True, True, True. The largest challenge in developing an online game aside from managing it effectively, is going to be obtaining funding without having to give up everything and your left leg. In chasing venture capital to fund the development, I am most assuredly telling the VC that I am going to give him a large percentage of equity. The difference in giving equity and giving profits is very large. VCs as you said have a vested interest in making the companies they invest in succeed. Publishers just need to recoup costs + profits and move on to the next game. Since a VC needs the company to survive for a potential buyout or IPO, then the risk to us as a company is smaller since it is in the VCs interest to leave the company alone to grow. Publisher on the otherhand will suck the life out of the company in order to recoup costs + profits with no regard to allowing the company to succeed. In this regard I view VCs in a much more favorable light. Besides, I am beginning to think publishers are worse than Bill Gates when it come to raping hard work after reading the forums here. The whole idea on the two pronged effort to develop the game was to get a VC with experience managing and funding online services(business or otherwise) and then minimize the publisher greed by reducing them to a contractor that is begging to publish a fantastic game.

Kressilac
ps The latter half of the last sentence is less reality then it is goal but hey if I can do it, maybe we can break the reigns of publishers within the industry. (at least for this up and coming genre)

BTW, if you didn't already notice, the In The News! section points to a really good article on GA-SOURCE about distibuting a game yourself that gives some pretty serious numbers.

That one got printed out and thrown in the permanant files.

I don't know much about those things, i'm quite new in game management (few hours) but i know some about the demo CD's as former editor of one - there is no fee to pay to the publisher or to the developer for the demo - there are cases when the publisher/developer ask for NOT publishing the demo until #date# - for exclusivity reasons.
The deal with the exclusivities concerns mostly the magazines - against their competitors.
You can contact the magazines of each country and offer exclusive demo (client) - in this way they are doing a BIG promo just to slam the other mag's.
Once again... i don't know if the PC Gamer has the same policy!

I have created a business plan for an online massively multiplayer game. What I now need to know concerns the financials of the business plan and how to present them to a VC.

How do I represent the sale of the boxed set in the projected cash flows statement. I figure I can do it one of three ways and am not sure which is the best to use. Should I figure all of the production costs for the materials of the game and then figure in the sales to work out what it will cost to fund the distribution of the game? Should I base sales off of projected royalties? Should I do some combination of the two above since an online game has a subscription part to it? I am assuming that the publisher has no rights to the subscription part of the game and plan on not giving them any of the revenue from it. Is this a safe assumption? Lastly if I project sales revenue based upon royalties, what is the typical royalty rate and amount for a completed game, that costs 44.95 on the shelves? Thanks for your input.

Kressilac

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Derek Licciardi

Just my 2 cents:

Someone previously said that the publisher is entitled to a cut of all the profits since they are sinking 2-4 million into it. I don't think that is the case for this project. The developer says he is presenting the publisher with a completed game, so all the publisher needs to do is publish it - not pay for development. The cost of publishing a game with a typical initial run of a 100,000 copies at about $7/copy is NOT 2-4 million dollars... And if the developer is ALSO paying for the server infrastructure, then the publisher really has no justification for garnishing that income source... Of course, they will TRY to, but I really don't see any justifiable reason they can present. Really, if you can self-fund your development, it is a HUGE advantage (IMHO).

Chaster