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[davidkip] 01/1/2019 10:32

Phil

a) NARC are going to spend millions on development and WHET is on the hook to fund that.

b) That one $60k game makes someone a fortune doesn't tell you the odds of that occurring. Something that has a 1-in-1000 chance of happening doesn't mean it never happens (by definition it happens once in 1000 times).

The odds of winning a fortune on Euromillions are incredibly small, yet people do win. Investing in a start-up in the hope that it'll be one of those incredible rare 10,000% returns is little more than a lottery ticket strategy.

Fortunately WHET aren't doing that. They're taking a bog-standard start-up funding pathway, taking a passive minority stake and then signing-up to keep funding it down the line. Whether the risk-reward profile for NARC makes this a sensible investment (as part of a pool of similar ones) is a valid discussion, but let's try and avoid the sort of la-la comments that do little to make WHET seem credible. [Yes phil/squid, that comment is aimed at you!]

[philobeddoe] 01/1/2019 10:12

Happy new year David. But I'm afraid you're still talking out of your bottom. Different industry, but do you remember back in 1999 a movie called "Blair Witch project"? It cost just $60,000 to make. It was up against giants of the movie business and so according to you it should have stood no chance of success. But instead it trumped all of them and made it to the top of the box office charts and grossed $250 million. The little guy has as much chance of succeeding as the big guy. As Richard Branson once said referring to his status as the underdog as being a good thing not a bad thing. Enjoy your day worrying and stressing about our investment! Again! LOL 😂

[davidkip] 01/1/2019 09:38

EA for example. $1bn annual budget, nearly 10,000 employees, and it's not the biggest game co. Incredible depth of technical and creative expertise to draw from. That's the current 2019 industry that Beck a going up against.

[davidkip] 01/1/2019 09:22

PS Phil / squid. Can I just say I absolutely love your boundless enthusiasm. I do miss those detailed charts of predicted WRN NAV after each deal, they always used to make me smile. Can you bring those back please? They're more fun than you just taking a pop at Nigel and his Debenhams investment (or whatever it is).

[sweet karolina] 01/1/2019 09:20

No doubt AB and AE have done extensive due diligence in to all of this in order to pick a diamond from the tonnes of rubble (after all they do have track records of doing that don't they, and obviously being of the right generation they have an intuitive knowledge of the sector). That is why the web page announcement / RNS Reach included so much detail on the specifics of NARC, including where WHET was getting the money from to invest in this winner.

[davidkip] 01/1/2019 09:06

Back in the real world then.

Electronic arts (games in old timer lingo) is a pretty mature space now. Revenues from that sector make it bigger than the US film industry. I some respects games are supplanting the escapism aspect of films of old. And the customer expectations for content are high ... think of the rich environment you get in the current COD versus some blocky wireframeesque game of 15 years ago. The sort of CGI tech we have come to expect in films, we see in the increasingly hyper-realistic game space.

And guess what, that takes time and cost. There are successful companies that produce successful games time and time again, but they are big and have deep pocket (eg EA). It's very similar to a movie making studio releasing titles.

NARC have already indicated it's going to cost a helluva lot to develop this game - that's quite explicit in the RNS. That's no surprise given a cursory look at estimates of game dev costs in the sector :



An established competent game co understands the market and its cost/capability base, and thus the likelihood of making a return on a (say) $30m development budget.

I'll say again. The electronic arts sector is huge - bigger than the film industry. There are tens of thousands of people working in it. It's a nature and somewhat crowded area. Now take me thru why Beck - out of the industry it seems for over fifteen years and at the start of assembling a technical team - has got what it takes to compete in that space.

[davidkip] 01/1/2019 08:44

Phil

Happy new year. I'm impressed with your retro gaming skills (I guess before it was retro).

What I'm challenging here is the implication that $70k costs can stand any reasonable chance of producing a $300m product. This happens literally once in a blue moon (I think blue moons are more common), these days typically in the mobile app space (where dev costs are usually lower). If anyone knew in advance which game would capture people's imagination and go viral, they'd all be doing it. Almost by definition, those unicorns are unpredictable in advance. What you can say however is that $70k spent on dev costs is almost 99.99% guaranteed not to result in a $300m game.

[philobeddoe] 01/1/2019 07:38

Software companies that dominated the 1980's making games for the ZX Spectrum included - "ULTIMATE PLAY THE GAME" a small company made up of just a handful of developers that was based in Ashby-de-la-Zouch. Despite David's ramblings about lottery tickets, Ultimate play the game released hit after hit after hit. Including games such as "Atic Atac", "Sabre Wulf", "Jet Pac", "Lunar Jetman", "Cookie", "Alien 8", "Knightlore", "Underwurlde". All of which were instant hits and sold millions of copies. I know of no games ultimate made that were flops - all were hugely successful. No lottery tickets needed. Just hard work and talent alone and understanding the market. Other successful indie developers for the spectrum included Peter Harrop who made the hugely successful "Monty Mole" games. "Kokotoni Wilf", "Scuba Dive" and "Jasper" were all games made by indie developers that sold in their millions. Time and time again, success in the gaming industry came down to hard work, talent and giving the gamers what they wanted. Investing in game makers isn't gambling - you're simply backing those who have the knowledge, skills and talent to make games on the latest devices with the intention of selling to the masses. With hard work and talent, developers move the chances of success in their favour.

[philobeddoe] 01/1/2019 06:32

David - that's a ridiculous way of looking at it. If everyone thought like that game developers would not even bother trying! Of course some make it big and others don't. But the same goes for any industry - music, games, toys, food & drink - nothing is guaranteed but success comes about by TRYING. Not by saying oh stuff it success is never going to happen so might as well not even bother trying and just buy a lottery ticket instead! You're desperate to find fault with this and your desperation is bordering on the ridiculous imo. The bottom line is it costs relatively peanuts to make a hit game. And the gaming industry is huge and huge money can be made. And the gamers control the market - all it takes is a good game that's in demand and it can take off big time. Good luck with your deramps but anyone who understands the gaming industry knows for a fact you're talking rubbish. My own interest in the gaming industry goes back to the early 1980's when i bought my first computer, a 16K ZX Spectrum. I later upgraded to a 48K. I was impressed back then by programmers such as Matthew Smith - a young indie developer who taught himself programming and went on to make a number of hit games on the Spectrum including "Manic Miner" (which he made in just 8 weeks and it made him very wealthy indeed) and then he made the sequel to that, the even more successful "JetSet Willy". I enrolled at night school on a machine language course and began making games myself. Sadly i started too late and before I'd finished my first game, the Sega Mega drive came along and killed off the spectrum. But the gaming industry is something I've followed eversince. So i do have quite an extensive knowledge and generally do know what I'm talking about! The other thing to say is just like any artists, be it music or games, it isn't a lottery anyway, it isn't just down to luck - it's largely down to talent and hard work and putting together something great that people will want. Very big money can be made from the gaming industry for relatively little outlay so it makes for a very, very attractive and very interesting investment imho. 😊

[davidkip] 31/12/2018 22:39

Phil

The analogy best here is a Euromillions lottery ticket.

Cost €1 to buy, winner takes away €50m

Yes it may only take a few £100k to Dev a game. Sadly almost none go on to make Fortnite-esque returns.

Actually it might be a better risk/reward for WHET to buy €650k worth of Euromillions lottery tickets than invest in NARC. At least with Euromillions you know the risk/reward (as opposed to putting your fingers in the air and hoping, or else taking charitable souls like Dazza at face value that they have your financial returns as their #1 priority, honest guv)

[sweet karolina] 31/12/2018 22:02

Makes you wonder why an existing NARC shareholder wants to sell at 70% of the price WRN are buying in at.

[philobeddoe] 31/12/2018 20:48

Andy - it's worth reading up on "what makes a game app go viral" - there are plenty of links and information on it if you Google it. Many of the most successful games that went viral and made millions have a number of things in common. Games like candy crush, clash of clans and of course flappy bird and angry birds. You can then kind of guage for yourself if a particular game might have the necessary ingredients to go viral and hit the big time.

[andy] 31/12/2018 19:57

phil,


Yes I agree, it's all about gaining critical mass, favourable reviews on social media can help for sure, Flappy Bird is a perfect example, a very basic game and and such a simple idea.


I have no idea of what percentage of games make it, I don't really know anything about the sector from a business angle.