Fuzzy Math scares me

spankybus

First of, I am really looking forward to SC. BUT, i am concerned about how much of the projected vision they can achieve on their current budget. I did some napkin math and came up with the following:

Current budget 113 million
Number of employees ~300
Averages salary of their employees ~ 50,000/yr USD (totally pulling this number out of my ass, prolly low, but being fair)

50,000 x 300 = 15, 000, 000 /year

15 mil / 12 = 1.250 mil per month

Now, someone somewhere in the past said that CR said they were burning through about 3 mil a month, but that weas a year or so ago when they had illfonic on the project and lots of sub-contractors, which cost more.

Also, this is only labor. No idea what their expenses are for overhead on 4 offices, one big on in expensive-as-hell L.A. business insurance, benefits, etc. 

Lets call it 2 mil a month for operations....again, just pulling air out of my ass, someone who has more experience in this might have better numbers to use as a base-line for predictions.

But:

113 mil / 2 mil = 56.5 months of operation, or 4.7 years.

Remember, they did not have 300 employees the whole time...in fact, for the better back of their development cycle, i don't think it's been anywhere close to that number?

Point is, my crappy napkin math says they could operate at their current level for 4.7 years if they started right now.  since they started awhile ago and have slowly scaled up their employee count, they can probably work longer. Add to that that they are still raising money...maybe they can go 6 years?? Again, pure speculation.  But as they started raising funds in 2013 (kickstrarter date, i think?), they SHOULD be good for another year or two, IF THEY ARE FISCALLY RESPONSIBLE. I emphesize that as I have some doubt of this, given the really nice office decor I have seen and some of the really elaborate presentations at citizencon, etc.


I am a professional artist. we get paid lower than engineers, etc, so depending on their distribution of engineers to artists, etc, the average salary estimates could go up.

But please, share your thoughts....and FFS be civil, please. 

SEANMCAD

my thoughts is that this is nothing new. I think pretty much everyone is unanimously in agreement for a considerable about of time now both critics and fans agree that the scope of the work compared to actual current output is of concern.

Fans are just excited and waiting and hopeful with fingers crossed
Critics are just being ass hats

Erillion

Star Citizen got on  average 2.815.828 $ per month over the last year (April 2015 - March 2016)

With something around 300 employees at present (number includes contract workers) and an old rule of thumb (*)  from the gaming industry of 10.000 $ per employee per month for ALL COST the typical fan estimated (!) burn rate is around 3 M$ per month.

So overall the money coming in according to the official counter approximately matches the fan estimated (!) current burn rate.


Have fun

(*) you will find the link for that in several threads here on mmorpg  ... or via Google.
That cost includes salaries, rent, licenses ... everything.


PS:
I have posted such estimates as you did two or three times here in this sub-forum.

spankybus

Seems like they are financially viable.

Of course, this does not take into consideration aberrant costs, such as conventions, which probably cost some money, and one-time expenses such as office improvements (they are making Frankfurt larger, according to BC) and decor, etc. hopefully these costs are reasonable...and can easily argue that the conventions generate new citizens, so it's a marketing expense that does generate some revenue.

Big unknown for me is, how much are the big people getting paid. In a time where CEO's make more money in bonuses then their employees earn annually...combined, this is a legit question. We will never know, I am sure, but what is CR pay himself. Or his wife? Or his Brother? Does the 3 mil a month take their salary into account? Who knows.

But assuming that it does, then what is the concern here? They seem financially stable and good to go for continuing development. I am asking the folks who are calling for this company to go broke. What are we missing?

Vrika

Chris Roberts when he was asked if the money is enough:

“It’s never enough!” he laughs. “We scale development according to how much money is coming in. The level of support dictates our level of ambition. This is a huge open-world game where you can go from planet to planet, so we could spend hundreds of millions of dollars on it quite easily.”

Source: http://www.pcgamer.com/the-future-of-star-citizen/

I don't think there's any need to be concerned on whether Star Citizen can realize their vision with their current funding. It would be illogical to be concerned when it's so obvious that they can not.

Erillion

spankybus said:

What are we missing?

The cost for mocap and big name actors has been cited in the past.


Have fun

SEANMCAD

spankybus said:

Seems like they are financially viable.

Of course, this does not take into consideration aberrant costs, such as conventions, which probably cost some money, and one-time expenses such as office improvements (they are making Frankfurt larger, according to BC) and decor, etc. hopefully these costs are reasonable...and can easily argue that the conventions generate new citizens, so it's a marketing expense that does generate some revenue.

Big unknown for me is, how much are the big people getting paid. In a time where CEO's make more money in bonuses then their employees earn annually...combined, this is a legit question. We will never know, I am sure, but what is CR pay himself. Or his wife? Or his Brother? Does the 3 mil a month take their salary into account? Who knows.

But assuming that it does, then what is the concern here? They seem financially stable and good to go for continuing development. I am asking the folks who are calling for this company to go broke. What are we missing?

what do you want and what do you think you can do to get it?

that is the question I have here

maybebaked

This is why I don't kick the starts.

SEANMCAD

maybebaked said:

This is why I don't kick the starts.

same here
I will do mid to late Early Access games if I find good lets play though but that is because I am getting something directly.

CrazKanuk

Oooooo, I love fuzzy math!!!! 

I've contended for some time that the average annual burn with the employees at that time was somewhere around the $25 million mark. That was when they had around 250 employees though. That same stat was also speculated by the dark lord himself. It's entirely possible he just copied my numbers, though  That $25 million includes labor burden (so any cost of doing business stuff).

I forget how the employee numbers ramped up, but I did do something on that before and I believe it put the project into 2018ish based on projected project funding year-over-year. The other unknown is whether or not subscription revenue is included in the numbers stated on their website. If not, then it could be an additional X amount of monthly revenues. I'm not sure how many people are subbed. 

In all, I'd say you're not too far off, really. 

SEANMCAD

but what about that other source of income?

Rusque

50k / yr is pretty low and if you're counting it as labor cost, that means you're paying your employees $25k-$35k on average depending on other labor associated expenses.

If you're estimating $50k/yr as gross wages, then you're looking at $70k-$80k per employee on average. I'd peg them at $30millioin / yr for overall expenses with is pretty close in line with $3million per month.

Sometime 2017 is when money goes dry in my estimates. Assuming there haven't been any major unseen costs (not doors or murals lol).

CrazKanuk

Rusque said:

50k / yr is pretty low and if you're counting it as labor cost, that means you're paying your employees $25k-$35k on average depending on other labor associated expenses.

If you're estimating $50k/yr as gross wages, then you're looking at $70k-$80k per employee on average. I'd peg them at $30millioin / yr for overall expenses with is pretty close in line with $3million per month.

Sometime 2017 is when money goes dry in my estimates. Assuming there haven't been any major unseen costs (not doors or murals lol).

I can't disagree with that, especially if the monthly revenues taper off. Question is whether they can figure out another income stream. They actually sent me an option to upgrade in March and I nearly pulled the trigger, but I couldn't do it. For me it's all about value, if they really gave me a reason I couldn't say no to, I'd probably upgrade and give them more money. 

Once the game is launched the possibilities are endless. Buy planets, space stations, whatever they like! People can resell land on their planets for real money, so there is a real-world economy factor. Could be a sickening amount of money still left on the table. 

GrumpyHobbit

No one has access to their books so it would be really hard to judge. We have no idea if they have any other income or exactly what their monthly outgoing costs are. 

I see no indications of financial difficulties yet but for sure there is a finite timescale involved. What that timescale is...no one outside the company will know that is for sure. 

rpmcmurphy

CrazKanuk said:
Once the game is launched the possibilities are endless. Buy planets, space stations, whatever they like! People can resell land on their planets for real money, so there is a real-world economy factor. Could be a sickening amount of money still left on the table. 

How about no!

Space simulator not real estate simulator!

filmoret

They have to be paying really low wages considering they are trying to hire 20 engineers and 19 artists and have been unable to fill the jobs.  But you did not really consider cost of facilities, insurance, taxes....  Sandy's new vehicle the money guy's new outfit ect ect...  Their prototype hardware and scaled concept art decorations that look better then any ship model I have seen.  I thought you could see the tax returns for a business but then again this isn't a corporation so I guess they can keep it all private.

CrazKanuk

filmoret said:

But you did not really consider cost of facilities, insurance, taxes....  Sandy's new vehicle the money guy's new outfit ect ect...  Their prototype hardware and scaled concept art decorations that look better then any ship model I have seen.  I thought you could see the tax returns for a business but then again this isn't a corporation so I guess they can keep it all private.

That's all calculated as labor burden. 

SEANMCAD

Rusque said:

50k / yr is pretty low and if you're counting it as labor cost, that means you're paying your employees $25k-$35k on average depending on other labor associated expenses.

If you're estimating $50k/yr as gross wages, then you're looking at $70k-$80k per employee on average. I'd peg them at $30millioin / yr for overall expenses with is pretty close in line with $3million per month.

Sometime 2017 is when money goes dry in my estimates. Assuming there haven't been any major unseen costs (not doors or murals lol).

doors!

how dare they!

Turrican187

CrazKanuk said:
[...]

Once the game is launched the possibilities are endless. Buy planets, space stations, whatever they like! People can resell land on their planets for real money, so there is a real-world economy factor. Could be a sickening amount of money still left on the table. 

Don't you dare give them ideas like this :P
Oh but *writes stuff down* thankee

The problem with sell everything you got is that it would be a monster of VAT and country laws - Blizzard had to learn it the hard way with D3 auction house.

DKLond

Yes, they keep hiring more people because they're in a lot of trouble financially. In half the community videos - they're talking about a new person on the team.

Not only is Chris Roberts the worst developer ever - he's also a complete and total retard who can't even figure out that hiring more people means you have to pay more money.

That's a very realistic scenario.

Certainly a lot more realistic than the scenario where we have absolutely no clue how they're handling their finances internally or what kind of contracts they're offering their employees.

Also a lot more reasonable than simply listening to what they're saying about these imaginary issues.

spankybus

filmoret said:

They have to be paying really low wages considering they are trying to hire 20 engineers and 19 artists and have been unable to fill the jobs.  But you did not really consider cost of facilities, insurance, taxes....  Sandy's new vehicle the money guy's new outfit ect ect...  Their prototype hardware and scaled concept art decorations that look better then any ship model I have seen.  I thought you could see the tax returns for a business but then again this isn't a corporation so I guess they can keep it all private.

They might be.  A lot of places are trying to pay less and less for artists. I cannot speak for other disciplines as I am not those. But with so many art schools making 'Artists' the market is getting flooded. Supply and demand...too much supply, not enough demand.

However, the reality is that a vast chunk of the people who graduate these schools do not have a demo reel good enough to get them employed. Worse, those that do usually have student loans breathing down their neck, so when I company offers them a job with crap pay, they have to take it.

I imagine CIG is especially conscience of its cash reserves as being a perishable item. As such, they are probably on the lower-end of the pay offerings for artists. Might explain why i see so many newb issues in the ship models, like designed-in features that encourage z-fighting. Especially being in a 64-bit 3D space, you really need to avoid placing models together in such as way that they have parallel faces close to each other.

But, that is all I can speak to, which is why I only estimates an annual salary of 50k.

Lets not kid ourselves though, everyone seems to be making less and less these days.

psiic

Honestly they need to start selling advertising. Pepsi wants to get into space in a big way.

Colt47

They aren't really concerned about releasing the scope they are pitching as much as hoping they can realize the release of the original vision of squadron 42.  The PU is a completely new area that they are putting resources into and most of the work there is sort of born off the work on Squadron 42 or is being done for both SC and S42.  So really if S42 does well then we will see a more fleshed out PU.

CrazKanuk

spankybus said:

filmoret said:

They have to be paying really low wages considering they are trying to hire 20 engineers and 19 artists and have been unable to fill the jobs.  But you did not really consider cost of facilities, insurance, taxes....  Sandy's new vehicle the money guy's new outfit ect ect...  Their prototype hardware and scaled concept art decorations that look better then any ship model I have seen.  I thought you could see the tax returns for a business but then again this isn't a corporation so I guess they can keep it all private.

They might be.  A lot of places are trying to pay less and less for artists. I cannot speak for other disciplines as I am not those. But with so many art schools making 'Artists' the market is getting flooded. Supply and demand...too much supply, not enough demand.

However, the reality is that a vast chunk of the people who graduate these schools do not have a demo reel good enough to get them employed. Worse, those that do usually have student loans breathing down their neck, so when I company offers them a job with crap pay, they have to take it.

I imagine CIG is especially conscience of its cash reserves as being a perishable item. As such, they are probably on the lower-end of the pay offerings for artists. Might explain why i see so many newb issues in the ship models, like designed-in features that encourage z-fighting. Especially being in a 64-bit 3D space, you really need to avoid placing models together in such as way that they have parallel faces close to each other.

But, that is all I can speak to, which is why I only estimates an annual salary of 50k.

Lets not kid ourselves though, everyone seems to be making less and less these days.

I can speak from the software side and say that it's definitely a tough market right now. We've got people walking in with 2 and 3 offers before even taking our interview. That's Canada at least. Could also be a reason they're having problems finding people. 

Arkade99

spankybus said:

First of, I am really looking forward to SC. BUT, i am concerned about how much of the projected vision they can achieve on their current budget. I did some napkin math and came up with the following:

Current budget 113 million
Number of employees ~300
Averages salary of their employees ~ 50,000/yr USD (totally pulling this number out of my ass, prolly low, but being fair)

I'm sure glad I don't work for you. Your average is half of what it should be:

http://crowfall.com/en/news/the-crowfall-budget-question/

"Typically even a small MMO is going to take over $10 million to build(and probably closer to $20 million). If the fully-loaded cost of an employee (once you add in the cost of office space, insurance, taxes, etc.) averages about $100k/year,which means a $10m project will buy you 100 man-years of work!"

Drakmar

You are also missing the money that will come in from when SQ42 launches later this year, early 2017.

Even if 500k  (I believe that figure is pretty low) purchase SQ42, that is another 22.5 million,  I believe it will be more like  1 million copies.