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The Almighty Buck Businesses Entertainment Games

Infinium Labs Owes $4 Million, Requires $68 Million to Stay Afloat 88

Posted by CowboyNeal
from the borrowed-time dept.
nz17 writes "Looks like Infinium Labs, 'maker' of the Phantom game console, can't manage its debt. According to GameSpot, the company's recently filed Securities and Exchange Commission papers show that Infinium currently owes $4 million as a capital deficiency, but requires an estimated additional $68 million to continue work until the end of 2006. However, Infinium remains chipper in the face of oppression, as it estimates its first year of sales will garner $35 million in revenue. Will the Phantom console launch on the projected date of November 18th, 2004, or will the system live up to its name?"
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Infinium Labs Owes $4 Million, Requires $68 Million to Stay Afloat

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  • Careful (Score:2, Informative)

    by I_Love_Pocky! (751171)
    or will the system live up to its name?

    These guys have sued people for slanderous statements in the past.
  • Heh, we all know (Score:1, Insightful)

    by shfted! (600189)
    Not that I want to destroy their chipper spirit or anything, but Infinium just needs to give up the ghost and die -- or phantom as the case may be.
  • $35mill? (Score:5, Insightful)

    by obeythefist (719316) on Thursday September 09, 2004 @04:09AM (#10198617) Journal
    Let's play with the numbers. $35,000,000 in one year. Let's say they're selling PC's that play games for about $500 each (reasonable price for a desktop gaming PC on the very low end). So, game sales and royalties aside, they'd need to sell 70,000 consoles to make up that revenue.

    That's not a totally unreaslitic figure - I guess there are at least 70,000 suckers in the world, although I imagine that there will be fewer sales and more revenue from subscriptions or whatever model the Phantom is supposed to use for gaming.

    The problem is that I can't see $35M revenue (not profit) paying Infiniums costs or paying any of that $68M debt. How exactly do you rack up $68M in debt developing a PC anyway? The personal computer is pretty straightforward as it is... most of the work has already been done.

    Needless to say, they also have a poor reputation from that legal fight with Kyle earlier on, that won't help them get sales because reputation counts for a lot in the gaming industry.
    • Re:$35mill? (Score:4, Interesting)

      by rsilvergun (571051) on Thursday September 09, 2004 @04:20AM (#10198650)
      How exactly do you rack up $68M in debt developing a PC anyway? The personal computer is pretty straightforward as it is... most of the work has already been done.
      Licensing fees. Games don't grow on trees after all, and Infinium probably had to cough up major dough for the right to market PC games. That, and I have no doubt the owners are drawing a hefty salary. Oh, and developing and mass producing a custom piece of hardware, even one based on off the shelf components, is pricey too. Microsoft pulled it off with cheap Mexican labor and bribing the local officials to ignore little things like safey and environmental regulations. I doubt Infinium has that kind of skill/money.
      • Re:$35mill? (Score:5, Insightful)

        by obeythefist (719316) on Thursday September 09, 2004 @04:27AM (#10198667) Journal
        True, Infinium would be screwed if they didn't have some decent publishers/titles available for Phantom when the time comes. So instead they had better hope that $68M got them some decent publishers or they're really stuffed. And some of the bigger game houses are already "owned" by MS, Sony, Nintendo. They won't be very obliging about helping more competition into their market. I wouldn't suggest people invest in Infinium right now.
      • Re:$35mill? (Score:4, Insightful)

        by rudy_wayne (414635) on Thursday September 09, 2004 @05:55AM (#10198891)
        and developing and mass producing a custom piece of hardware, even one based on off the shelf components, is pricey


        Huh??

        The only thing "custom" is the case. It takes some money to design and mass produce the case, but after that, it's just a matter of paying people to stuff standard off-the-self parts into it.
        • Re:$35mill? (Score:3, Funny)

          by British (51765)
          The only thing "custom" is the case.

          Any way we can buy a Phantom case shell? It would be fun to get a Mini-itx system in there, and then you can pretend you own a real Phantom console.
          • I'm sure you'll be able to buy the Phantom cases cheap once the company has its debts called in after the console's spectacular failure.
            • You'll probably be able to bid on actual prototypes as well (as soon as the company goes under which I have no doubt it will)....
      • Re:$35mill? (Score:4, Informative)

        by gl4ss (559668) on Thursday September 09, 2004 @06:53AM (#10199042) Homepage Journal
        they dont have 68m in debt, they would need 68 million to operate for those couple of years.

        (to buy those consoles before selling them for example, it takes a lot of mone up front)

      • Re:$35mill? (Score:4, Informative)

        by Ayaress (662020) on Thursday September 09, 2004 @12:18PM (#10201785) Journal
        The thing is, they don't have the rights to any games that they can verify yet. So far, they've claimed that Starcraft: Ghost, Fallout BOS, UT2k4, Doom 3, Diablo 2, and probably a dozen other games were to be in their launch lineup. The catch is, you send an email to id, Interplay (when it was still around), or Blizzard, and they say they don't have plans to release their games on the Phantom (usually with the "at this time" qualification attached).
    • Re:$35mill? (Score:5, Interesting)

      by clambake (37702) on Thursday September 09, 2004 @05:37AM (#10198818) Homepage
      The problem is that I can't see $35M revenue (not profit) paying Infiniums costs or paying any of that $68M debt. How exactly do you rack up $68M in debt developing a PC anyway? The personal computer is pretty straightforward as it is... most of the work has already been done.

      You weren't around in the dot com days, I take it. I worked at a company that blew $250M in six months just buying rights to pop star's websites. Not the rights to any of the SALES or AD REVENUE, mind you, just the right to host and the website... that's right, PAYING to eat the costs of high bandwith sites without any of the possible benifit.
      • I worked at a company that blew $250M in six months just buying rights to pop star's websites...

        Stop it...you're making me misty-eyed for the past. Oh, for those glory days...

    • Re:$35mill? (Score:3, Interesting)

      by ghostlibrary (450718)
      "selling PC's ... for about $500 each ... they'd need to sell 70,000 consoles to make up that revenue."

      It's worse than that-- likely they only get 40% of the cost, since they have to sell to distributors, who sell to retailers, who then have to sell at consumers. So the company makes maybe 40% of the cost.

      They say you should retail price things at 10x your cost to make money. So they need to make their PCs for $50 to do this... eeps. They have to make them at less than $200 to profit. If revenue-per-i
    • How exactly do you rack up $68M in debt developing a PC anyway?

      Before this article, I always thought they were a fraud in the 'ha-ha april fools' sense, but I guess if they pissed away $68 million with very little chance of recouping it, maybe they're more of an investor lawsuit SEC investigation etc. style fraud?
    • They don't even need that, since the console is subscription based. So you can get that $500, plus money every month, and I guarantee it'll be an excessive fee, since they're delivering "30000" games accross it, so they can just say, "Games are expensive. Imagine how much you'd have to pay to buy 30,000 games in the store. $75 a month is a bargain for you people!"

      Suddenly, those suckers are worth a lot less money, and you need a lot less of them. Worried you can't keep the suckers? Don't worry, make the ha
    • If you look at the website [infiniumlabs.com] there is a video (E3?). In it they describe it will be subscription based at $24.95 a month and you get hardware free for 24 month commitment ($300 in first year?). If you go month to month it's $200 for the hardware. Because this requires a broadband connection only, there is a limited market for this product.
      I can easily see racking up $68M just because of the massive amount of advertising and promotions required to break into a very tough market.
      • Yes, a market that even Microsoft, Sony, and Nintendo will be happy to join forces in just to stomp Infinium out.

        Then, Infinium will sue Microsoft, Nintendo, and Sony for anticompetitive practices.

        They may also claim they own proprietary code or patents, after the anticompetitive cases are thrown out. While the final stages are underway, the executives will relocate to a non-extradition country.
    • ...because reputation counts for a lot in the gaming industry.

      I respectfully disagree. Xbox seems to be doing fine. Of all the companies who face a reputation problem among gamer-techno-types, M$ has to be one of the worst. M$ gets openly slammed by /. on an almost daily basis, yet the Xbox is still going strong.

      I doubt the few niche articles on /. and hardocp are any part of the average mom-dad purchaser. If Infinum Labs can hit the market with a large enough mainstream advetising campaign, they cou

  • Phantom Launch (Score:5, Insightful)

    by Anonymous Coward on Thursday September 09, 2004 @04:10AM (#10198623)
    I'd be very, very surprised if the Phantom launched in November as anything approaching what we'd recognise as a games console. The idea of it having a proper games library at launch, or indeed at any point in the short-to-mid-term future is preposterous. As I understand it, the idea is that you'll be able to download and play PC games on it, paying both a monthly subscription and the cost of the actual PC game to do so. Leaving aside all the obvious problems that potential customers are going to have with this, I just don't see how the system can work.

    After spending several years in a pretty much static state, the minimum specs for PC games have finally resumed their upwards march. Farcry, Unreal Tournament 2004 and, in particular, Doom 3, have finally forced many people into upgrading PCs which hadn't needed it since soon after Quake 3 came out. From what I've seen, the Phantom's hardware is inferior to that needed to run any of the above games well on a current PC. Admittedly, the resolution will be a lot lower, as you'll presumably be playing on a TV, but even so, the Phantom's going to be obsolete with regards to mainstream PC games pretty much as soon as it's released.

    Then we have the issue of bugs and hardware compatibility. The X-Box is also built on PC hardware, and it's not really suffered from these. A console game having a major bug generally warrents a slashdot games story devoted to it; a PC game NOT having major bugs at release probably warrents the same. Will the Phantom be clever enough to be able to automatically patch any games the user has bought for it? Moreover, while the X-Box can count on its developers making games specifically for its hardware, the Phantom, which will apparently run full-blown PC games, has no such guarantee. Any PC gamer will at some point come across the situation where he gets a game that doesn't like a specific bit of his hardware, necessitating a specific patch, driver update or even hardware change. With the battle between ATI and Nvidia really getting into swing, it's perfectly possible that we'll see deliberate hardware incompatibilities starting to crop up. How is the Phantom going to react to this?

    If the Phantom ever does actually appear, the only role I can see for it is as a kind of extension of current "digiboxes" and the like, running simple games that will be covered in the montly subscription price. How many people will be willing to pay for this? I know I wouldn't...
  • preorder? (Score:3, Funny)

    by Anonymous Coward on Thursday September 09, 2004 @04:12AM (#10198627)
    Is it too late to preorder? I can't find any sales information so I guess it must be sold out. :P
    • by Ayaress (662020) on Thursday September 09, 2004 @12:10PM (#10201682) Journal
      I registered to reserve the opportunity to preorder about a year ago. They asked a lot of funny questions, though. I had to list all the games I'd bought in the last year, how much money I make, my social security number, credit report, father's maiden name, and it had a section at the bottom with a check box and a line saying, "I hereby certify that I ceremoniously killed a domestic companion animal at some time after beginning to fill out this form," and wouldn't let me continue until I checked it. I sure hope I get mine in time for Duke Nukem Forever.
  • The odds? (Score:2, Interesting)

    by Hido (655301)
    If they get those consoles out more power to them, but looking at there track record and how the market is currently the odds are not in their favor I would think. They do not have much in the way of game developers backing them up, they do not have the finances now.

    Unless your like M$ who had money to throw at it and who could deal with a loss of this magnitude, vaporware or not it seems to me like a sinking ship.
  • by tod_miller (792541) on Thursday September 09, 2004 @04:18AM (#10198646) Journal
    SCO

    Have nothing of real value
    Sue people
    Lacking money

    Infinium

    Have nothing of real value
    Sue people
    Lacking money

    Oooooh one at a time please, there are plenty of stocks to go around.

    Prediction: Infinium can suck my balls.

    How many game developers have voiced support?

    0

    I think it is a hyped up PC with gfx card and a subscription to a games download server - sounds pants to me.

    Gotta link:

    Timothy Roberts, CEO of infinium labs [penny-arcade.com]

    Gotta love penny arcade.
    • That's nearly a haiku:-

      Have nothing of worth
      Sue people to make money
      Going bankrupt soon
      • That's nearly a haiku

        The only reason the haiku persists is because it has a specific set of rules. If the average guy tries to write poetry, well, it's just sucky poetry. But instead it's "No, no, it's a Haiku. Look, count the syllables!"

        • by Anonymous Coward

          Technically speaking, grandparents comment is closer to the poetic form of Senryu, which is in turn derived from a literary game not unlike the French "Exquisite Corpse". Unless you're writing in Japanese, the hard syllable limit is not really relevant - the idea is that the Haiku should convey an image, usually in two parts, with brevity.

          However...

          venture capital
          fades into bleak nothingness
          like fallen snowflakes

        • Would it have helped had he written a Limerick?
          • Infinium wants us to game
            On a console that we think is lame
            They haven't the cash
            To market this trash
            "It sucks!" the /.ers exclaim
    • "I think it is a hyped up PC with gfx card and a subscription to a games download server"

      Well, duh. This is the kind of incisive analysis I've come to expect from people who quote Penny Arcade.
    • Prediction: Infinium can suck my balls.

      Well, I guess that's one way to make money, although it's going to be hard to come up with US$4M that way.

  • Phantom game console...
  • by Silverlancer (786390) on Thursday September 09, 2004 @04:26AM (#10198665)
    Explain to me... why does Infinium believe that people will buy a console made by a company about to go bankrupt to play games that don't exist?
    • Because Infinium believes unwaveringly in naive consumers. They've based an entire business model on their existence.

      • Because Infinium believes unwaveringly in naive consumers. They've based an entire business model on their existence.

        So have spammers and 419ers, and SCOsource, as well as a number of other businesses. I seem to keep getting spam, phishers in my mailbox, and SCO is stil worth more than the paper it's written on. Repeat the mantra: "People are stupid."
      • Because Infinium believes unwaveringly in naive consumers.

        And/or naive investors. Hopefully there aren't enough of the latter that Infinium can fuck over the former.
    • they based their financing on financers without a clue, it's only natural that they base their business model on customers without a clue.

      (and it's buying a subscription service from a company that's about to go bankrupt)
  • by C0rinthian (770164) on Thursday September 09, 2004 @04:44AM (#10198695)
    Their console isn't the only thing thats vaporware...
    • Sorry buddy but their console works and its actually a pretty cool and viable product. If you were at E3 you actually got a chance to sit down an play with the console (and it was a great experiance to say the least). It wont appeal to the hardcore nerd or gamer who likes to build their own machines and have absolute control. But for the Moms and Dads out there that want to buy a good gaming computer for their kids, where they don't have to worry about running to the store to buy new software (since a larg
      • Don't bash the product until you have tried it.

        Using that logic, no one short of the few that were able to try the mockup at E3 will ever be able to bash it.

        • There were actually quite a few people who where checking out the Phantom at E3... though I suspect most of them were there for the free T-shirts (I got a few plus demoed the Phantom).
  • by SimianOverlord (727643) on Thursday September 09, 2004 @05:18AM (#10198776) Homepage Journal
    Press Room, 09/09/04

    Muhammed Saeed al-Sahaf: We have much, much money. Many games for console. Console has already appeared in shops, and we have made many millions out of it.

    Muhammed Saeed al-Sahaf: Nintendo and Microsoft pigdogs are running for the cover. We will crush them like a snake, and burn their machines in the streets.

    Muhammed Saeed al-Sahaf: Our console can fly, hoover and tidy your bedroom whilst making dinner for 4 and creating virtual reality world where you are the One, with boomboom magic powers.
  • by Anonymous Coward on Thursday September 09, 2004 @05:23AM (#10198784)
    Infinium currently owes $4 million

    This would probably be shocking to mw if I hadn't just sent my daughter off to college this weekend. To me, $4m is just "eh."
  • '...as it estimates its first year of sales will garner $35 million in revenue.'

    Lol, unlikely, but what are they gonna say?
  • ahhh (Score:2, Funny)

    by k4rm4_p0l7c3 (583281)
    an open letter to phantom's investors

    I live near these ass-hats.. I'll club their kneecaps until you get the $ back, for 5% of the total. email me, we'll figure out the details

  • I never understood why they went ahead and designed their own console/PC. The concept of actually downloading games and basically renting them with a monthly subscription could actually work. However, wouldn't it be more practical to just do this on a standarded PC? The hardware is already there. Why reinvent the wheel? And besides the market is already flooded with moderate to cheap consoles anyway. What parent or game junkie is going to be like "Well I already have a PC and a GC costs 100 bucks and a
    • That's a good idea. I think other companies have tried that, but all the games were little stupid things like backgammon. If you could do it with real games, I'd probably sign up.

      After your company made some money with this, then you could try to add a console to it, for people without pc's.
  • It's the CEO (Score:4, Insightful)

    by solitarian (398175) on Thursday September 09, 2004 @08:14AM (#10199280)
    No one seems to be pointing out that the "brains" behind the company has a history of creating then bankrupting companies. I assume he is an excellent marketer, or knows a lot of rich morons, who are willing to fund his ideas.
    He probably knew that Infinium would go belly-up, but he gets a nice paycheck until it does.
    • Some part of me thinks that moron belongs in prison. It seems like it should be illegal to get people to fund a company, then siphon millions of dollars out of it, drive it into the ground, then walk away leaving your investors screwed. Or they should get to approve his salary.
  • by Moo Moo Cow of Death (778623) on Thursday September 09, 2004 @08:48AM (#10199430) Journal
    So let me get this straight...

    -They have NO hype for commercials, internet advertisements or even the occasional popup.
    -They have NO credibility in the gaming community overall
    -No major, minor or even INDEPENDENT names that I know of have backed them or stated they're planning to in the future
    -Their CEO is known to be, by and large, an asshat and possibly the only person the company
    -They have a couple million in debt with all the above and their plan is to produce a console which in order for us to keep playing on they HAVE to stay in business

    So how exactly did they plan on going anywhere except to perhaps Cuba? Africa? Some other country that won't export them?

    I've garnered most of my opinions on this from hardocp, PA and other misc sources btw
    • -They have NO hype for commercials, internet advertisements or even the occasional popup.

      But they do seem to get alot of press on slashdot

      >--They have NO credibility in the gaming community overall

      Which doesn't matter if their console is actually good, which it probably won't be but tha's another story.

      >-No major, minor or even INDEPENDENT names that I know of have backed them or stated they're planning to in the future

      I saw the names eidos and vicendi but that might just be marketing hype

      >-
  • Just think about the world changing possibilities of this guys. Dare to dream!
  • They have a 4mil current debt.. not 68M like stated by others. The 68 is how much they are going to need to keep afloat for another 2 years.

    If they are only 4M in debt right now..IMHO I'd say it's pretty clear they're going to be eating a lot of money on their console (much like all of the other console makers do) and are praying that their subscription services make them their money. How do they intend to make 35M in 1 Year in subscription services and Pay per play alone? Has ANY company managed to make t
    • I wouldn't venture to compare them to Sega. At least Sega made consoles. These people just seem to be a void of lost money, and bs claims. It sounds to me this is going to be another Dreamcast if it does ever get released. May be a great console, though of course no where near the dc's greatness, but no one will buy it...
      • I feel that there is most definately a market for this... just not with nerds and gamers like us. There is a much larger untapped and under developed casual gamer market that would love to have a no nonsense IBM compatible machine where all they need to play is downloaded through their monthly subscription. As a game developer I personally hope that they pull through and can succeed as it opens up more markets for everyone to enjoy great games (and not the old rehashed console garbage).
        • From what I've heard, that's exactly what Infinium is hoping. But it's not going to happen here.

          They've lowered the price for the console itself to $199. That gives them a better shot, but if you are trying to sell to casual gamers, it's not going to work. People who aren't already dedicated gamers (i.e. people who don't already own a game console) will regard it as too high an investment.

          If you want to sell games to casual gamers, and hopefully to expand that market, you'd be best off making the games ru
      • Whats a real shame is Sega missing their oppertunity to work with the mod community and embrace the dc as an open console..that would have been so cool.. but o well

        *expects to get modded offtopic.. but it was worth it!*
  • Whereisphantom.com (Score:4, Informative)

    by Torgo's Pizza (547926) on Thursday September 09, 2004 @12:38PM (#10202059) Homepage Journal
    Not to toot my own horn, but Whereisphantom.com [whereisphantom.com] has posted detailed information about this last month. If you want the latest news about Infinium Labs, you need to start visiting WIP regularly. Already today we have breaking news of another company suing them in small claims court and their CFO threatning harm to the owner over a small billing issue.

    Just because Gamespot finally gets around to posting information doesn't mean that it's news. It's rather old news to be sure.
    • I've really got to give Torgo proper credit: WiP?? [whereisphantom.com] has been covering Infinium Labs' escapades quite thoroughly, showing every piece of information he could get his hands on. If you want to be up-to-date on what is pretty obviously a scam that just won't quit, check them out.
  • Man, this console is going to be so cool!

    Tee-Hee aside, what a shame IMO. I really think that the on-line game rental would be a great deal. Our little group http://virtualcarnage.com/ [virtualcarnage.com] of Thursday night XBox live players is always waiting around for everyone to pony up and purchase a game. It would be great to simply rent the game for the eve allowing everyone to play.
  • Phantom: The game console I've primarily seen marketed in banner ads on the Motley Fool.com

    Hmm... well, I guess people trading stocks have lots of disposable income to spend on game consoles, that's why they advertised there, right?

  • Has anyone else noticed that this person keeps going around saying how great Phantom will be? It's like instead of paying money for real Marketing they've hired some guy to go around trolling on websites saying how great it is. It's cheap and easy.
    • He's like those N-Gage marketers who randomly went onto obscure forums posting about how great it was...
      • Sorry the burst your bubble guys but no I do not work for Infinium Labs. I can see where you got that assumption though.

        I am an independant game developer who makes games (such as Dark Horizons Lore [garagegames.com], which is coming to Linux very soon) with the Torque Game Engine. As a game developer I see the Phantom as another potential market to move my products onto with the added benefit that I don't have to change much (if anything) from my WindowsPC build to get it working.

        As for "defending" the Phantom Console..

  • I think the saddest part is that even if it bombs, CEO Timothy Roberts will still end up with millions in his bank account. I guess if you know how to milk the system....money isn't too hard to attain these days..
  • A few years ago, a new console might have a life. But since Microsoft entered the market, the only consoles that have a chance of survival are those that were big already. Any new console will be crushed. Crushed like a bug.

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