Foundation 9 Gets $150 Million Investment

Posted by jgaudiosi :: Emerging Business Models

Death_2 Foundation 9, the largest independent game developer in North America, has secured $150 million through investment firm Francisco Partners. The collection of game developers, which includes Backbone Entertainment, The Collective, PipeWorks, Circle of Confusion, and ImaginEngine, now can focus its attention on new games like "Death Jr. 2" and "Dirty Harry" without worrying about publishers and funding. According to CEO Jon Goldman, the studio has access to more than $150 million, if necessary, which puts it in a unique position in the videogame landscape. Last year, venture capital firm Equity Partners created a partnership with Pandemic Studios and BioWare to the tune of $300 million in capital.

These two investment deals make perfect sense. I'd be surprised if more equity managers didn't replicate this model with other proven developers. The games business is a tough business for the majority of game makers. Publishers often hold game developers hostage and even proven game makers can find themselves out of business these days. The merging of independent developers gives these companies strength and size. And the capital ensured creativity will be at the forefront of these developers, rather than funding and financing.

This business model should become the future of game development. The current system is clearly broken for all but the elite publishers who can create original game engines and sell their technology to others. With more publishers buying up game development studios, there remains a need for independent game makers. Partnering with investors is a great way to stay successful in the interactive entertainment business.

The key to independent game development with investment capital is that these game makers can retain the rights to their creations--something that publishers were always looking to take away under the traditional model. Moving forward, as games continue to grow, game makers will be able to make money through merchandising of its original IP. Foundation 9 already has a movie in the works based on "Death Jr." Toys, comic books and clothes are also smart ways to expand a brand.

With game publishers relying so much on franchises these days, it's the independent game makers that will be able to introduce new games to the market place. Original IP is key for the continued success of the game industry. With investors on board, game makers will no longer have to plead for a big game publisher to fund their original idea, only to steal the rights away from them. This is a good move for the growth of the games business.


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