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The whole “they have to make the shareholders happy” argument in gaming…

Gamingtodaynews1g - The whole "they have to make the shareholders happy" argument in gaming...

So I was watching

video where Alanah Pierce was basically describing how game release is often reliant on – not the finished product – but on making shareholders happy. Alanah is responding to Tweets where people are remarking how game publishers often announce games too early, forcing to crunch, set unrealistic release windows and often delay games multiple times. Essentially, Alanah says something along the line of "they're trying to make the shareholders happy" and asking publishers to do otherwise is against how the stock market operates. Now, I'm not doubting that there's a ton of truth in what she's saying. The issue I have is that I've also heard this same sentiment multiple times to excuse these types of practices.

I'm not quite sold on this idea, more-so that it has to be this way. This is often framed in a way that – to me- makes it seem as if publishers have their hands tied behind their backs. I'm sure there's a certain dynamic between publishers and shareholders but this notion that the publishers themselves don't have the last say on the matter strikes me as a bit overgeneralized.

Shareholders invest in a publisher for multiple reasons. Yes, the shareholders may not necessarily know anything about video games but quite honestly, if you're investing a lot of money then you're at the very least trying to understand that specific sector of the market. This happens with anything else in stocks, that's why people are constantly sharing news like FDA approval for a new drug, a big government contract for their product etc… And like any other stocks, shit happens and the window where they expect to see a ROI changes. Chances are, if they've invested a lot of money they're keeping track with either news or investor's briefings. When a drug doesn't pass FDA approval, investors may know that it's going to take a lot of time before they can pass so yes, then they may take their money out and invest elsewhere. However, many do not and will just wait for the drug since they may have purchased shares low, why risk selling and potentially buying at a higher cost in the future? Especially when there is already gameplay footage, trailers, hype etc… behind the product. Furthermore, wtf happens when a game is announced and then goes silent for months, if not years? The shareholders would just take their money out anyways if there's been no news. This happens with stocks a lot, when there's no news – there's no reason to keep your money on a stale ticker. At least with more conservative release windows, there's better communication between publishers and investors.


Now yes, investors want to see growth, they want to see new products and they want to see profit. However the argument that "X publisher did this to make investors happy" is a bit of a blanket statement that almost always shuts the conversation down because most people don't understand what's happening behind corporate doors in the video game industry. I've seen it excuse a lot of things and while micro-transactions are a shitty business practice that unfortunately do generate a lot of money, early announcements and multiple delays are not on the same level.

What I think this comes down to is one thing: greed. It's publishers wanting to appease investors and over-promising en masse. Again, I don't doubt that there's pressure by investors to announce or release a product. However, like any other market, there are development cycles and I think publishers know this. So again, this thread isn't necessarily to say that investors don't have an influence, just that you shouldn't give publishers a pass because "they need to make their investors happy". Investors can wait, publishers just want more so I think the onus is still on the publishers to get it right. I highly doubt that after having money invested for years, they'll just take all their money out because a game was promised in Dec. 2020 instead of Mar. 2020. Frequent delays and early announcements are – in my opinion – a very, very shitty practice that I can only imagine gets worse if even the fans start to excuse it. There are examples of some publishers that seem to get this part right, Nintendo being a prime (pun not intended lol) example.

Any other points of views are welcome as I'm relatively new to investing and other people here may have a better opinion on the matter.

tl;dr – it's a dry topic so just read it or move on.

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