutra.com/blogs/PaulTozour/20150120/234443/The_Game_Outcomes_Project_Part_4_Crunch_Makes_Games_Worse.php https://www.gamasutra.com/blogs/PaulTozour/20150120/234443/T...
    - kosei 9y ago
      Asking employees to work long hours in order to meet deadlines is not unique to the games industry.
      - plussed_reader 9y ago
        It's not an ask when made a condition of employment.
    - always_good 9y ago
      You built your own straw man. Nobody said that video gaming companies "are somehow out to provide benevolently for it's software developing community." If we were talking about Epic Games giving $100 to each American, that wouldn't follow either. But if you can't acknowledge that some decisions are more well-meaning than others, you're just sour grapes.
aaronharder 9y ago
I'd argue benevolent belongs in quotes. Not to question the very clear upside to the game development community. But rather to acknowledge that Epic is likely anticipating the benefits to itself as a company will be higher than the costs.
- falcolas 9y ago
  I would disagree that a prerequisite of a corporation being benevolent is losing money. There was no requirement of giving away the assets in order to gain the tax benefits.
wwalser 9y ago
"As with all of Epic’s internally developed assets, the Paragon assets are only licensed for use in Unreal Engine 4." This is marketing for their game engine. They don't have to do it, sure. But SaaS companies don't have to provide free blogs, webinars and e-books either but we don't pretend they are benevolent for doing so. Don't get me wrong. I think more art assets available in the game dev community is a good thing. I think more free stuff from one company (Epic in this case) will beget more free stuff from their competitors (Unity mainly). I'm just pointing out that this isn't free for the sake of being benevolent. It's free for the sake of capturing market share.
- abiox 9y ago
  > I'm just pointing out that this isn't free for the sake of being benevolent. It's free for the sake of capturing market share. this seems like it could be a false dichotomy. it's not obvious why it can't be both.
  - wwalser 9y ago
    Benevolent: "(of an organization) serving a charitable rather than a profit-making purpose." That's not how this word works. We can use another one. I hasten to add, again, that I'm attributing nothing pejorative. I'm glad Epic have done this. It's great marketing that may be helpful to lots of people.
    - abiox 9y ago
      "benevolent" wasn't being used to describe the organization, it was being used to describe a particular action.
      - awesomepeter 9y ago
        The issue is this action isn't benevolent. It's nice, but as said previously it's to promote their engine. So they will profit from it indirectly. If on the other hand they would release the assets without strings attached (for use with any game engine / in any way) then I'd say this word would apply.
brann0 9y ago
Indeed. Tired of people associating benevolence with no monetary reward whatsoever.

Cthulhu_ 9y ago

And hopefully get more devs to use their platform (Unreal Engine) using these assets as their entry point, giving them dank licensing money if there is a good game amongst the many mediocre ones.

tyrust 9y ago

>reduce their tax burden Why do people always make this argument? Loss is loss. You're financially better off if you make money, even if you have to pay taxes on it.

Kiro 9y ago
Yeah, I don't understand how this reduces anything. Can someone explain?
- simaracode 9y ago
  You basically can take a Tax deduction on capital losses, meaning paying less tax (Super simplifying the complex US Tax Code) https://www.investopedia.com/articles/investing/062713/capital-losses-and-tax.asp https://www.investopedia.com/articles/investing/062713/capit...
- tyrust 9y ago
  You pay taxes on capital gains. Suppose that Epic made P income from Paragon and I income from everything else. They are taxed at T. So if they return P to customers, that's a loss. So they will pay (I - P) * T in taxes and end up with (I - P) * (1 - T). Suppose they kept P, that's gain. So they will pay (I + P) * T in taxes and end up with (I + P) * (1 - T). So even though they pay less in taxes ((I - P) * T < (I + P) * T), they will end up with less money ((I - P) * (1 - T) < (I + P) * (1 - T)).
  - mbesto 9y ago
    Whoa, even I couldn't follow this :) Basically, what it means is the following: Year 1 - I spent $10M on Paragon (let's pretend I've made a single dollar from it). I therefore have negative -$10M in profit, so I pay zero taxes. Year 2 - I shut Paragon down. I still have $10M in losses from Paragon. Fortnite does $30M in Revenue and it cost me $20M to build Fortnite in Year 2. Theoretically I profited $10M in year 2 and I'd have to pay ~30% (thats not the real number, so don't correct me) of that in taxes, so I really only get to keep $7M of that to reinvest. But I get to carry my loss forward from Year 1 onwards. So in theory I get to keep more of my profit due to a smaller tax burden. Generally speaking this is usually done over 5 years. So I'd take $10M and amortize it $2M ever year. Meaning Year 2, instead of paying 30% of $10M, I would pay 30% of 8M, so $2.4M versus $3M. It's obviously way more complicated than this, but this is the gist.

CyberDildonics 9y ago

It still takes time and energy to package and release something to the public, even if it is assets.

barking 9y ago

I come in peace. You're not a benefactor given that you are the one who benefited