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Firefall: The9 to Raise $24 Million to Invest in Red 5

SBFordSBFord Associate Editor - News ManagerThe Land of AZPosts: 16,649MMORPG.COM Staff Uncommon

Red 5 Studios' parent company, The9, has launched an initiative to issue $24 million in common stock to Shanghai Oriental Pearl Culture Development Ltd. The issuance of the stock will make the company a 20% shareholder in Red 5.

The value of the shares is based on a pre-money valuation of Red 5's forthcoming online shooter, Firefall. According to a statement released today, Firefall is valued at $100 million.

The9 acquired a majority stake in Red 5 Studios - founded in 2005 by former Blizzard staff - in March 2010. The company announced Firefall in September 2010, but the game only entered open beta in July this year.

Red 5 recently laid off 10 per cent of its workforce. The redundancies were attributed to an internal reorganisation as Firefall moved towards its full release.

Source: GamesIndustry.biz

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Associate Editor: MMORPG.com
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Comments

  • TheLizardbonesTheLizardbones Arkham, VAPosts: 10,910Member

    Firefall is valued at $100 Million? Dollars? Wow.

    I'm not saying it's not, but wow, that's a lot of money.

    I can not remember winning or losing a single debate on the internet.

  • LobotomistLobotomist ZagrebPosts: 5,060Member Uncommon
    Dangerous move. I doubt they could ever repay that investment.

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  • DamonVileDamonVile Vancouver, BCPosts: 4,818Member
    Originally posted by lizardbones

    Firefall is valued at $100 Million? Dollars? Wow.

    I'm not saying it's not, but wow, that's a lot of money.

    That's how much they've spent on development in the last 3 years.

    I like firefall and hope it keeps progressing towards a launch but.... pouring a $1000 bottle of wine into your toilet doesn't make your toilet worth $1000.

     

  • TalonsinTalonsin Posts: 1,478Member Uncommon
    I like the game and Red5 but their monetization model just doesnt work.  Even if they fix PVP and get it back, the game just does not seem to hold people very long and the store just doesnt not have much worth buying.
  • TekaelonTekaelon Brookhaven, MSPosts: 532Member Uncommon
    Here's hoping their refocuss on PvE will result in a more complete game! Their base game experience is so fun but there needs to be more content and progression options.
  • drunkenvashdrunkenvash houston, TXPosts: 7Member

    100 million isn't all that much. They spent 300 million on GTA5 alone. 

    Anyways, I hope it goes well and I believe they are shooting for ESports. I hope they make it.

  • ScalplessScalpless SnowballvillePosts: 1,396Member Uncommon
    Originally posted by drunkenvash

    100 million isn't all that much. They spent 300 million on GTA5 alone.

    GTA5 is the most successful game of all time, so let's not compare it to FF. 100 million USD is huge for a video game. GW2's budget was usually estimated to be 50-80 million.

    Of course, a game's worth may be more than its budget if it's very successful, but FF isn't, so I don't know what's up with that price.

  • Swedish_ChefSwedish_Chef of heroes, MSPosts: 213Member
    This is very similar to what Flagship Studios did with Hanbitsoft, and we all know how that turned out...
  • HeretiqueHeretique Posts: 1,101Member Uncommon
    I don't see this ending well.

    Originally posted by salsa41
    are you have problem ?

  • avalon1000avalon1000 Kihei, HIPosts: 754Member
    Originally posted by Talonsin
    I like the game and Red5 but their monetization model just doesnt work.  Even if they fix PVP and get it back, the game just does not seem to hold people very long and the store just doesnt not have much worth buying.

    I keep waiting for more vehicle selections (like something with four wheels).  The only thing I spend beans on (and not a lot) is to speed up crafting. And you are right...I have seen a lot of people come and go. But it is a good solid core to build on and hopefully we will see that big update soon.

  • feena750feena750 Federal Way, WAPosts: 331Member Uncommon
    I agree.  Lack of content and anything useful in the red bean store is really what is hurting them.  I keep coming back because it was a lot of fun, but I leave after a few days since ther eis nothing new to do.
  • AtrayoAtrayo Sarasota, FLPosts: 57Member Uncommon

    Hopefully the valuation of the company is truly $100 US million. Besides IP properties or any other bonifide tangible assets.

    Nonetheless selling off a 20% stake in a company just as its entered open beta. Is a careful sign to notice that an earlier investor may have left the scene. If not the company has been spending more than it should have, which it needs stricter spending controls in place.

    Otherwise the MMO industry is rife with (developers) games launching prematurely due to having run out of working capitol. Talk about a baptism of Fire subjecting consumers to more so incomplete games.

    ----------------------
    The Older Gamers

  • SamsusSamsus San Marcos, TXPosts: 3Member

    I have followed FF since announcement and i don't see how they have so many fans. FF is a demo of a game at best. Its called Global Agenda. Future game devs can learn from Red 5 on how not to release a game. Red 5 did not work hard to live up to their obligations and it shows. I suggest that everyone stop playing so they cant bring anyone else down with them.

     

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  • DamonVileDamonVile Vancouver, BCPosts: 4,818Member
    Originally posted by Atrayo

    Hopefully the valuation of the company is truly $100 US million. Besides IP properties or any other bonifide tangible assets.

    Nonetheless selling off a 20% stake in a company just as its entered open beta. Is a careful sign to notice that an earlier investor may have left the scene. If not the company has been spending more than it should have, which it needs stricter spending controls in place.

    Otherwise the MMO industry is rife with (developers) games launching prematurely due to having run out of working capitol. Talk about a baptism of Fire subjecting consumers to more so incomplete games.

    The9 have always been the money behind red5. Whatever shares ect that are changing hands isn't some new person buying in. It probably has something to do with the9 being broke. This probably has more to do with numbers on paper than actual money changing hands.

    It could also mean FF is about to shut down and someone protecting other assets.

  • ThomasN7ThomasN7 87.18.7.148 1, NJPosts: 6,690Member
    Not sure why someone would invest into a game that isn't that good. Big mistake..
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  • zonovazonova franklin, TNPosts: 34Member
    Originally posted by ThomasN7
    Not sure why someone would invest into a game that isn't that good. Big mistake..

    I mean, look at CoD

  • GrakulenGrakulen Staff Writer St. Charles, MOPosts: 461MMORPG.COM Staff Uncommon
    Originally posted by Heretique
    I don't see this ending well.

    I don't either.

  • CnameCname KinabaluPosts: 125Member Uncommon
    Originally posted by ThomasN7
    Not sure why someone would invest into a game that isn't that good. Big mistake..

    Jun Zhu, owner of The9 got lucky once and made lots of money through an exclusive license to operate WoW in China from 2005 to 2009.

    Since then he has been paying exorbitant fees to developers in hope of  finding another successful product but with poor results.

    Other notable failures for The9 (in China):

    1. Soul of the Ultimate Nation (US $13 license fees )
    2. Huxley  (US$35 million)
    3. Hellgate: London (US $5 million license fees)
    4. Granado Espada 
    5. Atlantica Online
    I think The9 was sucker in by Red5 to invest heavily because of Mark Kern's past role in WoW,  since to them WoW was The9's  "Goose That Laid the Golden Eggs" MMORPG venture.

    "A game is fun if it is learnable but not trivial" -- Togelius & Schmidhuber

  • ZeGermanZeGerman Andover, MAPosts: 197Member Uncommon
    Originally posted by Cname
    Originally posted by ThomasN7
    Not sure why someone would invest into a game that isn't that good. Big mistake..

    Jun Zhu, owner of The9 got lucky once and made lots of money through an exclusive license to operate WoW in China from 2005 to 2009.

    Since then he has been paying exorbitant fees to developers in hope of  finding another successful product but with poor results.

    Other notable failures for The9 (in China):

    1. Soul of the Ultimate Nation (US $13 license fees )
    2. Huxley  (US$35 million)
    3. Hellgate: London (US $5 million license fees)
    4. Granado Espada 
    5. Atlantica Online
    I think The9 was sucker in by Red5 to invest heavily because of Mark Kern's past role in WoW,  since to them WoW was The9's  "Goose That Laid the Golden Eggs" MMORPG venture.

    The money made on Atlantica Online could pay for all the other ones you listed so your point is kinda invalid.   At one point there were just over 1 mil players in america alone and the average amount of money that a player had spent on the game was estimated at something like 80 bucks, possibly just game propaganda but given the addictive nature of that game i believe it.  It may not be 100% safe but i can only assume that this translated to china since it was even more successful in korea.

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