Is the game up? SEC moves on developer/publisher cashflow system

It's book-burning season way out west!

Posted by Staff
Is the game up? SEC moves on developer/publisher cashflow system
The games industry grew out of a cash-only arcade business, riddled with organised crime.

From money-laundering outfits to fronts for illegal operations, gangsters all around the world were very much taken with the idea of un-audited machines taking cash, with no paper trail or goods trail of any kind to get in the way.

You may not know this, but every gaming outfit that was spawned by the coin-op industry has its own tale to tell, with employees laughing off the old days, insisting that nothing like that goes on anymore.

The situation in Japan is arguably the fiercest, with Yakuza connections spread like pockmarks throughout the colossal 100 yen coin-fuelled industry.

Of course, this has nothing really to do with news today that sees the Securities and Exchange Commission in the US put several firms under close scrutiny, other than to underline the fact that the way money is handled within the games industry, and its flow from one sector to another is dramatically different to the operation of other entertainment companies. The games industry has had to make it up as it's gone along.

The SEC is looking into the accounting practices of several firms, including Acclaim, Activision and THQ. The actual picture is said to be considerably bigger, with talk of an industry-wide audit jangling the nerves of accountants and shareholders alike.

Activision, one of the firms that announced that the SEC had come knocking at its door, said, "The investigation appears to be focused on certain accounting practices common to the interactive entertainment industry, with specific emphasis on revenue recognition."

Revenue recognition...it's kind of like asking how many coins went into the Space Invaders machine on Saturday. Full circle. We'll watch this closely, and bring you the findings as they break.
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