As someone who has looked at various type of funds/funding in various companies to a degree, (equity and non-equity) one of which was actually a game fund, I have this to say: The fees they are charging are absurdly high. 5% of all money raised and 5% of all game revenues is way higher than most things I've seen, although they usually have performance fees.
Most funds will charge more like 2 or 3% of all funds raised and then another 2 or 3% each year of the funding, plus a performance fee based on how much money they end up making. I would assume they are forgoing a performance fee and instead just taking a higher cut of funds plus revenue.
That's the fund manager's costs/revenues, and they typically will pay for all the associated costs of considering the investments such as hiring the relevant people out of the money raised for the investment as well, e.g. you say "we will invest $1m in your game" and of that $1m, $900k goes to the developer and the other $100k ends up being legal costs, admin costs, specialist costs etc. That means this might end up "costing" more for a developer than a Kickstarter type deal, because they have to pay all these other costs of setting things up.
They are basically charging double the market sort of rate, although if they don't have any performance fee that might not be so bad.
Most funds, sensibly, spread their risk. The gaming fund I have seen had its risk spread by platform and game type. Some were licensed titles from well known publishers on multiple platforms (e.g. consoles + PC), some were mobile only games, some were casual games "puzzle adventure" games sold on places like Big Fish (if you have ever heard of them). All other funds do the same.
I would assume that anyone thinking of investing in this sort of thing would also hopefully do the same and only put some of their money into it.
Then in terms of getting money, your return on investment only happens if the game makes enough money to cover its costs. You put in your money to pay the developer, and then pay the lawyers and everyone else, and that's your total game funding. When you've made back your money, in a fund you will usually get a set proportion of the money above your recouped investment (e.g. once you have 100% of your investment back, including all those other fees, you then get 30% of the rest of the revenue above your 100% investment). This can be structured in various ways.
Now, assuming they are offering equity in specific games, that means you will probably just have it structured so the developer gets its "equity share", the "manager" gets theirs, and investors get theirs.
E.g. the deemed contribution by the developer is 50%, deemed by investors is 50%, so they get 47.5% each, with Fig getting 5%. That's potentially a better deal for the developers that getting traditional non-equity funding. Assuming you make any profit on the game at all.
The real question is, why would a developer opt for this over something where they get to have their money up front through crowdfunding, but without having to give away any residual profits? It doesn't seem like something as a developer I would want over a simple crowdfunded opportunity. It might be nice for the investors, but that's not going to get people to make use of it.
Now, since the current crop of participating entities are all owned by the same people as the Fig company, they aren't losing out too much, and if they get other people on board they get (mostly) cheap money from their 5% cuts in perpetuity, but that doesn't mean there's any reason anyone else as a developer would necessarily want to bother with it. If the investors don't get that much money from their investment in terms of share of profits, then what's the incentive to invest? I would see it being quite difficult to strike a balance. Plus, since you are only investing in one game, there's presumably no way for an investor to get their money back if a different product is successful. Equally, if you are the developer and you are making 3 games at once, you might end up prioritising the one in which you have the greates equity stake still compared to investors, and which will bring your company the most profits, and the expense of the other titles, so you have an incentive to put some titles on the backburner because they got more funding, rather than because they got less, unless there are strict controls and oversight of how funds and team resources and time are used, and milestones which are forced to be maintained.
Otherwise you are investing in a "game" but the money is going to a company which could use it for other things. That makes it quite difficult from an investor oversight perspective.
One thing I have seen is that if you are making a game with outside non-crowdfunded money, the investor will typically want a detailed plan and keep the right to withhold money if you don't hit milestones, or potentially take over the game development if you manage to screw up badly. Obviously if you haven't managed to Kickstarter your game, you might prefer this over other funding sources due to the control you retain over the game/your company and the security that you won't lose the IP if it does all go wrong, but since you now might have investors to answer to, there's a different kind of risk and different set of responsibilities.
Overall, I can't see it really getting that big simply because from a developer POV it doesn't seem like it would hold a significant amount of attraction given all the downsides it comes with.
Then there are further complications with things like who is going to sign off on the sharing of revenues. What happens if a publisher wants to get involved in the game? What if you equity fund a game and it comes out on PC, and then Sony or MS come along and say "we will pay $900k to port this to our console, please do it". The way the agreements are structured will also be a key concern in terms of who has the rights to the profits potentially if the platforms change/expand etc. Pitching this as something that any old person might want to invest in like they would do with shares seems pretty far off the mark given the fact you are "investing" in a specific game and not a company, which makes things more complicated, especially due to the way media rights seem to end up working in the gaming space.
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