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Comment by ocdtrekkie | Hacker News Reader

The Paragon closure has come with a surprising number of upsides compared to the usual collapse of a game. I really wish more companies opened up their assets (or even the game code) upon the closure of a game they've written off.

The other highlight note is that when Epic decided to shutdown Paragon, they opened up the refund offer for all purchases, not just really recent ones. They've taken essentially a complete loss on this entire project, that I believe had upwards of 100 developers working on it at one point.

But given Fortnite's success, plus the general solid padding of cash Epic always gets from having one of the most popular game engines that everyone else uses, means they can afford it.

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> They've taken essentially a complete loss on this entire project

It's a genius financial and strategical move, predicated by having a lucky monster success elsewhere in the company that required a quick influx of resources (Fortnite). They can effectively write off a failed game over the next 5 years, and reduce their tax burden as a result. They then act as a "benevolent" actor to the gaming development community by giving away assets that have no financial incentive to them. So they get a nice influx of resources and get to advertise to a new pool in the same breadth. That's a win-win.

EDIT: I should also note - I was a benefactor of shifting my payment from Paragon to Fortnite. Given that it had no variable cost to give me $20 worth of skins in Fortnite, that's a pretty solid user acquisition strategy.

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Paragon was/is already a F2P "monster".

I don't see why benevolent needs to be in quotes in your comment.

Regardless of whatever financial or tax upside they get from doing this, the upside the game development community gets is the same.

They are doing something they really didn't need to do, and as GP pointed out, most companies don't do.

> I don't see why benevolent needs to be in quotes in your comment

> most companies don't do.

Because most companies are for-profit entities. Most companies don't do this because they aren't in this specific situation. Most gaming companies have really delicate economics (high up front capital costs, with less than guaranteed returns).

Call me cynical all you want, but the idea that video gaming companies (of all industries) are somehow out to provide benevolently for it's software developing community is laughable at best (see EA, Ubisoft, Zynga etc). The video gaming market is rife with abusing long hours out of it's employees.

> see EA, Ubisoft, Zynga etc

You're cherry picking a handful of awful companies for the sake of making a point about the entire industry.

I take it you haven't worked in the industry? There's literally an industry term for it ("crunch") because it's so bad.

https://www.gamasutra.com/view/news/257143/Working_time_amon...

http://www.gameinformer.com/themes/blogs/generic/post.aspx?W...

https://kotaku.com/crunch-time-why-game-developers-work-such...

https://venturebeat.com/2016/03/20/why-crunch-time-is-still-...

https://www.nytimes.com/2017/10/25/opinion/work-culture-vide...

https://www.gamasutra.com/blogs/PaulTozour/20150120/234443/T...

Asking employees to work long hours in order to meet deadlines is not unique to the games industry.

It's not an ask when made a condition of employment.

You built your own straw man.

Nobody said that video gaming companies "are somehow out to provide benevolently for it's software developing community."

If we were talking about Epic Games giving $100 to each American, that wouldn't follow either.

But if you can't acknowledge that some decisions are more well-meaning than others, you're just sour grapes.

It can be both. Doing good by others does not require absolute zero benefit for yourself. The total refund is a win for Epic and it’s customers alike.

I'd argue benevolent belongs in quotes. Not to question the very clear upside to the game development community. But rather to acknowledge that Epic is likely anticipating the benefits to itself as a company will be higher than the costs.

I would disagree that a prerequisite of a corporation being benevolent is losing money.

There was no requirement of giving away the assets in order to gain the tax benefits.

"As with all of Epic’s internally developed assets, the Paragon assets are only licensed for use in Unreal Engine 4."

This is marketing for their game engine. They don't have to do it, sure. But SaaS companies don't have to provide free blogs, webinars and e-books either but we don't pretend they are benevolent for doing so.

Don't get me wrong. I think more art assets available in the game dev community is a good thing. I think more free stuff from one company (Epic in this case) will beget more free stuff from their competitors (Unity mainly). I'm just pointing out that this isn't free for the sake of being benevolent. It's free for the sake of capturing market share.

> I'm just pointing out that this isn't free for the sake of being benevolent. It's free for the sake of capturing market share.

this seems like it could be a false dichotomy. it's not obvious why it can't be both.

Benevolent: "(of an organization) serving a charitable rather than a profit-making purpose."

That's not how this word works. We can use another one.

I hasten to add, again, that I'm attributing nothing pejorative. I'm glad Epic have done this. It's great marketing that may be helpful to lots of people.

"benevolent" wasn't being used to describe the organization, it was being used to describe a particular action.

The issue is this action isn't benevolent. It's nice, but as said previously it's to promote their engine. So they will profit from it indirectly.

If on the other hand they would release the assets without strings attached (for use with any game engine / in any way) then I'd say this word would apply.

and my point was that this seemed like a false dichotomy.

True. A dichotomy cannot explain for example tax deductible donations: they're obviously self advertising at much lower cost than a real PR campaign, still they benefit someone, so we probably should use a trichotomy like "I'm doing good even if it has a sustainable cost" - "I'm doing good only if it somehow benefits me as well" - "I'm not doing good because being evil brings even more profit than the above".

> This is marketing for their game engine.

Which faces _stiff_ competition against the Unity engine. Epic is the incumbent in the space and the success of Unity in the last several years must be a huge concern for Epic.

Epic has always been a game engine developer first and foremost, so anything to claw back market share from Unity is going to be a calculated strategic move on their part.

I don't think it's quite that clear. Sure Epic has been in the game engine market longer, but it was only relatively recently that they entered the non-AAA market due to a major change in licensing. Unity was really the incumbent in that space at the time. In some ways Epic is the up and comer. You can also see that as Unity has had to react strongly to Epic's entry into the market.

Indeed. Tired of people associating benevolence with no monetary reward whatsoever.

And hopefully get more devs to use their platform (Unreal Engine) using these assets as their entry point, giving them dank licensing money if there is a good game amongst the many mediocre ones.

>reduce their tax burden

Why do people always make this argument? Loss is loss. You're financially better off if you make money, even if you have to pay taxes on it.

Yeah, I don't understand how this reduces anything.

Can someone explain?

You basically can take a Tax deduction on capital losses, meaning paying less tax (Super simplifying the complex US Tax Code) https://www.investopedia.com/articles/investing/062713/capit...

You pay taxes on capital gains.

Suppose that Epic made P income from Paragon and I income from everything else. They are taxed at T.

So if they return P to customers, that's a loss. So they will pay (I - P) * T in taxes and end up with (I - P) * (1 - T).

Suppose they kept P, that's gain. So they will pay (I + P) * T in taxes and end up with (I + P) * (1 - T).

So even though they pay less in taxes ((I - P) * T < (I + P) * T), they will end up with less money ((I - P) * (1 - T) < (I + P) * (1 - T)).

Whoa, even I couldn't follow this :)

Basically, what it means is the following:

Year 1 - I spent $10M on Paragon (let's pretend I've made a single dollar from it). I therefore have negative -$10M in profit, so I pay zero taxes.

Year 2 - I shut Paragon down. I still have $10M in losses from Paragon. Fortnite does $30M in Revenue and it cost me $20M to build Fortnite in Year 2. Theoretically I profited $10M in year 2 and I'd have to pay ~30% (thats not the real number, so don't correct me) of that in taxes, so I really only get to keep $7M of that to reinvest.

But I get to carry my loss forward from Year 1 onwards. So in theory I get to keep more of my profit due to a smaller tax burden. Generally speaking this is usually done over 5 years. So I'd take $10M and amortize it $2M ever year. Meaning Year 2, instead of paying 30% of $10M, I would pay 30% of 8M, so $2.4M versus $3M. It's obviously way more complicated than this, but this is the gist.

You're describing the situation assuming that Epic has already taken the loss.

I'm describing the tradeoff between intentionally taking the loss (i.e. allowing returns of the game) vs keeping the profits they've made.

I don't get your math, but (I+P) - (I-P) = 2P. It seems wrong that that the difference between the two scenarios is 2P.

It reduces the taxes they pay, but only because they make less profit.

They still have less money and it is in no way better than if Paragon had made a profit.

The "yeay it failed! we get a tax write-off" thing is stupid and wrong.

its not that clear when you international subsidiaries. companies, when it comes to taxes, can have the cake and eat it too.

It still takes time and energy to package and release something to the public, even if it is assets.

I come in peace. You're not a benefactor given that you are the one who benefited

> I really wish more companies opened up their assets (or even the game code) upon the closure of a game they've written off.

Or just old games in general. Many rewrites of old games are hampered by the lack of assets.

Sure, but there's a big difference in how a company sees the value. If you're talking about a property the company found success with, they surely want to hang onto the copyright and exclusive control of those assets with which to make sequels and the like, or even remasters and re-releases as Nintendo often does.

I particularly feel we need to clear up the copyright drama for abandoned works in particular, but there's a reasonable point that plenty of companies do continue to use and sell their game content for a very long time.

A failed project has very little value for the purposes of monetizing again later, you don't make a sequel to a game that you didn't make a profit on (usually). So it's a particularly good category to give away to the community.

I'm interested to see if Epic releases the entirety of the remaining assets, while they are no longer interested in developing the game there was a small but dedicated community that was sad to see the game shutdown. It would be interesting to see the community take over the game and continue to give it life, and it wouldn't be the first time this has happened (see Allegiance/FreeAllegiance as an example, Microsoft just re-licensed the game under the MIT license last year at that - it was already available under the MSR-SSLA for quite a while).

Well to Epic, their games are usually a showcase of their engine. It makes sense to open source their assets.

It also helps that Fortnite is a massive success.

"They've taken essentially a complete loss on this entire project, that I believe had upwards of 100 developers working on it at one point."

Not really, they're doing that on purpose to put everyone on Fortnite, it's a very different story.

Wow I hadn't heard about the refunds. That's really uplifting.

Well, in this case Epic and whoever benefits from these assets are taking the Taxpayer for a ride. So this is a “convenient” incentive to Epic and others who use these assets (as opposed to inconvenient, as when it happens with [company not relevant to the SV echo chamber]).

A) Epic closes Paragon down

B) Epic opens Paragon assets

C) Epic deducts Paragon losses from their earnings, saving on federal taxes

D) Companies that build assets based on these assets do so while getting a nice taxpayer-enabled corporate welfare check.

C) would happen regardless of the other items.

My understanding is that this happens when an asset is written off. I understand it would be either now [with the action], or over time [without this action]. Maybe a person with an accounting background can correct me so I can edit my comment. Thanks for bringing this potential issue up.

pretty much all corporate expendature is tax deductable.

Software is an asset that depreciates over time. It's not an expenditure in the sense of when one spends money on, say, a trip, which would become an instant expense.

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