Hmmm. Interesting. But is hands off enough? I wonder if CA generates enough internal capital to finance its own projects? Otherwise, the reliance on parent company financing may limit access to capital needs.Originally Posted by Quietus
For example, when CA produces and markets a project, does the capital gained from sales go back into CA? And does CA have the capital for them selves? Otherwise, a reliance on financing from Sega will mean that a large portion of recievables go back to Sega, rather then back into CA.
A hands off policy is good news from a project development standpoint. I would love to know the financing relationship, as this can hinder or aid the ambitions of future projects. If CA is beholden to Sega, is CA able to justify the Net Present Value (Net Present Value being the cash value of projected future cash inflows from an investment in today's dollars, thus accounting for the time value of money) of capital investments in its products with ease or difficulty? I would imagine that the annuities generated from the TW series thus far would be justification for pro forma cash flow estimations on future TW projects.
In other words: The financing relationship affects the operations decision making which subsequently affects project development. So Sega could have a "no project micromanagment" policy with TW, but the financing arrangements would indirectly and seriously impact project decision making.
And this is where corporate culture comes into play. CA may be willing to take risks with capital that Sega may not be. CA will have to justify increases in capital expeditures to Sega. If the risk is perceived to be too great, Sega will not allow the extra financing.
An example of this is in the patches following a game release. Patches use resources in capital and assets that could otherwise be used on other projects. If the Net Present Value of the patch is less than the Net Present Value of a competing project, than the patch will not be undertaken.
Damn, I would love to hear a CA or Sega Rep comment on this. But this is probably top secret internal executive intelligence that stays away from the public.
Yarrgh.
Divinus Arma
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