how can game company sell each other out?

[Matt Macdowel]

ok i have some questions how can other game company sell each other out like Nintendo and Rare and how can another company shut down another company like E.A with Pandomic studios and IW with activsion

[CrypticQuery]

I'm not 100% on this, but I think Pandemic, IW, and Rare were 2nd party developers, kinda like part of the actual company. 

[Matt Macdowel]

well im not sure about IW or pandemic but i know for fact that rare was a second party but how don't see where they could sell off the company and also M$ screwed bungie over as well.

[Steve]

It's called capitalism, business and competition, it happens everywhere, not only in the game industry.

[Sabre]

well im not sure about IW or pandemic but i know for fact that rare was a second party but how don't see where they could sell off the company and also M$ screwed bungie over as well.

Hold your horses there fella. It's a bit more complecated then that. Time to call on my old friend captain business studies. (I never saw the overlap between PC repain and running a bussiness, but it's handy stuff to know at times)

Bungie went to activision. MS didn't 'screw' bungie. MS simply didn't want to back there next series, or Activision made a better offer.

Without going into details, but you know how people sell shops? Someone pays the owner money to buy the shop, brand name, secretsm staff ect. With games it's exactly the same, only games companies dont sell chocolate or bags of suger, they sell games.

Why do they get bought? Compatition. This runs close to polatics, but it could be because you want a slice of company X, you want their brand (rare), you want rights to the successful games they made (call of duty) and so on.

This also works on a personal level. John Carmack, famous highly skilled programers. People would pay a fortune to have his skills. So skilled names get hunted.

[Guest DRL]

I am going a bit on the edge of locking

this thread too, but let me explain:

When a company is founded, the

founder controlls ALL of the 'shares',

or 100% of the them, if you prefer.

The founders become the 'first owners'.

What does this means? It means

that when their company makes profit,

100% goes to the owner. If it loses money,

then the owner loses money.

But what happens when you want to fund another

project or are runing out of funds?

A relatively good way to obtain money

is selling some of your 'shares'.

Shares are like saying 'part of the

ownership' - this can range from less than 1% up to 100%.

This gives you some additional money, because

you are selling 'part of your ownership' of the

company to other person, or sometimes other company.

These who buy part of your shares are called 'investors'.

The problem with this aroses when you sell to much

shares. To be the 'boss', you need at least more than

50% of the share, if you have less, you are no longer the

'one in charge'. Sure, as long as you have shares, you do

get some profit (and loses, if the company is lossing money),

but you no longer control the company's actions.

Maybe you can be left CEO, but if your investors wish so

they CAN replace you.

When a buy-out happens, this means that there is a new boss

around.

*Example*:

FATZ owner decides to sell some of it's shares.

10% Are bought by a private investor.

30% Are bought by Catsoft.

So, FATZ is still under control of it's founder

because he still controls 60% of the shares,

while the investor and MS only have 40% if

summed up.

A buy-out:

Let's say the FATZ owner wants to sell it.

Now he sells his remaining shares.

If private investors buy most of them,

then FATZ will still be 'independant' - because

private investors (who become the new owners) control it.

If another company controls most of the shares,

then FATZ becomes a subsidiary, which means,

a company owned by another company.

*Examples*:

---This is a still-private owned:

Private Investors: 65%

Catsoft: 35%

The ones saying who say what is done and

what not are the private investors.

But in essence, the company is self-controlled,

which means that it has the freedom to do

what it wants.

---This is a subsidiary:

Private Investors: 20%

Catsoft: 80%.

This means that Catsoft - another company -

has the ownership of FATZ. Thus, Catsoft

decides what to do with FATZ. But ultimately,

if FATZ gets profit, it goes to Catsoft, and it

turn the profit goes to Catsoft owners...

...

Well, that is quite a short, incomplete, and

maybe quite innaccurate explanation.

I am sorry I can not explain it better...

["User"]

You're forgetting about the company's initial public offering (IPO)   in the case of really big companies.  But if you'll referring exclusively in your example to only private companies than just ignore my talk about IPO's.  Just want to clarify a few things, you did a pretty decent job at explaining so excuse me if I'm too technical   Also I don't see how your initial post could put this topic at risk of being locked, it isn't violating any rules as far as I can tell

I am going a bit on the edge of locking

this thread too, but let me explain:

When a company is founded, the

founder controlls ALL of the 'shares',

or 100% of the them, if you prefer.

The founders become the 'first owners'.

Technically this is correct.  However most people will recognize "shares" as something that is openly traded on a public stock exchange, hence for a private company there are no "shares" as we know them in the traditional (stock market sense). The company at this stage right now is private, it has not become public and possess the ability to offer "common stock" and other types of shares to the general public to raise a great deal of money (IPO). 

What does this means? It means

that when their company makes profit,

100% goes to the owner. If it loses money,

then the owner loses money.

From a private corporation/organization standpoint yes, this is correct - unless the owner has given other individuals "shares" of his company.

But what happens when you want to fund another

project or are runing out of funds?

A relatively good way to obtain money

is selling some of your 'shares'.

Which, as mentioned is most commonly done when the company goes with their IPO.  The IPO is not always successful and is a considerable risk to the company as well.  Reputation plays an important here.

Shares are like saying 'part of the

ownership' - this can range from less than 1% up to 100%.

This gives you some additional money, because

you are selling 'part of your ownership' of the

company to other person, or sometimes other company.

Anything over 50% would be pretty much giving away your company to someone, unless that 50% were divided up over two or more people/entities. Also how would you know though how much your company is worth though when you decide to do something like this?

These who buy part of your shares are called 'investors'.

The more proper term is "shareholder" for that particular company   Investor is much more broad term.

The problem with this aroses when you sell to much

shares.

It's not as much about "selling too much" as it is trying to find buyers who will buy them.  Also, if you could sell too many shares the valid of each share would decrease because the overall value of the company, for the time being, stays constant in the case of a private enterprise.  For an IPO though obviously it's different as you are making your company publicly trade able and you're getting an investment of large sums of money from outside sources

To be the 'boss', you need at least more than

50% of the share, if you have less, you are no longer the

'one in charge'. Sure, as long as you have shares, you do

get some profit (and loses, if the company is lossing money),

but you no longer control the company's actions.

Maybe you can be left CEO, but if your investors wish so

they CAN replace you.

When a buy-out happens, this means that there is a new boss

around.

From a basic point of view this is correct.

*Example*:

FATZ owner decides to sell some of it's shares.

10% Are bought by a private investor.

30% Are bought by Catsoft.

So, FATZ is still under control of it's founder

because he still controls 60% of the shares,

while the investor and MS only have 40% if

summed up.

A buy-out:

Let's say the FATZ owner wants to sell it.

Now he sells his remaining shares.

If private investors buy most of them,

then FATZ will still be 'independant' - because

private investors (who become the new owners) control it.

If another company controls most of the shares,

then FATZ becomes a subsidiary, which means,

a company owned by another company.

*Examples*:

---This is a still-private owned:

Private Investors: 65%

Catsoft: 35%

The ones saying who say what is done and

what not are the private investors.

But in essence, the company is self-controlled,

which means that it has the freedom to do

what it wants.

---This is a subsidiary:

Private Investors: 20%

Catsoft: 80%.

This means that Catsoft - another company -

has the ownership of FATZ. Thus, Catsoft

decides what to do with FATZ. But ultimately,

if FATZ gets profit, it goes to Catsoft, and it

turn the profit goes to Catsoft owners...

...

Well, that is quite a short, incomplete, and

maybe quite innaccurate explanation.

I am sorry I can not explain it better...

It also depends on the way the board of directors is set up and how voting works when it comes to big decisions.

Anyways, why am I complicating things at 3:30 am on a Sunday morning :lol:

[Guest DRL]

You're forgetting about the company's initial public offering (IPO)   in the case of really big companies.  But if you'll referring exclusively in your example to only private companies than just ignore my talk about IPO's.  Just want to clarify a few things, you did a pretty decent job at explaining so excuse me if I'm too technical   Also I don't see how your initial post could put this topic at risk of being locked, it isn't violating any rules as far as I can tell

Technically this is correct.  However most people will recognize "shares" as something that is openly traded on a public stock exchange, hence for a private company there are no "shares" as we know them in the traditional (stock market sense). The company at this stage right now is private, it has not become public and possess the ability to offer "common stock" and other types of shares to the general public to raise a great deal of money (IPO). 

From a private corporation/organization standpoint yes, this is correct - unless the owner has given other individuals "shares" of his company.

Which, as mentioned is most commonly done when the company goes with their IPO.  The IPO is not always successful and is a considerable risk to the company as well.  Reputation plays an important here.

Anything over 50% would be pretty much giving away your company to someone, unless that 50% were divided up over two or more people/entities. Also how would you know though how much your company is worth though when you decide to do something like this?

The more proper term is "shareholder" for that particular company   Investor is much more broad term.

It's not as much about "selling too much" as it is trying to find buyers who will buy them.  Also, if you could sell too many shares the valid of each share would decrease because the overall value of the company, for the time being, stays constant in the case of a private enterprise.  For an IPO though obviously it's different as you are making your company publicly trade able and you're getting an investment of large sums of money from outside sources

From a basic point of view this is correct.

It also depends on the way the board of directors is set up and how voting works when it comes to big decisions.

Anyways, why am I complicating things at 3:30 am on a Sunday morning

Quite cool.

I wanted to make a short explanation

of it, yet I am not too much into the

subject (while I do like it, I do not

have extensive knowledge) but I somehow

feel like Matt is going to get a bit...

confused with all of this.  :lol:

["User"]

Quite cool.

I wanted to make a short explanation

of it, yet I am not too much into the

subject (while I do like it, I do not

have extensive knowledge) but I somehow

feel like Matt is going to get a bit...

confused with all of this. 

Regardless, you made an excellent attempt at it nonetheless.  

I'm not a big expert either but I'm a "jack of all trades" when it comes to the basics of many things that are discussed, although I have an acute interest in the business world :)

[Matt Macdowel]

what i ment is how can company sell another one off when they don't really own the company rare had its own owners well they left now. and EA shutdown pandemic but ea doesn't really own it. ahh man im gonna miss mercenaries and battlefront.

[DZComposer]

Investment stakes usually equal control over a business. If you put millions of dollars into someone's business, you'd probably want a say in how they run it, right?. In the case of a publicly traded company, the investors ARE the owners.

Let's say ABC Inc. owns 60% of DEF Corp. For all intents and purposes, ABC owns DEF because 60% is a massive amount of control. ABC is starting to feel that their investment in DEF is no longer worthwhile, so they start looking for a buyer. XYZ, LLC.  comes in and offers ABC $45,000,000 for DEF. ABC's board approves the offer, and ABC sells their interest in DEF to XYZ. XYZ now has the 60% stake in DEF, and therefore control DEF. ABC no longer has a stake in DEF, as they sold all their shares and completely divested themselves.

Rare was an interesting case. Nintendo owned 49%. That's a huge interest, but the original founders still owned 51%. While the founders technically controlled the company, you can't ignore a 49% stake, even if it's the minority stake. It's just too big. In the mid 2000s, Rare was going through some trouble, and in 2004, Microsoft made an offer to Rare's founders for their stake. They took the offer, so at this point Nintendo owned 49%, and Microsoft owned 51%. Of course, MS was all like " Problem?" to Nintendo at this point. Rare's troubles made them not worth the fight to Nintendo, so Nintendo offered MS their stake. Now that MS has 100% of the stake, they can do whatever they want.

Companies own other companies. That is the way of the modern business world. Motives for it can range from increasing long-term investments (good investments make your company look stronger), to a desire to expand product lines, to a desire to obtain intellectual property, or to eliminate competition.

As far as one company owning another, read this wiki page:

http://en.wikipedia.org/wiki/Takeover

More info on this one:

http://en.wikipedia.org/wiki/Mergers_and_acquisitions

As far as killing a company, if you own a company, it is within your rights as the owner to dissolve it. Even if you are another company.

[Matt Macdowel]

Investment stakes usually equal control over a business. If you put millions of dollars into someone's business, you'd probably want a say in how they run it, right?. In the case of a publicly traded company, the investors ARE the owners.

Companies own other companies. That is the way of the modern business world. Motives for it can range from increasing long-term investments (good investments make your company look stronger), to a desire to expand product lines, to a desire to obtain intellectual property, or to eliminate competition.

As far as one company owning another, read this wiki page:

http://en.wikipedia.org/wiki/Takeover

More info on this one:

http://en.wikipedia.org/wiki/Mergers_and_acquisitions

As far as killing a company, if you own a company, it is within your rights as the owner to dissolve it. Even if you are another company.

thanks DZcomposer!

[DZComposer]

I edited my post with some examples.

[Guest DRL]

Investment stakes usually equal control over a business. If you put millions of dollars into someone's business, you'd probably want a say in how they run it, right?. In the case of a publicly traded company, the investors ARE the owners.

Let's say ABC Inc. owns 60% of DEF Corp. For all intents and purposes, ABC owns DEF because 60% is a massive amount of control. ABC is starting to feel that their investment in DEF is no longer worthwhile, so they start looking for a buyer. XYZ, LLC.  comes in and offers ABC $45,000,000 for DEF. ABC's board approves the offer, and ABC sells their interest in DEF to XYZ. XYZ now has the 60% stake in DEF, and therefore control DEF. ABC no longer has a stake in DEF, as they sold all their shares and completely divested themselves.

Rare was an interesting case. Nintendo owned 49%. That's a huge interest, but the original founders still owned 51%. While the founders technically controlled the company, you can't ignore a 49% stake, even if it's the minority stake. It's just too big. In the mid 2000s, Rare was going through some trouble, and in 2004, Microsoft made an offer to Rare's founders for their stake. They took the offer, so at this point Nintendo owned 49%, and Microsoft owned 51%. Of course, MS was all like " Problem?" to Nintendo at this point. Rare's troubles made them not worth the fight to Nintendo, so Nintendo offered MS their stake. Now that MS has 100% of the stake, they can do whatever they want.

Companies own other companies. That is the way of the modern business world. Motives for it can range from increasing long-term investments (good investments make your company look stronger), to a desire to expand product lines, to a desire to obtain intellectual property, or to eliminate competition.

As far as one company owning another, read this wiki page:

http://en.wikipedia.org/wiki/Takeover

More info on this one:

http://en.wikipedia.org/wiki/Mergers_and_acquisitions

As far as killing a company, if you own a company, it is within your rights as the owner to dissolve it. Even if you are another company.

That was simply AWEcool!,

Bravo!  :cool:

[Kursed]

so wait activision went under?

[Guest Mr. Mario]

Sooooooooooooooooo...

Is there perhaps a way that Nintendo could buy Rare from Microsoft or is it too late?

Maybe Nintendo could buy SEGA...

[Sableye]

Sooooooooooooooooo...

Is there perhaps a way that Nintendo could buy Rare from Microsoft or is it too late?

Maybe Nintendo could buy SEGA...

Not really, for the fact that SEGA is an pretty big company by itself, Only a bit  smaller than Nintendo, for the fact, they don't make consoles no more.

[Matt Macdowel]

nintendo and sega were rivls and Nintendo probaly won't be able to buy rare back but they mght be able to buy out that overrated game halo

[DZComposer]

Rare would only go back to Nintendo if MS sold them, and Nintendo wanted them back enough to be the high bidder. Not likely. Rare is a shell of it's former self. Everyone who made Rare what it was has left the company, so there is no reason for Nintendo to buy Rare back when they have stronger second parties like Retro Studios.

Sega is currently owned by Sega Sammy Holdings, a large, publicly traded, conglomerate of entertainment, gaming (as in casinos), electronics, and intellectual property companies. The Sega video game brand is a subsidiary of Sega Golf Entertainment, which is Sega Sammy's largest asset.

Nintendo could conceivably buy Sega Sammy, but I don't know how well that would work. Taking a look at Sega Sammy's financial statements, I noticed a Net Income loss of ¥28,800,000,000 in FY 2009, and over double that in FY 2008. FY 2010 has not been posted yet. Ouch... Not sure I'd want to invest there, that company is carrying some hefty liability baggage. If Nintendo bought them (and they could if they wanted, Sega Sammy is publicly traded), they would have to shoulder that liability. A big mistake in the merger game is to buy out someone who has more debt than you can handle.

By comparison, Nintendo's Net Income was a gain of ¥229,000,000,000. Nintendo made 200 billion Yen more in FY 2010 than Sega Sammy lost in FY 2009. Nintendo has some really solid financials, and have for over 20 years. That is why I laugh when people say Nintendo is doomed. The people running the company are top-notch businessmen. We may not always agree with the markets they target, but they do know how to run a profitable business. By comparison, the PS3 and Xbox divisions of Sony and Microsoft need to be subsidized by other portions of those companies. If they were on their own, they'd be in the red.