One of my friend has a list of artists willing to do art for game in exchange of a royalty fee. That kept me thinking since a part of the game's funding is for artist and it can sometimes get quite expensive. The only mandatory expenses left I could see which are mandatory to get before selling anything are the print/production fee and probably the distribution fees. Else everything else could be royalty based: Designer, Artist, Manager, etc.
Considering that kick starter is illegal in Canada, I was thinking of a method that I am not sure if it is entirely legal. The idea would be to sell shares of the game to cover the production + distributor cost. If a game cost 5000$ to produce/distribute 1000 copies for a year, then maybe 10 shares of 500$ or 20 shares of 250$ could be sold. This will form the initial capital. Shares can be bought by anybody, including people working on the project like the designer, artist, etc.
Each time a game is sold, the royalties are paid the to designer, artist , manager, some money is aside to reconstruct the initial capital if all the games get sold and some royalties will be paid to the share holder. For example, maybe a 500$ pays 0.25c per game sold for a total of 250$ if all games sell through.
If the games works well, once all the copies are sold, the re-assembled capital can be re-invested again to make another print run. Else, if the investors want to stop, they take back their capital. So for example, if 1000 copies were sold and people stop afterward, then the investor get back their 500$ share and their interest of 250$ (25 cents x 1000 games)
Now there are some issues that I am missing.
- I am not sure if that kind of funding is legal. Because it's not a company shared by people, but rather each project is funded separately.
- Their might be taxes or fees that the company should pay forcing to set money aside. I am not sure if it could be possible to use a non-profit company and all royalties paid to the various partner would be instead taxed on the people's income. Because the "company" is just there to bind people together and publish under the same name, it's not making any profit for herself.
- If the game does not sell, you give what's left of the capital back to everybody, but what do you do with the games. You need to store them somewhere. You could share copies of the game between the share holders, force them to pay the royalties to the authors, and allow them to sell their copies at any price they want to get their money back. I am not really sure.
Does that business plan looks coherent and possible or I am missing a lot of issues or completely day dreaming?
By selling shares, I mean to people who know the designers and played the game. I was not expecting to sell real shares on a stock market. It's just that it would have looked like a stock market.
The idea is simply sharing the initial funding to get some money in return. There is no value of shares, or the ability to buy/sell shares.