LAFS SVGI Session 7 - Game Publishing
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Transcript of LAFS SVGI Session 7 - Game Publishing
GAME PUBLISHINGSession 7
David Mullich
Survey of the Video Game Industry
The Los Angeles Film School
Economic Terms
Cost: The value of money used to produce something
Revenue: The income a company receives from its business activities
Profit: When revenues exceed costs
Man-hour
Man-hour: The amount of work an average worker can perform in one-hour
Researching and writing a college paper might require a student to do 4 man-hours of work
Preparing a family banquet from scratch might require 10 man-hours
Goods and Services
Good: A product or material that is sold to satisfy the wants and needs of a customer
Service: An intangible item that satisfies a customer’s wants and needs
Market: A system where parties engage in the exchange of goods and services
Value: The worth of a good or service as determined by the market
Video Game: Product or Service?
Capital(ism)
Capitalism is a system of creating a profit by producing a good or service
Financial Capital is “money lying around”
Personal Capital
Your weekly salaryTaxesExpenses
○ ○ ○ ○
What’s left is Discretionary Income
Discretionary Income (DI)
Revenue – Overhead = DI…or Gross Income – taxes – necessities = DI
What do businesses do with their discretionary income?
Financial Capital
Capitalists want to put their money to use to make more money This is called “Re-Investing”
Any use of such money involves RISK
Risk
“Nothing ventured, nothing gained.”Lottery players > Very great risk of money, no
risk of timeStock buyers > Moderate risk of money, small
risk of timeEntrepreneurs > Great risk of money and time
Corollary to the Golden Rule:
Golden Rule of Risk
Whoever risks the most gets the greatest reward. Which of these two risks the most at the
Springfield nuclear power plant?
Labor vs. Owners
Employees (laborer):No risk of income (as long as company stays in
business)No share in profits (unless negotiated or offered)
Owners (capitalists):No guarantee of income unless company makes
a profitLion’s share of profits (less what they’ve
promised to investors)
Risk = Stress
Most released games don’t make a profit
Game projects are frequently cancelled
Employees are frequently laid off
Why don’t most games make a profit?
Sturgeon’s Law
90% of everything is crap
Pareto Principle (80/20 Rule)
For many events, roughly 80% of the effects come from 20% of the causes
80% of your sales come from 20% of your clients
Only about 10-20% of video games break even
THE PUBLISHER
Publisher
A video game publisher is a company that publishes video games that it has either developed internally or has had developed by a video game developer
Game Developer (Studio)
Stakeholders Studio Head Technical Director Lead Programmer Art Director Design Director Business Development Manager (Sales)
Game Publisher
Stakeholders Product Development Legal Finance Marketing Sales Customer Service
Publisher Functions
Finance Production Marketing
Market Research Advertising Packaging
Manufacturing Distribution Support
Technical Community Management
Most of All – Publishers are the Bank
Have the most money at riskCost of developmentCost of marketing Cost of inventory
Types of Risk
Things that can go wrong all along the chain:Technological riskSchedule riskMarket riskInventory riskDistribution riskLiability risk
Result is always the same: MONEY LOST
The Blockbuster Trap
Companies try to replicate success
Source: Anita Elberse, “The Creative Industries: Managing Products and Product Portfolios,” HBS No. 409-077 (Boston: Harvard Business School Publishing, 9002), p. 11
because demand is uncertain, they imitate “winners”
competitors do the same, so investment
goes up
greater reliance on winners
greater desire to avoid risk and copy
past successes
Portfolio Management
Diversify by genre Diversify by platform Diversify by budget Hope that your hits cover
your losses
The Greenlight Process
Greenlighting is getting everyone on your team to agree “let’s do it!”
Development Contracts
Work-for-HireFlat feeNo retained rights to developer
Publishing License AgreementAdvance against royaltiesDeveloper may retain certain rights
Royalty
Percentage of every sale Up-front money is an “advance” on future
royalties Advance must be “earned out” before true
royalties are paid
Stupid Developer Trick
“I’ll cover all my costs with the advance and wait for profits when the royalties come.”
MOST GAMES NEVER EARN OUT (make a profit).
Advances
Never paid in one lump sumToo riskyBad for cash flow
Paid out over a series of “milestones”
Milestones
Typically paid against “deliverables”Signed ContractDocuments (GDD, TDD, Schedule)First Playable (Will it work? Will it be fun?)Alpha (feature complete)Beta (asset complete)Gold Master (publisher approved to sell)Source Code & Assets
Milestones
Production milestones (such as Alpha and Beta) are typically defined by:Features: Degree of completenessAssets: Percent finalBugs: Number and severity allowable
Risk vs. Reward
Video Game Developers vs Publishers: Who Wins? (12:33)
BUSINESS MODELS
1950s-60s – Priceless
Early 1970s - Rent
Early video game machines were placed along side pinball machines, pool tables, foosball and air hockey
Late 1970s - Buy
Early 2000s - Rent
You “bought” early mobile games, but you didn’t really own them
Free To Play
Sell premium features via subscription Sell items or services individually Sell eyeballs (advertising) Blend two or three
Conversion Rate
Percentage of players who spend money on your game.(for example:)SubscriptionsPremium featuresDigital goods
Online Business Models
The Times – They Are A Changin’
Game Theory with Scott Steinberg - Episode 1: Reinventing the Video Game Industry (10:00)
MARKETING
We’re Sudden Millionaires
Our rich Uncle Carlos left us $2M (USD)! We can save it
Risk? Reward?
We can invest it Risk? Reward?
We can start a business Risk? Reward?
Let’s Make (and Sell) a Game!
What are we going to make?Vision DocFeasibility Study
Who’s going to buy it?Business Case
Marketing
Demand for the ProductOptimal MarketValue PropositionCreate AwarenessCommunication Channels
Market
“Those whose money you want.”Who’s buying?What are they buying?How competitive is the market?Are there voids to fill?How do we create demand for our product?
Marketing seeks to answer these questions through the Business case.
Marketing Terms
• Installed base: a measure of the number of units of a particular type of system
• Market share: the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity
• Metrics: the continuous iterative exploration of past business performance
Types of Research
Concept tests Competitive research Gameplay/usability research Advertising research Demographic research
Research
Inherently flawedSample sizeThe Observer EffectAsking the wrong questionsMisinterpreting the results
Better thanAnecdotesPolling your friendsCalling your daughter during a meeting
Demography
“The statistical study of human populations”
How would we describe this room?100% Californian100% nerd100% ages 17-34
Demographics
Different ways of describing groupsAgeGenderGeographic distribution
○ States or Regions○ Urban / Suburban / Rural
IncomeEthnicityFamily size
○ Single/Married○ # of kids
Chicken / Egg Question:
Does the game determine the market?
or Does the market determine the game?
Considerations
How does the market impact game design?What genres are appropriate?What platforms are appropriate?How difficult is the game?How steep is the learning curve?How long does it take to play?Is it single-player or social?What licenses work?
Why to Buy?
The marketer’s (and the designer’s) job is to answer that question.
Answer must be more specific than “it’s cool!” or “it’s fun!”
We Buy to Fill Needs
Cheetos hunger Mountain Dew thirst Zoo York hoodies clothing Gasoline transportation Anything cool self esteem
Psychologist Abraham Maslow proposed that we unconsciously prioritize our needs:
Maslow’s Hierarchy of Needs
Know Your Market
Mass Core Niche
Mass Market
Very large and diverse
Core (or “Hardcore”) Market
Smaller and more homogeneous
Niche
Small but very loyal
Marketing Channels
Magazine/Web Advertisements Billboards Tradeshows Radio/Television Commercials
PR ≠ Advertising
Public Relations is publicity that you don’t pay for. Sending out press releases Doing interviews and press tours Being reviewed Writing blogs Appearing on podcasts
There’s no such thing as bad PR Screw-ups double the press Piracy is a nice issue Linux port? Do it!
Create Assets
Make a deviantArt account for your concept art
Post gameplay videos on YouTube Publish and spread screenshots
Everything A Game Trailer Should Do Have sound Be shorter than two minutes Have a minimum of text Leave viewers with an understanding of
how your game plays Show what makes your game special
RETAIL
Distributor
An organization or set of organizations (go-between) involved in the process of making a product or service available for use or consumption by a consumer or business user.
Retailer
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser.
Retailers
Major, Game Retailer GameStop/EB Games
Minor, Game Retailer Pink Godzilla (Gorilla), Hyper Game, Hastings
Major, Tech Retailer Best Buy, Fry’s Electronics
Major, Mass Retail Wal-Mart, Target, Kmart, CostCo, Amazon
Retailer Issues
Displays Pre-orders Trade-ins Ratings/Appropriateness Cross-Regional sales
Displays
Buying Visibility “Street Date” “Stock Date”
SKU
A SKU is a stock-keeping unit, a number code that represents a unique identifier for each distinct product and service that can be purchased.
Pre-Orders
Consumer: Guarantees prompt delivery Manufacturer: Allows them to gauge demand Retailers: Assured of minimum sales Marketing: Used to generate buzz
A pre-order is an order placed for an item which has not yet been released.
Trade-Ins
Decreases unit sales for publishers (and developers)
Significant profit for retailer
POST RELEASE
Downloadable Content (DLC)
Additional content released through the internet
“Live Team”:ProducersDevelopmentQACommunity Managers
Revenue is NOT split with retailers
DLC by Genre
Fighting: Extra characters, costumes Shooting: Maps, multiplayer modes,
unbalanced new weapons Sports: Release annual full-priced title
instead Action-Adventure: New areas, sidequests,
non-standard weapon type RPG: Items, weapons, armor, quests
DLC by Genre
Strategy: New scenarios, maps, units Racing: Cars, tracks, combat mode Party: Minigames Music: Songs, famous musician avatars Exercise: Routines, yoga poses, mode
where the game just complements your body
Community Managers
MMOs and other Online games Roles:
Beat CopCruise Director
Beat Cop
Griefing Abuse Fraud Farming Exploits
Cruise Director
Information help Problem solving Event planning and
management Content creation
GM Tool
Master control panel for any accountCreate/delete items/moneyChange character attributeCustomer service functions
World controlRare spawnsWorld events
Community Management
Extra Credits: Community Management (5:17)
INDIE DEVELOPMENT
Indie Development
Extra Credits, Season 6, Episode 21 - So You Want to be an Indie (6:29)
Indie Project Funding Options
Publishers Day Job Credit Cards Friends & Family Patronage Festivals & Contest Prizes Crowdfunding Government Programs
Indie Company Funding Options
Friends, Families & Fools Incubators/Accelerators Angel Investors Seed & Early Stage Venture Capitalists
Crowdfunding
Extra Credits, Season 4, Episode 10 – Crowdfunding (7:29)
Electronic Arts
G4 Icons Episode #45: Electronic Arts (21:32)