Hey ! This is my first active post in a gamedev forum. Very short, i''m new to programming in general, and plan on attending 4/5 years of Game Development on a university in the UK next year. When i read "How to get started in GD" articles there are allways some note on huge corporations with multi-million dollar budgets etc. I know very little on economics to, but i wonder where all this incredible amount of money ends up ? Huge teams require alot of money, advertisement is expensive and so forth, but is it all well spent ? Is it the publishing corporation that end up with the biggest grin ? Are some areas in the process of making and publishing a game that are overpaid ? I realize that its not all fun and games (no pun intended) and that one needs to learn alot more then just programming, teamwork and time-schedules. Seems like theres alot of hidden skills to master too. I''m looking forward to it all cheers, ________________ Tom Norway

Teams for triple A titles are around 20 strong these days. Properly paid and equiped a team like that costs around $1-1.5 million per year. With games taking three to four years to develop its not hard to see where the money goes.

Dan Marchant
Obscure Productions
Game Development & Design consultant

Is it the publishing corporation that end up with the biggest grin ?
yes, and the creators get nearly nothing, sometimes they don''t even keep the rights to their IP. publishers are scum.

Actually as I pointed out most of the money on big budget projects goes to the developer (and the single biggest cost is staff wages). Still many projects over-run and the developers projected profit gets eaten up. Then if the project doesn''t sell well the publisher loses too because the project never recoups.

Of course the ones that do make it worthwhile and the hope of getting a GTA3 (over $250 million) makes the publishers hang in there.

Also smart developers do smart deals and get paid. Argonaut made something in the region of $4 million dollars in royalties for Harry Potter. Not exactly peanuts.

Dan Marchant
Obscure Productions
Game Development & Design consultant

quote: Original post by Anonymous Poster
Is it the publishing corporation that end up with the biggest grin ?
yes, and the creators get nearly nothing, sometimes they don''t even keep the rights to their IP. publishers are scum.

Yes and No.


Compare publisher AOR funding to:

- VCs: they want a chunk of your company in return, and often want a say in top level management.

- Banks: you have to pay them back, they often want a say in how you do things.

If the game you make doesn''t sell, then the publisher (or their shareholders) lose out and you as the developer doesn''t (usually, depending on the contract) have to pay them anything in return.


Because they''re gambling with that amount of money (and shareholder confidence), and they are a _business_, publishers:

- only fund titles they''re confident will sell (i.e. what the retailers and previous sales say the public wants). Thus licenses, sequels and samey titles. The higher the stakes, the less the risk the accountant with the chequebook wants to take.

- will try and get as much ownership of IP out of the deal as possible. That potentially makes future products and sequels cheaper for them - back to risk and reward.

- will try to get the product made in the shortest possible time for the lowest possible price. From offshore outsourcing to getting developers to bid against each other. [Some developers get so caught up in undercutting that their staff end up being paid peanuts - they then lose the good staff and the game runs into problems]

- will dump titles that are already in development if they are going to sell as well as they at first thought.


Some of the above do lead to developer unemployment etc - but the harsh reality is - that''s business and economics. (my history is in development btw)


How much the publisher will own and how much they''ll pay really does depend on lots of things:

- If the developer already has an 80% complete game that they''ve funded themselves, then obviously the publisher won''t get to take too much of that share away.

- If the developer already has their own _proven_ and current technology then they aren''t going to be spending the publishers money doing that. If the publisher pays for the development of the engine, they''ll expect to want to own it.

- A good, specialist business contracts & IP lawyer is essential to make sure the contract isn''t just one sided in favour of the publisher. They help ensure so many things aren''t all stacked up against the developer: company logo placement on the box, crediting, IP ownership, indemnities (and reduction of), change control, royalty calculation & periods etc. You might 10x pay more for a specialist compared to a high street law shop, but they''ll make you 10x more in return.

- Someone at the developer who actually negotiated rather than taking the first deal offered.

- If the publisher had to license the IP, then they''ll probably want to own the game based on that IP


Obviously there are some issues with the current AOR model borrowed from book publishing nowadays which mean the developer doesn''t see money early enough due to break even points.

And there have been cases where publishers have broken clauses in contracts and the developers have suffered but haven''t complained for fear of losing future work - or have simply been too skint.

But people are suggesting alternative funding models such as bond financing that might balance things a bit more and the more shark like publishers have died down a little (+ developers are mobilising & grouping)



BTW: as for asking where development budgets go to - try asking where marketing budgets go! - some games have had marketing budgets that were far higher than their actual development budgets.

> Is it the publishing corporation that end up with the biggest grin ?

Here are 2 easy rules to remember:

Profit Rule: Profits (for all) = Revenues (publishers) - Costs (developpers). I other words, it takes 2 to tango.

Golden Rule: The one with the gold makes the rules.

-cb

Than you all for your thoughts.

______________
Tom

S1CA hit the nail on the head.

A general rule of thumb is that a software engineer costs about $100,000 per year. This is total costs, including equipment & licenses, benefits, and rent on the part of the office that houses his or her cubicle. The cost goes down a bit for very junior-level engineers, and may go up for top-level senior engineers (especially if you are in an expensive place to do business, like San Jose). Artists & modelers & designers usually have lower salaries (depending), so they may be a bit less, but I wouldn''t expect less than $70,000 per year for them, too.

With all the assets like sound effects, music, shell art, texturing, modeling, licenses (you are going to pay through the nose to use the Unreal II engine to make a Harry Potter game, for example...), packaging, etc... there''s a bunch of costs that add up over, say, a 2-year dev cycle. So a team of 20 people over the course of 2 years is going to cost you about $4 million. The publisher gets their take, and the distributer gets their take, and the point-of-sale shops get their take. So for a game that costs $60 retail, the wholesale cost is probably $30, and the developer might get around 20%, or $6 per box. If their contract with the publisher is such that they only see royalties after their advances are paid off at their base royalty rate, they won''t start seeing a profit on the game until after it has sold $4 million worth of copies... or over 650,000 copies. That''s a LOT of games sold.

I couldn''t tell you if that kind of contract is atypical, though --- usually royalties are paid at different rates based on number of units sold, etc. I''m a lowly programmer and not too familiar with such things (and 3 years out of the games biz).

You're right, but your figures are a bit on the high side.

Most publishers aren't going to pay 100K per year per programmer on your team, since they'll be paying for all your software and equipment also, they'll want to own all of this.
I'd say 50-75K is more likely.
If you tell a publisher to pay for all your equipment/licenses, etc. they will probably tell you to take a hike.

4M$ is on the high side at this moment but it will soon get there. Most deals will run 1-3 M at the moment. 4M$ will get you a console port as well.

Again, 60 USD per game is also a bit much, more likely 40-50 USD on average.

In the end, if you received 4M in development funds, of course you'll need to sell 500K copies or more to see any royalties, but like I said it'll more likely be 1-3M at the moment, so perhaps 150K copies or more minimum to sell. (Which is still a lot for a PC game, not much for a console game, but the royalties are typically lower though)

Mark



[edited by - Mark Tanner on September 15, 2003 2:56:51 PM]

quote: Original post by Jay Barnson
I''m a lowly programmer and not too familiar with such things (and 3 years out of the games biz).

You''re not programming games anymore. What are you working on now? Why no more gaming biz? Just curious.