Gamecock
Those crazy fellas from GoD games appear to be at it again. This time around it's Gamecock. With a live up like Mushroom Men and Hail to the Chimp it seems like a sure thing! I hope the E3 parties are as amazing as they were in the old days...oh yeah right.
"Thanks to the support of savvy backers, Mr. Wilson believes the Gathering idea will fare better this time around. For one thing, he isn’t worried about the EAs, Activisions, or Take-Twos. “The only real competitive advantage those guys have is money,” he said. “Distribution and developer partnerships can be had with money.”"
It's a good thing when you don't have to count on money to make you successful right? I'm looking forward to more on this actually, indie publishers are a thing that interests us a lot.
RED HERRING | Gaming Vets Launch Gamecock
Labels: mmo
14 Comments:
So these guys intend to negotiate deals in which the developers give up a smaller piece of the pie, but presumably the publishers do the same tasks and have the same costs as traditional publishers.
Are they just generous/more ethical/whatever, or is a better developer deal a necessary competitive differentiation for them? Why does it make economic sense for these guys to not demand as much as publishers traditionally have demanded?
I would guess that they are more expense-efficient because they are small and if they are going to do distribution mainly on the internet I would think overheads are way smaller than with huge companies.
Like I would know anything about game business. Yet :)
So they'd be an Internet-only publisher?
Does that mean their campaigns wouldn't include the gaming-magazine ads, visually effective retail packaging, POP sales materials and retail shelf space related costs...IOW, the things that traditional publishers think they have to do to effectively reach enough potential customers?
They've tried this before and they aren't the only ones. I think the base principle is akin to what snellman suggested but also hinging on another aspect. Indie developers by nature don't usually have the huge development costs that big studios have so the risk is smaller for the publisher funding but the rewards can be just as big. Kind of a Mirimax (I think that's the indie film distributor). You get more titles for the same ammount of money spent and thus more chances at hits.
Here's a good update on the developer centric model.
Also, the original 10 commandments from G.O.D. extolling the dev-centric model.
Actually I don't know if they are internet-only, I was just guessing based on two articles I read on them. Actually I think that distribution methods depend on the games and developers much. But I would guess mainly internet based distribution.
Thanks Gophur, I'm gonna have interesting read once I'm done with studies for tonight.
Didn't actually know they (GoD) published Max Payne, probably the only game from Finland people know about anywhere else :)
Following that thought path, one would think that an indie-oriented publisher's risk/benefit analysis for a game like WWIIOL would be pretty dang small, since the game has been in the marketplace for six years, has a solid subscriber base and business-wise is so lean, mean and optimally tuned that it's been able to self-fund most of its development to date.
OTOH, obviously this game isn't going to hit the lucky number, take off like a rocket and become a major mass-market hit. Six years of market history and evidence of the game's design nature vs. the mass market's desires indicate that.
So, are indie publishers oriented toward publishing lots of low-development-cost games primarily in order to find skyrocket-revenue-curve hits? If so, one would expect them to cut their losses as soon as they determine that a game won't be a hit.
Or, are they also interested in publishing low-development-cost games that are steady income generators in the long haul?
Bottom line J is that publishers make all of their money at point of sale. Outside of MMOs there is no back end. You build it, they invest some capitol, say 2 million outta 10 to 20, and then they spend another mil no marketing. They need to have a million box seller at that point and Wal Mart generally gives them 3 weeks to do so.
Small market titles are not what they are looking for. Simply put, they aren't worth the time; no money to be made.
Yep, the total difference between freestanding and OL games is understood. I was considering only OLGs. Obviously the world works differently for publishers that push freestanding-game boxes into WalMarts.
It seems odd to me that OLG publishers don't expect to participate in downstream revenue. Certainly publishers of film and television, for instance, understand that some titles won't hit big at first but will turn out to be steady secondary-revenue performers. Sony Pictures, Lions Gate, Buena Vista and the Weinsteins' various companies among others all used to be considered art-house marketers but now count on making their baseline revenue from the downstream DVD rental/sale and cable-play space.
It sounds to me like there's a business model to be worked out for a different type of game publisher... one that wants to build and maintain a stable of steady OLG niche performers, with a piece of the subscription revenue being an important element. 8^)
What they're moving towards, Jwilly, is the independent studio model that Hollywood has used in the past. It's exactly like Miramax, and it's really starting to gain traction, to the benefit of small studios such as Warpig. CRS is another studio that can fit within that model now.
The idea is to cut out the middleman (traditional retail publishers) for much smaller middlemen - online publishers. Our studio can make the same amount of money selling our product at $10 as a studio going through traditional retail publishers can at $50. That means you don't need a 1 million unit title to be profitable, you only need to sell 200,000 units or much less, which is much more feasible.
Let's say your development costs are $2 million, which is a real sweet spot for a small studio to put out a game. In order to pay that off, you need to sell a crap load more units for the studio to be profitable going through retail than going with online, which offers a MUCH higher percentage of sales to the developer.
The big idea here is with the large studios and publishers to change their revenue streams from producing games themselves to outsourcing that work. For instance, EA would hire a developer to make a game, providing expertise and money for a chance at profits. EA averages around $72 million per title in production costs and licensing. $72 million! And just think of how many of those games are unprofitable because they have to sell so many units. A lot of them are tie-ins to other media franchises, which is even riskier because if the movie or whatever fails, the game doesn't stand a chance. If the movie succeeds, it has a slightly better but still low chance of being profitable.
So it makes sense to spend that money elsewhere. Why spend $72 million on one title when you can spend $2 million on 36 titles or $1 million on 72 titles? Which has the better chance of succeeding? If just one of those games sells 1 million units, they'll break even.
This is the future of the game industry and the big boys are taking notice. EA just recently got into the act of financing numerous small budget titles. And it's great for the industry because it allows for more experimentation, more pushing the envelope, and lower price points, all of which are direly needed in the industry to spur growth. This also pushes down development costs. Off the shelf engines and tools can be sold for a lot less if there are more customers.
CRS wouldn't need a Strategy First these days. They'd find some private investors for a couple hundred thousand, a couple of big studios for $250k - 1 million each, and be on their merry way. Develop their game with <30 people in two years, sell it for $20, and be profitable in weeks, if not days.
That's what we're up to at Warpig. We're out there beating down doors, asking for what is essentially chump change from these guys, pooling it together, and making our game. We sell it online for $X and will be profitable in no time, allowing the studio to continue to develop and perhaps not needing any outside capital for future releases. It used to be that developers had to bend over and take it in the ass from publishers to ship a game. If you were lucky and managed to pay off your debt to them, you might get another ass raping in the future. Now you can have a candle lit dinner, some drinks, and make sweet, sweet love instead of the prison love of days (hopefully) gone past.
There's still a need for retail right now, but you don't have to go that route any longer. If you're successful, you'll still end up with a box on the shelf.
That's a fine analysis if both the developer's and the publisher's business models are built on (virtual) box revenue, and if enough customers can be found via internet promotion and delivery for the lower unit price divided between the publisher and developer to provide them both with a suitable payday.
Finding the customers without the help of retailers is the crux, yes? Customer relationships are their raison d'etre. If you're internet only, it'll be easier to find enough customers if your design has mass appeal.
So what do you do if your OLG design has specialized appeal but superior customer retention and involvement? You're a good candidate for a business model that utilizes slow-but-steady non-traditional marketing, and heavily counts on subscription revenue. You need to trade downstream revenue for upstream marketing, on an *ongoing basis*. A publisher that thinks in terms of getting their payday from initial sales isn't going to fit.
And no, publishers that get their payday from initial sales, but on the net so that they have a smaller cost nut, are not "exactly like Miramax". They're like art picture houses *used* to be, looking for hits but on a smaller scale and quickly cutting their losses on anything that didn't take off...but that was before they discovered the magic of downstream revenue.
You're right in the downstream revenue, but that's what makes this business model work so well. You aren't competing anymore with other titles for increasingly dwindling shelf space. Like Gophur noted, you've got 3 weeks and then you're off the shelf.
And you're right on finding the customers being the crux, but that's where outlets such as Steam do that job very well. To play a newer Valve game you have to use Steam, which can throw up a popup anytime they feel like advertising a game. And you don't have to worry quite as much about downstream revenue because your game will always be available for purchase from the comfort of your home with nearly instant playability. That was a brilliant move on their part.
But other online retailers have their work cut out for them because they don't have that captive audience. They have to build that audience and that has so far proven to be a monumental challenge. These guys may be able to break that mold.
As far as a business model for production and distribution, the analogy of being just like Miramax is a little incomplete, and I was going to follow up on that but I was already in bed. :)
Think of it like a cross between television production and movie distribution. The normal stages of production are:
1. Develop the concept. This is where all of the prototyping on paper is done, your unique elements are drafted, and all of the core concepts are fleshed out. You usually end up with a good portion of your bible from this and probably some concept art to show it off.
2. Produce your technology demo. You secure enough financing to build a fully working demo of your game, usually consisting of one level and incorporating all of your key design and gameplay elements. This is done with very little capital (say $50-200k max) and is made using as much off the shelf free components as possible. What you're looking to do is put a playable demo of your game in the purse string holder's hands to secure the bulk of your capital. This is usually done in 3-6 months with a handful of people.
3. Shop your demo around to investors and secure your financing.
4. Produce your game while finding an online retailer.
5. Ship the game and then try to find a traditional publisher to put the box on the shelf.
As you can see, this is very much like a mix of movie and television production. In TV, you write the first few scripts and show bible, secure financing for a pilot, then shop the pilot to secure more financing and a distribution deal. In this new games business model, you produce your concept and bible, secure financing for your tech demo, then shop that around to secure your production capital and online distribution. At this point it changes over to the Miramax model where Miramax is your traditional publisher, distributing your product to traditional retail outlets. It could languish on the shelves or be a hit. If it's a hit, the publisher makes money, if not, they lose. But the developer is still making money through their online distribution. You aren't beholden to the traditional publisher like before.
So as you can see, there are plenty of places for people to cut their losses. Developers can cut their losses at the prototyping stage, investors can cut their losses at the tech demo stage, and traditional publishers can decide whether or not to publish the title based upon a finished product with demonstrable sales.
So for somebody like EA, there's a lot of reasons to jump into this model. They can finance hundreds and hundreds of concepts and tech demos for the price of one game. They can end up with 200+ playable tech demos from which they can pick and choose what they would like to invest in further. And that's what is really important here. Because original IP has been virtually non-existent in the past few years because it has traditionally been the most risky. The potential for reward is proportional to the risk involved. But if you can lower that risk while keeping the potential reward the same, it becomes a lot easier to take those risks, which leads to more innovation - something that is sorely lacking in the industry right now.
Small studios (<30 people) can be very efficient. $2 million dollars to them is a shipped game in one year, whereas for a studio the size of EA it's a tech demo. They're frugal, especially by outsourcing most of the work. They don't have to pay for licenses, office space, taxes and benefits, etc. because they use freelancers and lean corporate structures. Freelancers tend to work harder because they know their next check is dependent on their performance every single step of the way or are willing to forgo compensation up front for a cut of the back end. All of those costs that somebody like EA can't escape.
It's an exciting time for sure. The next five years will be very monumental.
That analysis doesn't include space for OLGs that, because of complexity and niche appeal, find customers by full-game free-download tryout and make *all* of their revenue from the subscription back end.
If there's no box, the publishing space *has* to consist of fronting marketing money in exchange for a share of the back end...and that implies an ongoing relationship, not a search for hits.
The indie film business is much less a search for hits than it used to be. I'd think that game publishing would want to evolve in that direction as well.
I think where you're having trouble is in how downstream revenue became so important to Hollywood. It wasn't by choice, it was by necessity because their production budgets had become so incredibly bloated. The back end is and should be a bonus, not your primary revenue.
You can only take the analogy so far, especially when comparing it to MMOs which have ongoing costs. Your initial production costs and a fair deal of profit should be gained from the initial sale, not downstream revenue. The downstream is for upkeep, improvement, and some additional profit. Delaying the revenue stream to recoup your initial production costs to the monthly subscription is the sign of either a marketing strategy or a ridiculous budget. And my opinion of using that as a marketing strategy (unless you're using a micro-transaction model) is that it's pure insanity unless your initial and ongoing development costs were extremely low and the bulk of future content is gained for free (Second Life).
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