This is a repost from another thread, I thought I might be helpful to some readers that do not have experience in the game industry. Its a long post and sounds fairly negative but can have a happy ending with the right choices. This is my opinion based on what I know, feel free to share your ideas. ------------------------------------------------------------ The game industry is very much like the movie industry. Publishers fund say ten games hoping one will be a smash hit and one or two make a little money and the rest tank. That one success recoups all the losses and makes a profit for the company. They then repeat the process. Many games are not developed in house of publishers originally. Publishers don’t want to risk the overhead of teams that can''t produce ‘guaranteed’ winners. They then will pick up and buy the successful companies often for less than they are worth. How? Its really rough being an independent developer. Let me walk you down the life path of an average starting company. First of the new company wont get a good deal from a publisher for a first title period. The only exception is a company started by a person or group with a track record on a previous VERY successful title. A new company can expect tight deadlines on a schedule that is too short to be realistic. They will get at the most 10% royalties on the project. In addition that 10% is only given to them after they pay back the advances they use to make the game. That means that if the game cost 1.6 million to make they have to pay all that money back before they see a dime from sales. On top of that you won''t get your money for a good 90-180 days after the games are sold. This is due to accounting delays and the desire for publishers not to want to part with money. Okay so sign the deal and you start making your dream game. You have your staff and studio all set up. This took more time than you thought it would. You now only have 16 months left on a game you promised in 18 months. The first milestone is due, most likely a design milestone followed by a technical design milestone. This is where the fun begins. The publisher will now step in and tell you how they would like you to change just a few things to make the game more marketable. If you don’t agree you don''t get paid. This will continue throughout the whole process. To be fair some companies need this reality check in other cases the publisher is just dead wrong. You need to fight you battles on these issues and really listen to what the publisher is asking. For example you may be asked to make the game that has the most awesome next generation cutting edge graphics on the planet. But at the same time not to exceed the minimum specs of a three year old 8 meg video card. The publisher wants to sell units. I call them units because they don''t care that they are games. They could be toasters or urinal cakes for all they care. They have to think this way or they go out of business. You need to pray that your producer at the publisher understands your game and believes in it. If you are very lucky they will go to bat for you and let you slip a milestone or fight for additional money without a change to the contract. This will be at great risk of there personal reputation and ultimately there job, so don’t count on it. Remember the publisher figures the odds are that you are going to fail. They know that. They don''t want to throw away any more money on a loser then they have to, so they keep the schedule tight and the milestones aggressive. Remember that a project can be cancelled at anytime up to the point where you hand over the completed game. So what the next step in our process? Most likely your late on a milestone. Why? Because you agreed to do a 24 month title in 18 months because you REALLY wanted to start your own company and get started living your dream. Well guess what, if your game is going along pretty well and you still might have a chance to make the publisher money you’ll get and extension. I think the publisher actually expects putting a little more money in since they got a good contract in the beginning. In addition your company is most likely already dead and you don’t know it. The price of an extension is going to be a lowering of you royalties. This will take your 10% and make it say 5%. We having fun yet? You take the deal figuring you’ll somehow sell 400,000 or 500,000 units. You know that only a handful of games sell that many but you are going to be the exception. You start going into crunch mode. Everyone works longer hours to make the game done. You start ripping out anything from the game that isn’t critical won''t break it. All the cool and nifty features that would have distinguished your game from the rest of the pack are now gone. The dust clears. You hand off your game and realize that you aren’t going to have payroll if you don’t have a new project. Those big royalty checks (yeah right) won''t come rolling in for a while. Hopefully you figured this out before now, if so you still have a slim chance to survive. Land a deal before the first game ships. If you do you will avoid shopping around for a new deal as your just completed game dies on the shelves and repeat the above process one more time, this time without a safety net. If you fail this time you won''t be able convince another publisher to give you money. If you fail to make a great selling game… Game Over. Find a new job. There is another startup starting 3 blocks down with an idea for a game that can’t fail! Okay lets do the ''Scooby-Doo Ending'' here for a moment and suppose you are successful, it does happen as there are very talented people that create miracles in the world of gaming. The reason why your company will get bought up by the publisher for less than its worth is that you are short on money during the time you are waiting for royalties. If you didn’t start a new project you won''t live long enough to see royalties, more importantly you won''t even know that before the publisher does, that you have been successful. They get sales figures and analyze them before you do. They will then come at the principals of your company and offer some stock in turn for the ownership of your company. You will get decent salaries and be signed to long term contracts to stay with the company....as long as they are happy with your future games...or they fire you. This isn’t the worse thing that can happen but its not as good as if you could have held on and kept the company in good health. Well that’s my take on the industry. Your mileage may vary. So why would anyone want to get involved in this crazy and cutthroat industry? Because it’s the must fun and exciting thing you can imagine being involved in! Have fun! I can share my ideas on what I think it takes to avoid these pitfalls if anyone is interested I’ll follow this with another post. Joshua Morris Game Designer/Producer -(unannounced project) Former Designer and Producer of Starfleet Command II and Orion Pirates

I dont really know why these people do it either, I mean making these games when any fool on the street could tell you it wont work, all these people are making games and failing, if you told me an idea I could tell you (withen reason) whether it would be a success or not...

CEO Plunder Studios

except for Deer Hunter...I didnt call that one ;>

Josh


Game Designer/Producer -(unannounced project)
Former Designer and Producer of Starfleet Command II and Orion Pirates

Good Post, It's nice to see you've thought through the trials and tribulations of dealing with publishers. While I can't speak for everyone on this board, the problems that you outline are exactly the reason why I as an independent developer would never go through a traditional publisher.

As I see it, any start up game development shop in the situation you describe has little to no chance of surviving unless they have a well established track record. Also I don’t think you can call them independent anymore when they have a publisher underwriting the development of the game, I think that is the line between being independent or not. (but I could be wrong)

What makes the independent developer route so much more attractive to new/un-proven game developers is that they fund their projects themselves. They dont answer to a publisher during the development of the project and they are free to sell to whoever they want. The internet today is at a point where you can reach a huge market with online only distribution. You can do quite well as an independent developer selling your game online and never going through a traditional publisher or signing any retail contracts.

The other flaw that I see in your new/un-proven development house from the example above is that they were going after the big boys with their first project. You can minimize your risk as an independent developer by initially going after market segments that are being missed by the big boys. There is plenty of money to be made here for the independent developer. Once he has established some good revenue streams from a few products catering to that market, s/he may be in a position to make a run at the commercial markets with a commercial quality game. Even in this ideal scenario, the chances of succeeding in that market are still very slim, but an order of magnitude better then the scenario you outline above.


[edited by - ironside on April 26, 2002 5:20:55 AM]

Josh, if this is the way you feel about it, and I don''t dispute that anything you''ve said is completely true, why are you trying to start out your own project? Have you figured out another way to do things without succumbing to all the pitfalls you just highlighted?

quote: Original post by Ironside
The internet today is at a point where you can reach a huge market with online only distribution. You can do quite well as an independent developer selling your game online and never going through a traditional publisher or signing any retail contracts.

Exactly, why does everyone think that the ONLY way to sell a game is through a publisher? Learn some business and marketing, and you can sell your game on your own. Of course, most people don't want to get into that stuff and just want to develop a game and expect people to buy it. Well, guess what the publisher's job is? To market the game! If you're not willing to do it yourself then don't whine about how bad publishers are. And yes they are in business to make money, this isn't communism. Why does everyone always make publishers look all evil? They're a business. They're still around because they're doing something right. I'm not saying it's nice what's happening to the developers but you have to see it from the publisher's point of view. They're not exactly rolling in money especially right now.

quote: Original post by Ironside

The other flaw that I see in your new/un-proven development house from the example above is that they were going after the big boys with their first project. You can minimize your risk as an independent developer by initially going after market segments that are being missed by the big boys. There is plenty of money to be made here for the independent developer. Once he has established some good revenue streams from a few products catering to that market, s/he may be in a position to make a run at the commercial markets with a commercial quality game. Even in this ideal scenario, the chances of succeeding in that market are still very slim, but an order of magnitude better then the scenario you outline above.

Again, well said. Why does everyone want to make big ass commercial games that will go head to head with Quake 3? What is wrong with making small games and selling them online? Look at the success of Dexterity Software. They're purely internet based, independent, and when they started they didn't require a 1.6 million dollar budget. Start SMALL, everyone keeps saying that about games, "start with small games and then bigger ones" but when it comes to startups they seem to think just because they got a publisher contract they're superman. Truth is, once you have a contract you're not independent anymore. The publisher is now your employer. If you want true independence you have to start with small games, sell them on your own on the internet, and use your revenue to fund the future projects.

Small games take 6 to 12 months to make generally, so you'll get your revenue a lot quicker, you can also pump out a lot more games at that rate than if you took 2-3 years for a huge project, which has a good chance of failing to make money. Publishers are not stupid, they fund 10 games at a time for a reason. Making small games would allow the developer to do the same pretty much, and their budgets are nowhere near the insanity of the "big boys" games.

Well that turned into a bit of a rant but I'm planning to start an independent game company to make small games when I finish college, so I guess now you can see where all that came from

[edited by - Supernova on April 26, 2002 11:43:10 AM]

Tacit,

I guess I am a glutton for punishment. The game industry is still a very fun and exciting industry to work for, I would rather fight to exist in this field than to get stabbed in the back trying to sell wedge-o-matics. My point was that this is a business like any other and you just need to know the pitfalls.


There are ways around the problems they are just hard to acomplish.


The key is getting as much done on the project before shopping it around. You will avoid a lot of tampering from a publisher if the game is already "done-ish". You will also get better royalties since there is less risk to the publisher.

There are also second line publishers out there that may give you a better deal if they think you have a quality product.

There are also Angel investors and venture capitalists. They will take a portion of your company to fund you but then you can finish your game before shopping it around. A small percentage of a large amount of money is a lot better then a small percentage on a large amount of money. These guys will want a lot to documentation and a solid business plan so be prepared. They may also want collateral on there investment which can be a problem.

Then there is self publishing. The internet is powerful these days. If you can somehow finish your game and market it on a website you can suceed. The makers of Combat Mission are my favorite example of sucess in this arena. You will sell a fraction of the units you would in stores (in most cases) but you will get almost all the profits!

The point is that the further you can get your project along the more leverage you have. The odds and possiblities increase the longer you can afford to work on a project on your own.

I will be using a combonation of the above methods to look for the best deal for me. We will find out if I am right.

Josh




Game Designer/Producer -(unannounced project)
Former Designer and Producer of Starfleet Command II and Orion Pirates

quote: Original post by Jinxx
I will be using a combonation of the above methods to look for the best deal for me. We will find out if I am right.

Just curious what size of a team you are planning on? If you are thinking of going it alone (not counting possibly contracting out a few people short term now and then) then I can see you using the self funding/self publishing model. If you are planning on any sizable team, then I imagine you wont be going the self funded route (either that, or Taldren paid you quite well). In this case, I would be interested in more specifics on your "combonation of the above methods". The obvious thought would be using venture capital to develop and then self publishing to reclaim a higher percentage of the profits. If this is the case, I wonder if the VCs wouldn't have some reservations about investing in something not involved with a big name publisher. The other combination I can think of is using VC to pay for development and then shop a finished product to publishers, but then again thats really not that untraditional of a plan, and it has nothing to do with independant development.

Just for kicks, let me talk a little about my plans. I have a game I've been working on for the past 14 months in my spare time. Its 100% self funded, and has cost me almost nothing out of pocket except for dev tools. When I finish in the next couple of months, I plan on going the self publishing (via the web) route. Once I release it I plan to spend 3 to 4 months on marketing, bug fixing, and preparing the first expansion pack (just a bunch of additional levels and a few small additional features). At that time, I hope to be making at least a modestly decent ammount of money. Not enough to quit my day job, but enough to recoup my dev tool expenses and hire a few contractors for a few weeks. I would use the contractors to spice up my models, textures, and music. The reason for this is that I believe my game has a certain level of "console-appeal" to it and is at least unique enough to stand out from the crowd a bit. So, at that time I would like to pitch my game to some console publishers. Basically, I would be showing them a finished and polished PC product, and would be looking for their partial-backing on a console port. I would be willing to do the console port out of pocket, and would just need them to provide:

1)access to development consoles
2)additional quality control for the console ports
3)full manufacturing, markting, and distribution of the game.

At this point, I believe the publisher would be placed in a relatively low risk situation, and I would be in a good position to negotiate a much higher royalty rate. They would have a fully playable version to try out before making a decision, and I will hopefully have some promising sales figures and some good reviews to show them for the existing PC version.

Thats my plan for right now. Feedback is welcome.

P.S. I havent yet decided on which console(s) I would be porting to. XBOX is always a relatively obvious choice (just for the ease of porting). However, my gut tells me the GameCube would be the good target for my game. Then again, the PS2 is more of a "we have everything" type of console. Im a bit undecided here, and would perhaps need some guidance from the publisher. Maybe in 6 months, my head will be a bit clearer on this decision.

[edited by - LordKronos on April 26, 2002 5:44:10 PM]

Always be weary of VC funding. For the most part VC''s will want a controlling interest in your company for the money they are giving you and that''s the very least. Most likely they will actually want to play a role in policy making and even game design decisions (worst case). Actually the absolute worst case is all of the above with a person who doesn''t know anything about game development. The above scenario is not nearly so bad if the VC having input on design decisions is an industry veteran and becomes an active member of the team. However there are alot more of the former then the latter

LordKronos: I think your plan is good. By already having a completed product you mitigate most of the risks outlined above. Can''t wait to try your game!

Why does anyone dream of being a rock star? 99% will fail and sell gas while their garage band waits to get discovered, and bides their time playing weddings and birthday parties for rich kids.

The reason... The dream is worth the risk. A life set purely in reality is not a life.

I''m gonna be one of the developers that makes it big! Now if you''ll excuse me I have to go buy a lottery ticket