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  • Book Excerpt: Secrets of the Game Business

    [07.08.05]
    - Jay Powell
  • A development studio has been working for months on the next greatest game and now it's time to hit the streets and secure a publisher for the game. They're confronted with their first decision: do they want a single publisher, or multiple publishers? This article gives developers the information they need to decide whether they want one publisher to handle every territory in the world, or whether it would be better for the company to leverage their risk across multiple publishers. Each model has its advantages and pitfalls, but developers need to have a firm grasp on the development status of their game and what their company needs to move forward.

    The Alternatives

    There are two primary models used for publishing or distributing titles. The worldwide model will place a game with one publisher who will handle everything for the developer and take care of all sales around the world. The country-by-country model will involve selling the game to smaller publishers in each major territory, or having one of these publishers handle a group of smaller territories.

    Basic Criteria for Each Model

    The first step in deciding which model a developer should go with is to evaluate their game and company. The two primary factors for this evaluation are the state of the development and the amount of cash in the bank. When looking at the state of development, the further in development a company is, the more options they will have.

    CASE STUDY 4.6.1: EVALUATING INTELLECTUAL PROPERTY

    The following are some of the major points involved in determining whether an intellectual property is marketable as the basis for a game.

    Quality of the Property

    • How strong are the characters in terms of depth and popularity?
    • Is it a well-developed book/television series/film/etc.?
    • Is it interesting, could the story add value to a game?
    • Is it a very linear story, or is there a broader "world?"

    Value of the Property

    • Popularity
    • Age (has it peaked?)
    • Strength of following
    • Expected longevity

    Target Demographics

    • Age
    • Sex
    • Geographic region(s)

    Ability to Translate into Game

    • What genres would be appropriate?
    • What platforms could it be adapted for?
    • Can the story be used in a game, or is it too linear?
    • Could it be used on an existing game project or to increase sales to an existing line?

    Competing Properties

    • What properties are similar?
    • Why is this property superior?
    • If another developer selects a competing property, how will it affect the market?
    • What games would it be similar to?

    Worldwide publishers will be able to sign titles on a technology demonstration or design document if your team has a great track record. When developers begin this process, they must realize that as much as three to five months can pass between the initial pitch and the signing of a contract.

    When dealing with smaller publishers or country-by-country publishers, this process can take as little as one month. Country-by-country publishers will have to see a working demo of the game, preferably at beta stage. Developers also need a significant base of contacts with these publishers as well as time to contact, follow up, and negotiate contracts with each.

    Once a developer understands the position of their company and title, they will be in a position to determine which model is best for them. This article takes a deeper look at each business model and how it will affect their game and company both immediately and in the long run.

    Advantages of the Worldwide Model

    When most developers begin to think about getting a publisher for their game, the publishers in this category are the ones that come to mind. What most people do not realize is that there are far more publishers that can handle these deals than they think. Around the globe, there are about 30 with the capital and distribution networks to handle a multimillion-dollar game on a worldwide scale. Many developers will only submit their title to the top five or six that they see consistently in the press. Here are the advantages of the worldwide model.

    CASE STUDY 4.6.2: WHAT TO INCLUDE IN A PACKAGE TO A WORLDWIDE PUBLISHER

    Here is a checklist of the materials you should provide to a worldwide publisher:

    • A 10- to 15-page game overview that includes thought-out and detailed concept, look and feel, details on gameplay including number of hours, types, and depth of gameplay.
    • A sell sheet that comprises a one-page overview of your game including screenshots, unique selling points, high-level concept, system requirements, and estimated ESRB rating.
    • A technical design review featuring unique technological aspects, polygon rates, frame rates, and so forth, including how different technological features will affect the budget.
    • Technical requirements of the final product.
    • Pre-production time scales and budgets.
    • Estimates of schedules and budgets for the complete project, including milestones.
    • Video or rendered/interactive demo that shows core gameplay. With a demo, include a detailed walkthrough.
    • Localization overview with an estimate of the localization effort, including approximate number of words, files, graphics needing localization, different voices, and so forth, and any unique localization issues, such as a proprietary engine limiting ability to subcontract localization.
    • Competitive analysis, including similar products in the same category (with sales results for those products) and strengths and weaknesses compared to those products.
    • Copyright information , including, will specific actors need to be hired? Are there union involvement issues, or specific approvals required?
    • Unique selling points of the game.

    Alleviating the Risk Early

    For companies that need to have a source of revenue early in the development cycle, this is the best model to use. Companies in this situation that stand a realistic chance of obtaining a contract with a major worldwide publisher are generally new teams with a wealth of experienced individuals and companies that have been in the industry for some time and want to get a second or third team moving on a project. If ateam has a solid track record, these publishers will sign based on design documentation, technology demos, and a solid timetable of milestones. This will allow the team to work on the game without worrying about not being paid, and will save the developers from investing time in a project that will never see the store shelves. Provided all the milestones are met, the contract will cover the expenses of the project as long as it is in development.

    Access to Professional Testing Facilities

    Few developers have the time or the facilities to fully test a game for gameplay balancing, bugs, and compatibility. Choosing a worldwide publisher will completely eliminate this burden. The publisher will be responsible for this testing and for promptly reporting any problems to the developer. The publisher will also have a wealth of experience with games in the genre to help let you know what features and gameplay elements have worked well with retailers and consumers in the past. Many developers might believe that too much of this input destroys the game that they have envisioned, which is true when this feedback gets out of hand. However, when handled correctly, it can make the difference between a poor selling game and a top 10. Keep in mind that selling to retailers can be as important as selling to gamers. If the buyer for a major chain has a problem with the game, a significant portion of the market can vanish from under your feet-which takes us to our next point.

    Better Access to Retailers and End Users

    In today's retail market, being excluded from the shelves of one store can put a severe dent in the sell-through of a game. One retailer deciding not to stock a game can cause a ripple effect down the line. Other retailers will see that it is not being stocked and can turn the game down based on this as well. Worldwide publishers not only have great access to all the retail channels, they also have the weight and clout to turn a "no" or "maybe" into a "yes." Through the promise of other titles or promotions, a worldwide publisher can get a title onto some store shelves that a smaller publisher would not have the ability to do. Worldwide publishers also have the experience with similar titles to know what the end users and press liked and disliked. Developers can use this experience to create a better game and consequently a bigger hit.

    Name Recognition

    Some worldwide publishers will publish titles that sell great despite bad reviews. How does this happen? Gamers often buy products based on the track record of the publisher; they have faith in that company to consistently deliver a quality product. By signing a contract with one of these publishers, a developer gains an instant fan base and potential customers.

    This name recognition will also carry over to the next title from a developer. By having one or more titles published on a worldwide scale by one of the larger publishers, the developer will be able to capitalize on the acquired notoriety when approaching other publishers in the future. This is a valuable tool in the process of selling and negotiating future titles.

    Marketing

    The larger publishers simply have more money to invest in marketing. More money invested here will generally translate into better sales. The best games in the world will not sell if they are not marketed correctly, and sometimes the extra marketing dollars will save a title that is not receiving the great reviews that everyone had planned. Small publishers will finance a few ads and some Web advertising, but the bigger publishers can produce the TV spots and in-store advertising that really push units out the door. Worldwide publishers can also afford to pay for more and better shelf space for their products. There is a reason why the games from the worldwide publishers are always up front and in the face of the consumers: the publisher pays a premium forthis location.

    In addition, the more a publisher markets a game, the more name recognition the developer gets for future products. Again, this is a powerful tool for future negotiations and sales.

    Relationships

    One of the biggest benefits of working with a worldwide publisher is the relationship that a developer will build. Publishers will generally look to teams with which they have had a positive experience in the past to handle contract deals. These deals, which can range from add-ons to ports to the next title in a franchise series, are difficult to obtain without a prior relationship with the publisher, but can be a huge boost to the team.

    A good experience with the publisher will also make things much easier the next time a developer needs to pitch a game to them. They'll remember what went right and what went wrong, and reward good teams accordingly. If a developer created a hit for them, the last thing they want to see is that team working on a project for a competitor.

    Drawbacks of Worldwide Publishers

    Working with worldwide publishers has a lot to offer if a developer is in a position to move on such a deal. However, these publishers also have their drawbacks.

    Time Restraints

    When a developer submits a title to one of the worldwide publishers, they should be aware of the time that it will take that publisher to evaluate the title. Most of these companies will have to show the title to multiple offices in North America and Europe to get the approval process rolling. These offices will evaluate the game based on the gameplay, finances, and marketability. If the game passes these steps, a board will generally have to approve the project. The higher the budget of the game, the more processes a developer can expect to go through. This process can take anywhere from one month to three months in some cases.

    Contract Negotiations

    Once the title is approved, the contract negotiation begins. Again, this is going to take time, as the publisher will have a large and sometimes exacting legal team reviewing the contract at each step. The developer is now looking at another one to three months in negotiation before a single dollar is transferred to them. The contracts themselves are much more stringent with the larger worldwide publishers. A developer might find that they are not getting the best deal possible with the contract that they have been presented from the publisher, and swinging the points of the contract in their favor will be a long and arduous process.

    Overlooked Territories

    Very few worldwide publishers have true distribution across the entire planet. In many cases, some smaller territories with a market for the game will be overlooked. True, these territories generate limited revenues, but when added together they can contribute a nice sum of money. If a worldwide publisher has no presence in South America , Portugal , or Eastern Europe , the developer might end up leaving a lot of money on the table. If the publisher has no plans to support the game in a territory, the developer would be better off selling it on their own in those markets.

    Sublicensing

    Worldwide publishers who do not have their own worldwide distribution will also sublicense to the territories they cannot cover directly. By sublicensing the game to smaller distributors or publishers, the worldwide publisher can generate revenue of their own with little effort. The drawback to the developer is that in most situations they are receiving a percentage of the percentage their worldwide publisher receives. With a little effort, the developer could make these sales directly and earn much more money.

    Lower Royalty Rates

    The sublicensing factor is not the only downside to the royalties from a worldwide publisher. Depending on the developer's track record and the profile of the project, the overall royalty rate from a worldwide publisher is generally much smaller as well. This is because the risk associated with completely or nearly completely funding a project is much higher than that involved in acquiring a nearly complete game. Consequently, the royalty rates will generally be much smaller-from 15% to 25% as a general rule. Other deal structures can generate a much higher backend for the developer.

    Less Mind Share

    Worldwide publishers handle dozens if not hundreds of titles each year. A developer can rarely count on getting the mind share from a worldwide publisher that they can get from a smaller territorial or country-by-country publisher. Less mind share can translate into less time spent with the producer polishing the game, and less marketing attributed to the game. All of this can easily result in fewer sales, which means smaller royalties for the developer.

    High Risk for the Developer

    One of the biggest concerns with the worldwide model, given the state of the industry over the last few years, is the risk involved in this type of deal for the developer. By signing full rights to a game over to one publisher, that developer has placed all of their eggs in one basket. Without a solid contract and backup plan, this could spell disaster for the developer if the publisher goes bankrupt, is purchased, or loses interest in the title.

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