The Good, the Bad and the Ugly — understanding the gaming business world
I have been working for game development and publishing business for years and love to watch it chops and changes.
But I know how difficult it is to understand that environment, especially if you are not involved in that business. Who are those publishers? How do they differ from developers? Why these days publishers are developers (and vice versa)? And what do they have to do with crowdfunding? Find the answers below.
Publishers and “The Old Model”
Publishing model is the way how old and popular games were built.
Publisher holds money and acts as a usual venture investor. It finds an interesting and potentially profitable concept, puts money into and waits. Publishers also might run a tender among developers for the project they have in mind. Most times the concept rocks, but occasionally fails. You all know these publishers: Bethesda, Ubisoft and EA work like that.
Usually developer owns a small studio with a really good concept trying to find a publisher. If lucky enough developer would be bought out by a publisher to be integrated and form a branch. This way a publisher become a big company with a bunch of branches.
Gamers tend to love game developers and products they make. Core audience: fans, old gamers, tech journalists are especially loyal.
Take, for example, Destiny — a popular MMOFPS-game by Bungie. It was published by Activision, a big and well-known company. But in ads you see: «Destiny by Bungie, creators of the Halo». Everybody knows Halo, and it gives an extra credit to Bungie. Who needs publisher if you are already famous?
Sometimes designers, managers and creators became no-namers, part of a big machine. Sometimes they make really good projects and become famous. Who knows that Heroes Of Might and Magic V were made in Moscow by Nival? Now Nival weights more in publishing business.
An old developer model worked perfectly twenty or even ten years ago. Game publishers looked like Hollywood studios. Many indie developers starve to work with them. But there is always a catch. Publisher buys a studio together with its copyrights. It means that indie-developers lose copyrights.
In 2004 Interplay, the maker of Fallout series, became bankrupt. Now days Bethesda Softworks owns all rights for the Fallout universe. Creators of first Fallout games got nothing, despite working on Fallout for many, many years. Nothing personal, just business.
Indie-Developers and “The Crowdfunding Geeks”
In 2010’s crowdfunding platforms emerged. Developers got themselves a new way to be invested, without publishers and copyright losses.
Obsidian Entertainment, started a campaign on a Kickstarter and earned $3.9 millions from 73900 backers. That helped them make The Pillars Eternity, their new game. $4 million is a lot of money, worthy of a decent project. It was more than enough, but wasn’t the record. Shenmue III earned $6,3 millions, Bloodstained got $ 5,5 millions.
Since 2009, 21.400 game projects were launched on a Kickstarter, and 6.898 were successful. They got $390 million total, but 6.282 earn less than $100.000. It means that 10% of top projects like Bloodstained hit the jackpot and get all the money.
It is really hard to be a successful indie developer on a Kickstarter. Even if you have a great idea, you should invest in marketing materials, befriend tech journalists, or just be famous. Like Tim Schafer, who earned $3.3 million for Double Fine Adventure. He succeeded because he was famous for projects like Full Throttle and Monkey Island.
Developing publishers and the “Hybrid Model”
An old publishers and indie developers from a Kickstarter are the two end of the stick. These models are extremes, and now dev and publishing business tend to be in the middle.
The good example is The Wargaming, developer and publisher of the famous World of Tanks. That studio started as an indie developer, using their own investments. And now World of Tanks rocks.
Sometimes small budget is an advantage. Wargaming worked hard with no room for error. They were a small studio and had no cover: it was a natural selection of ideas in action. If they ran short of cash, they would fail. If they made a mistake, they would fail. Big publishers sometimes see no errors, pour money in stillborn projects and launch something like Duke Nukem Forever.
When World of Tanks became a hit, Wargaming became a publisher. Wargaming opened offices in Europe and US and started Asian branch. They decided not to sell rights and publish games by themselves. Wargaming did not stop making games: World of Warships, World of Warplanes and the other. They localize and publish every game independently. This is how hybrid model looks.
The other way to be hybrid is to be good at licensing and localization. Such publishers represent developers in East Europe or Asia. They help with translation, local marketing and support, solve legal issues. It is a big business with many companies involved. For example, Mail.ru is the biggest hybrid company in Russia. If you want to go big in China — Tencent is your natural selection.
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Publishers, Indie-developers and Hybrids are not fixed types. Game business constantly evolves and mutates, and the picture is changing rapidly. That being said, I have just briefly touched common structures in a PC/console gaming worlds. Mobile platforms is a completely different story. And it is wonder yet to see how VR/AR games are going to find its place under the sun.