CAPEX challenge?

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infoscott
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CAPEX challenge?

Post by infoscott »

Do any of you players have experience in scenarios that require high capital expenditure (CAPEX) and low profit business model? What I have in the mind is a more aggressive form of the Real Estate Mogul scenario.

Scripting Constraints
Player - High starting capital
AI - Low starting capital
Limit the player to Mining, Logging, Oil Wells, Warehouses, Apartments, Commercial Buildings, Civic Structures.
Turn off the stock market except for your own company's share issuance and buyback.
Turn off all manufacturing and retail.
Turn off all research.

Player constraints
No wholesale distribution of products other than extraction products allowed by natural resource firms.

Player Goals
Manage a large pool of investment capital (cash and loans) to develop natural resource and commercial properties. Closely watch the macro economy, interest rates, and real estate occupancy rates to maximize your company's return on equity.

If there is an interest in such a scenario, I can start working on the user-defined script and post it here.
counting
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Re: CAPEX challenge?

Post by counting »

infoscott wrote:Do any of you players have experience in scenarios that require high capital expenditure (CAPEX) and low profit business model? What I have in the mind is a more aggressive form of the Real Estate Mogul scenario.

Scripting Constraints
Player - High starting capital
AI - Low starting capital
Limit the player to Mining, Logging, Oil Wells, Warehouses, Apartments, Commercial Buildings, Civic Structures.
Turn off the stock market except for your own company's share issuance and buyback.
Turn off all manufacturing and retail.
Turn off all research.

Player constraints
No wholesale distribution of products other than extraction products allowed by natural resource firms.

Player Goals
Manage a large pool of investment capital (cash and loans) to develop natural resource and commercial properties. Closely watch the macro economy, interest rates, and real estate occupancy rates to maximize your company's return on equity.

If there is an interest in such a scenario, I can start working on the user-defined script and post it here.
There're business journals specifically deal with mines
http://capitalismfans.com/businessjourn ... agename=GR

I've already include strategy Mining Cartel in my collection post. And this is a viable normal game starting strategy, coming from the upstream working downward. It even started a suggestion about refilling natural resources, instead of rebuilding over and over. But a script and scenario to focus on this strategy would be interesting. And actually from my experience, although natural resource has high investment, its profit margin is not low. The lowest profit margin in long term is actually pure retail business (when there are enough AIs well developed to produce every products to overshadow seaport products)
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infoscott
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Joined: Fri Mar 06, 2015 11:04 pm

Re: CAPEX challenge?

Post by infoscott »

I saw the mining cartel business journal, but the player was not branching into R/C real estate.

I have a game started now under Real Estate Mogul scenario just to see how the numbers work out. At the very beginning I invested in Timber and Aluminum, but wasn't getting any sales. So I went into cola, cigarette, and bed manufacturing in order to jump start those natural resource firms. I have the smaller factories up for sale to cycle back the CAPEX, but so far the customers of those factories are still not buying.

If the goal would be to let players do manufacturing and retail in the early years to follow such a strategy, it might be difficult to turn those off using a calendar triggered LOCK. It might be possible to set a subgoal with nearly impossible conditions to meet, and then use the penalty clauses to then lock players out of manufacturing and retail.

It would be nice to experiment with goals/subgoals in script writing such that the script might be eligible to become another Enlight Software scenario.
counting
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Re: CAPEX challenge?

Post by counting »

infoscott wrote:I saw the mining cartel business journal, but the player was not branching into R/C real estate.

I have a game started now under Real Estate Mogul scenario just to see how the numbers work out. At the very beginning I invested in Timber and Aluminum, but wasn't getting any sales. So I went into cola, cigarette, and bed manufacturing in order to jump start those natural resource firms. I have the smaller factories up for sale to cycle back the CAPEX, but so far the customers of those factories are still not buying.

If the goal would be to let players do manufacturing and retail in the early years to follow such a strategy, it might be difficult to turn those off using a calendar triggered LOCK. It might be possible to set a subgoal with nearly impossible conditions to meet, and then use the penalty clauses to then lock players out of manufacturing and retail.

It would be nice to experiment with goals/subgoals in script writing such that the script might be eligible to become another Enlight Software scenario.
Currently the best option is to delay player's start about 5 to 10 years, and let AIs to form their business ecology first. A lot of time, the downstream development takes time, even very high starting capital AIs take time to build up their factories and scale. The most important is the retail AIs, there must be enough outlets exists already with high enough level. After all, all the income comes from their ability to sell.

I've always wanted a scenario editor for the game, that can be very specific with starting AI firms even landscape and locations, down to their AI personality and starting position. Don't know if it's even possible to do via a 3rd party editor though, no visual tools to help reading save files. Different versions seems to change the data structure as well.
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infoscott
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Joined: Fri Mar 06, 2015 11:04 pm

Re: CAPEX challenge?

Post by infoscott »

counting wrote:
infoscott wrote:I saw the mining cartel business journal, but the player was not branching into R/C real estate.

I have a game started now under Real Estate Mogul scenario just to see how the numbers work out. At the very beginning I invested in Timber and Aluminum, but wasn't getting any sales. So I went into cola, cigarette, and bed manufacturing in order to jump start those natural resource firms. I have the smaller factories up for sale to cycle back the CAPEX, but so far the customers of those factories are still not buying.

If the goal would be to let players do manufacturing and retail in the early years to follow such a strategy, it might be difficult to turn those off using a calendar triggered LOCK. It might be possible to set a subgoal with nearly impossible conditions to meet, and then use the penalty clauses to then lock players out of manufacturing and retail.

It would be nice to experiment with goals/subgoals in script writing such that the script might be eligible to become another Enlight Software scenario.
Currently the best option is to delay player's start about 5 to 10 years, and let AIs to form their business ecology first. A lot of time, the downstream development takes time, even very high starting capital AIs take time to build up their factories and scale. The most important is the retail AIs, there must be enough outlets exists already with high enough level. After all, all the income comes from their ability to sell.

I've always wanted a scenario editor for the game, that can be very specific with starting AI firms even landscape and locations, down to their AI personality and starting position. Don't know if it's even possible to do via a 3rd party editor though, no visual tools to help reading save files. Different versions seems to change the data structure as well.
Well, unless/until a scenario editor comes along, there are plenty of tricks to do with scripting. You've given me a great idea for CAPEX, I could just script it so the AI gets a 5 year head start, just like in the Fashion Venture scenario. This would be the best solution for a pure Mining scenario.

But with my proposed mixing of mining and real estate, a player can get started on land development and then just pay close attention to when emerging markets will support mining. I can set a sub goal that after a certain year awards additional cash as investment capital for natural resources and unlocks natural resource firms.
counting
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Re: CAPEX challenge?

Post by counting »

infoscott wrote: Well, unless/until a scenario editor comes along, there are plenty of tricks to do with scripting. You've given me a great idea for CAPEX, I could just script it so the AI gets a 5 year head start, just like in the Fashion Venture scenario. This would be the best solution for a pure Mining scenario.

But with my proposed mixing of mining and real estate, a player can get started on land development and then just pay close attention to when emerging markets will support mining. I can set a sub goal that after a certain year awards additional cash as investment capital for natural resources and unlocks natural resource firms.
The trouble of delay starting is that it's difficult to set a good duration. Sometimes you get lucky and AIs starts earlier, when a lot of them rush toward high value products, sometimes they rush toward farm-based products, the timing would even be differ along with the composition of AI strategies, and AI starting capital. Even seaport raw material quality and types affect the availability and timing.

The threshold reward for starting capital is interesting, but it's kind of a mismatch for natural resource firms IMO, real estate value usually has nothing to do with raw resource production. And the return of real estate, greatly reduce the difficulty of running natural resource firms by offset overhead with rent income (and increase the asset values as leverage for more loans). Although it might not a bad thing, if you want the scenario to be easier. ;)
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infoscott
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Joined: Fri Mar 06, 2015 11:04 pm

Re: CAPEX challenge?

Post by infoscott »

counting wrote:
infoscott wrote: Well, unless/until a scenario editor comes along, there are plenty of tricks to do with scripting. You've given me a great idea for CAPEX, I could just script it so the AI gets a 5 year head start, just like in the Fashion Venture scenario. This would be the best solution for a pure Mining scenario.

But with my proposed mixing of mining and real estate, a player can get started on land development and then just pay close attention to when emerging markets will support mining. I can set a sub goal that after a certain year awards additional cash as investment capital for natural resources and unlocks natural resource firms.
The trouble of delay starting is that it's difficult to set a good duration. Sometimes you get lucky and AIs starts earlier, when a lot of them rush toward high value products, sometimes they rush toward farm-based products, the timing would even be differ along with the composition of AI strategies, and AI starting capital. Even seaport raw material quality and types affect the availability and timing..
I ran a test run for CAPEX using the Real Estate Mogul scenario. Farming products were not in my attention span, but mineral/oil/timber were. I really couldn't get into resources for the first 15 years or so. Trying to get into Timber early for beds and and paper, I found there just wan't enough demand to keep the logging camp profitable. So the real estate holdings built up until then just ended up subsidizing the losses on timber.
counting wrote:The threshold reward for starting capital is interesting, but it's kind of a mismatch for natural resource firms IMO, real estate value usually has nothing to do with raw resource production. And the return of real estate, greatly reduce the difficulty of running natural resource firms by offset overhead with rent income (and increase the asset values as leverage for more loans). Although it might not a bad thing, if you want the scenario to be easier. ;)
It is sort of to make the scenario easier, by bringing in more capital to the player than is allowed at the beginning of the game. With enough subgoals specified in the script, you could grant the player's corporation many times 100K capital. Real estate dominance is a soft target, as the AI rarely goes deep into real estate investing, probably for all the obvious reasons.

Playing the test run from year 15 to 22 was the most interesting. By then I had about 22 - 25 income producing RE properties, probably more commercial than rental. The Downtown locations were by far the most profitable when you got in early on cheap land, with effective rental yields from 16% - 25% over initial investment. But in the big picture, the rental income was servicing the loans, and the loans were used to either buy mineral reserves or more property. As the mineral properties were running down, the cash returned from depletion was also paying down the loans. All good stuff, and exactly what you want from managing a complex capital expenditure scenario.

My company was profitable the whole time, but the game's random number generator was most unkind. At the 15 year mark the interest rate was 10% and peaked at 11% until a recession finally brought some relief. This meant that although I had a huge credit line secured by real estate, there was no way to afford using it very much. Debt to equity ratios were usually between 10% to 35% and no more. With average yield on real estate being around 6% - 8%, there was no way to stay highly leveraged at 11% interest and still run a profit from cash operations. During the recession the occupancy rates dropped to 60% - 80%, but anything over 50% is positive cash flow.

During the recession I paid down all the debt and put extra cash flow into buying raw land. When the economy started to tick up, I went back up to a quarter billion in loans to put down real estate buildings on the land and buy mines. The mines were only profitable when the AI was so badly constrained on raw material supply that they ran at over max capacity, and depleted in under six years.

Since the Mogul scenario only starts with 100K and the self imposed limit of natural resources and real estate, most of the AIs were well ahead of me in most financial metrics. So the point in granting extra capital with all the restrictions is to allow the player to be reasonably close in market cap to the other AI companies. From this first test run my thinking is only 100K granted at year 10 should be enough to make the game interesting and not too "easy mode".
counting
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Re: CAPEX challenge?

Post by counting »

In custom game setting, there are ways to "encourage" AI to buy from upstream sources (and earlier). Most notably is to set the seaport product quality to low, and counter-intuitively plenty (like 2 raw per city but only 1 retail, and a lot of cities). Also it would help if local competitor are very low, so AIs can run early successful business easily and more profitable. When you are the upstream sources, unlike competing in retail end, you would wish your downstream as profitable as possible, the bigger the pie, the more you can share from them. A wide range of AIs all have diversify strategy is the best. A world with multiple retail giants are natural resource companies best friends.

And I agree most profitable mines usually don't last long, but it's resource type depended, gold mined and logging camp run out very quick, but the opposite end, silica and coal run for decades even at peak consumption. And when you have monopoly in all sectors in natural resources, you would expect to close and re-open new source every month, thus always needing quite handsome of cash at hand to replacing new ones.
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