[MUD-Dev2] [NEWS] Sigil / Vanguard fallout ... the ex-employeeinterview

[Mike Sellers]

Mike Rozak wrote:
> Mike Sellers wrote:
> 
> > it levels out at 100K or so, which may be generous.  At $15/month,
> they'll
> > pull in about $18M/year in revenue.  With a solid gross margin (50% is
> 
> This one has been puzzling me. Obviously, Sigil management did the math
> and
> decided they couldn't keep Vanguard alive on the money that was coming in.
> 100 employees = $5M-$10M to keep around, and your numbers imply they'd be
> brining in $9M/year... if I were Vanguard management, I wouldn't have sold
> with those numbers.

You have to figure an average loaded cost of about $12K per employee per
month - maybe a little higher since they're in California, but certainly no
lower than about $10K.  So you're looking at $12M-$15M right there for 100
employees.  

And remember that Sigil was funded largely by Microsoft and published by
Sony -- both of those doubtless had their cut of revenues (not profits).

Finally, in a business like this, especially at the start, you have to spend
ahead of users - so Sigil had to buy servers, hire CS people, etc., in
anticipation of revenues from players they hadn't yet gotten.  This can
present not only a cash crunch but also a degree of overspending that it can
be difficult to recover from.  

> Repayment of bank loans might be a problem, but I doubt there were any.

Bank loans? Ahahahahaha.  Whew. Thanks.  

No, seriously, no bank is going to fund the development of an MMOG.  Sigil
has other investors (notably Microsoft, possibly others I don't know) who
may have pay-off deals (rather than straight equity deals), and Sony as
publisher surely carved a large slice off of any revenues that came in.  

> So, the math doesn't add up in my head.
> 
> Another scenario is that management decided that instant cash from a
> sellout
> was better than years doing it hard... but given the little I know about
> management, that doesn't make sense either. They seemed to be in it for
> the
> game/vision, not the quick buck. (But did VCs/Microsoft still have input?)

I can't imagine the Sigil management was in this for a quick buck; this
business is much too difficult for that, and as you say, they were
definitely there for the Vision.  

There's no telling about the internal dynamics (despite what we've all
read), but I'd have to say that cash flow and prospective revenues were at
least the acute cause if not the root cause.  


Mike Sellers