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Nov 23, 2005

Comments

1.

Biggest problem with this, one Zimmerman acknowledges, is definition of 'Game Developers'.

I could come up with a Bill of Rights for scriptwriters. I could come up with a Bill for directors. I could come up with a Bill for cinematographers. I could come up with a Bill for foley artists.

I couldnt come up with a worthwhile bill for 'filmmakers'.

2.

This whole SWG situation is a turning stone in modern MUD development. You basically have a game's core system redesigned years after release.

I am still torn from a consumer standpoint. But from a developer standpoint, I am a bit outraged. How can a publisher make such huge fundamental changes after the game goes gold?

It is one thing to make small changes, patches. But to go completely away from the games Vision (thanks Brad ;)) is just insanity.

Bravo to Mr. Zimmerman, and I hope more developers in their teams will adobt this creed.

3.

I just want to add that this is hardly something all developers will agree on. As Eric mentions in Gamasutra, some of the contributors to this document (including me) have serious reservations about it. Most of them boil down to the fact that every single deal is different and the structure of every deal should reflect the specifics of that situation.

For instance:

#1. The right to full ownership of what we fully create."

I have no problem with that as long as you are fully and completely funding it, distributing it, etc etc. Of course, in that case, there's not likely to be an issue anyway. Eric falls back on Greg Costikyan's superbly reasoned argument that developers should own stuff "because they fucking should, that's why.” With arguments that cogent, how could anyone disagree?


#5 The right to a fair and equitable share of profits derived from a game.

So vague as to be meaningless. Fair and equitable, in my opinion, means somewhere around 0% if you're not taking any risk, for instance, and scales up from there in proportion with the risk one takes on oneself.


#7 The right to promote and the right of approval over any and all promotion of our games and ourselves.

Sure. A publisher, will invest 10 million, purely on risk. You will be getting paid throughout the entire course of development, and you expect the publisher, who is risking FAR more than you, to allow you to have control over marketing? Come on.


#8 The right of approval over means for distribution, as well as for licensing, merchandizing, and other derivative versions of our games.

Ditto.


#12 The right to employ legal representation in any and all business transactions.

You already have that right, and if you're stupid enough to give it up, you deserve to fail.


#13 The right to final say in creative disputes regarding the game.

When I challenged Eric on this before he gave his speech at Montreal, he said he was assuming that the publishing contract already had an attached content document to it that the publisher signs off on, so Eric isn't actually suggesting that developers, once a contract is signed, should just get carte blanche to make whatever creative decisions they want.

Essentially, this one is predicated on the idea that developers are the creative experts while publishers are the corporate drones. The problem with this is that assuming a developer is a "creative expert" is not warranted. Some might be. Some might think they are and not be. Some certainly are. Some games require simulation experts (a lot of modern sports games) rather than creative experts. And let's face it, so many bad games are made that there is no way to assume it's always the publisher's fault.

Regardless of all this, once again, it's the publisher taking the vast majority of the risk in an advance-on-royalties type of arrangement, and it is thus completely reasonable for the publisher to get final control over anything it deems necessary.

You're free to set your expectations as otherwise, but unless there's a fundamental shift of power, you're wasting your time. The reason top Hollywood actors are able to push publishers around on occasion is because the public demands their specific presence in a movie, or at least rewards the movie with greater sales when a top star is in it. We don't have that in the games industry except in extremely rare cases, and even there I'm dubious as to how much power the brand of the developer actually has with consumers as opposed to the brand of the game. Did Blizzard's name contribute all THAT much to WoW's success, or was it the Warcraft name that did it? Does Sid Meier's name really sell much, or is it the Civilization brand? It's both to some extent of course, but regardless, they are one of only a handful of examples like that at all in the entire games industry. (And please don't mention that you buy all your games based on who makes them. If you're reading Terranova, you're not remotely representative.)

Anyway, Eric's motives are good, but I, at least, find this to be a document which ignores fundamental realities that eventually dictate the limiting boundaries of any deal. Please note that I'm not aiming to answer the question of whether it might not actually BE better for publishers to allow developers some of these. It might be. It might not be. That's way too speculative. I'm just pointing out that the very landscape we're playing on does not permit the rules adaptation that Eric proposes, at least when applied evenly to every player on the field.

--matt


4.

Anyway, Eric's motives are good, but I, at least, find this to be a document which ignores fundamental realities that eventually dictate the limiting boundaries of any deal. Please note that I'm not aiming to answer the question of whether it might not actually BE better for publishers to allow developers some of these. It might be. It might not be. That's way too speculative. I'm just pointing out that the very landscape we're playing on does not permit the rules adaptation that Eric proposes, at least when applied evenly to every player on the field.

Perhaps his motive is to change the playing field to put the games back into the hands of developers, and out of the hands of publishers and VC companies.

It is a noble goal, but is it attainable? I don't think so. Money is the key to all of this. Games with lower funding can be just as great as games with 30 million dollar budgets. However, developers have already given up so much to have their pet projects completed.

If and only if developers are willing to sacrifice their outside funding will this happen. I don't think that will happen.

5.


I think AJ's point is the most relevant one. Several of these "rights" are beyond reasonable expectation, particularly given the vagueness of "game developer".

I basically agree with items 3, 6, 10, 11, and 12, partially 8 and 9.

I think most of the other items fail before the need to actually get the game out, and the freedom for developers to negotiate their own terms (even sometimes bad ones).

6.

It would seem to me that a developer already has all these rights until they exercise #14:

"The right to bargain away any of the preceding rights or portions thereof."
(Eric in fact alludes to this when he says they are alienable rights)

Am I missing something?

7.

This whole SWG situation is a turning stone in modern MUD development. You basically have a game's core system redesigned years after release.

I'm sure that somehow, somewhere, there's a MUD that has already tried to do this. And it was probably discussed in MUD-Dev back in 1997.

8.

The snarky answer is that Eric ignores the golden rule: He who has the gold makes the rules.

Or maybe he doesn't. Most of Eric's points deal with having some measure of control over the project and the results. What does control mean? It means the ability to exploit the work for further profits. And that's why creators should have rights to what they create: not just "because they fucking should", but also because it would allow them additional income and stability.

Of course, this goes directly contrary to the publishers' best interests. They want the developer to stay lean and hungry, eager to take whatever deal they lay on the table or risk going out of business. This means the publisher gets a more favorable deal. If the developer had other income streams, they would have more negotiating power. This might result in better games, but unfortunately it also results in lower profits for the publishers.

Publishers counter with the same words Matt used above, claiming that they shoulder most of the risk. And, while this is strictly true, the amount of risk taken by each party isn't quite reflected in the profits enjoyed by both sides. The developer takes the risk in developing the prototype of the game, which publishers usually won't fund. Then they take the risk of hoping a publisher will fund the game at a reasonable level. After the game ships, the developer then takes the same risk as the publisher: will the game sell and make money? Of course, most of the time the publishing agreement specifies that development costs are an advance against royalties, which means the publisher will recoup their costs before the developer will see any money (who's taking the larger risk here?). But, if the game doesn't sell the game developer goes out of business, while the publisher has a number of other favorable deals and can farm out the IP to another team without any complications. And, we won't even talk about opportunity costs for the developer developing this game. The simple fact is that developers tend to be over-eager and have poor business sense, and the publishers will take advantage of that every day of the week.

Matt Mihaly wrote:
The problem with this is that assuming a developer is a "creative expert" is not warranted.

Uh, why is the publisher investing money in the developer, then? Because they like the way they smell? A developer comes to the publisher with original IP, a prototype, and a core team, enough for the publisher to want to invest and own the IP, and suddenly the developers become inept at creativity? It doesn't make any sense to throw money at someone in whom you don't have some confidence.

My thoughts,

9.

Eric's "bill of rights" seem to me to be pretty divorced from reality. Noble perhaps, idealistic certainly. And ideals are a good thing. But these, I think, are so misplaced as to render a developer who buys into them less effective in dealing with a publisher than they are with a cold, clear understanding of the economics involved.

And this is about economics -- about making money. Creativity is the vehicle, not the end. Now before I get taken (again) for a heartless capitalist, I say this as a game designer and developer -- as a creative person. Creativity is wonderful. But by itself it won't put food on your table. Creativity has to be given some direction and end to have utility outside of the creative person's head.

In the case of game developers, it's exceedingly rare that a developer has the money he or she needs to implement their creative vision (and strangely, I can't really think of any examples of those who could fund a project entirely on their own who haven't fallen to project bloat worse than anything seen with a cruel publisher hovering over things).

So, if as a developer you don't have two or ten or twenty million dollars to fund your vision, you have to get it from other people. These are the people who are then taking the risk -- it's their money. (Don't believe me? Send me a thousand dollars.)

I wish this wasn't the case. I wish that opportunity cost for the developer, risk in having to shut down after a game is released, or the risk of seeing a creative vision dwindle to nothing outweighed the real-world, real-dollar risk of publishers and investors. I wish there was a way to change our broken system -- a system that dangles the idea of making a great game (or a great movie, great band, great novel, etc.) in front of many who will see nothing more than years of hard work dashed to pieces.

But wishing doesn't make it so. And defiantly claiming rights in an online article is no more than wishing. Vilifying publishers and clamoring for a change to the economic balance between developer and publisher might might make you feel better for a few minutes, but ultimately you're just howling at the moon.

The equation for game developers is starkly, brutally simple: if you can fund the development, deployment, and marketing of your game all on your own -- terrific! If you can get even most of the way there, you'll likely find lots of attractive deals to be made. But if in the final analysis you can't fund your game's development yourself, you have to either find some way to get the money from other people -- in which case the risk of failure of the project transfers to them -- or go back to a career in a cubicle in an enterprise software company (or at best, in a large game development company that will have even less regard for your creative "rights" than if you were an external developer).

That's the deal.

We get to declare rights only when we can enforce them. As long as game developers depend on others for funding, "rights" as described by Eric (or Greg Costikyan or others) will be nothing more than wishful thinking that obscure the unforgiving reality in which we live.

10.

Greg Costikyan responds: http://www.costik.com/weblog/2005_11_01_blogchive.html#113278602352099018

11.

Well, sure. You can lay down all those ground-rules. There isn't an item there that you can't try to incorporate in your next contract.

Then you can try and attract capital. Good luck. But you can't force the investor to risk his money with you if he doesn't want to, and goodness knows that you'll be up against the rest of us: plenty of developers who'll use flexibility as a competitive advantage.

Endie

12.

It amazes me how stubborn people can be. It's one thing to accept reality and work within logical bounds to achieve a goal. It's quite another to willingly be taken advantage of.

Let me say it again: the current publisher/developer system is in place because developers, as a rule, are overeager and bad at business. I've heard representatives of the publishers state this, perhaps not in so many words. And the system will continue until the developers decide not to be taken advantage of anymore.

Let's look outside the games industry for a second. One of the biggest success stories is J.K. Rowling and the Harry Potter series. Of course, writing books is a bit different than making games, but it is another creative field. The first book was sold for roughly $4000 from what I've read, but keep in mind that printing books is still an expensive and low-margin proposition. Deciding to publish the first book was a HUGE risk for the publisher, perhaps even larger than the risk a publisher makes in funding a game. But, the book's success and her ownership of the intellectual property allowed her to make more money on subsequent books until she literally makes tens of millions of dollars the day her books go on sale.

Compare this to the games industry where a company like Looking Glass Studios, despite developing the outstanding and best-selling Thief and System Shock franchises, is now out of business. Yeah, there's some subtleties to this example, but it's still a valid example.

But, now let's consider movies. Speaking of Harry Potter, it took someone to fund the first movie. The investors were taking a huge risk, more than publishers do when funding a typical video game, yet they managed to not need to own the intellectual property. J.K. Rowling still owns all the IP, and has probably made considerable money from the excellent movies. But, there was a risk taken there that didn't require ownership of the IP in order to secure it.

But, perhaps that's not entirely fair; this is more like licensing than developing original content. So, let's consider another famous scenario: George Lucas and Star Wars. As most people know, Lucas negotiated to retain merchandising rights to the Star Wars movies. (Of course, nobody thought this was worth anything back in the day, so they thought little of it.) But, he was able to take the merchandising rights and make a lot of money from it. He was able to exploit his own intellectual property and make good income from it.

In the end, there are alternatives to the "We give you money, you do all the work, we own everything afterwards" system of developer/publisher relationships. It is just sad that I can point to the book or movie publishing business as a more enlightened way to handle creative works. However, to change this it takes the developers being willing to walk away from the table and wait a bit. It takes the developers realizing what their IP, prototype, and core team are really worth. It takes longer-term planning on both the developer and the publisher side of things. But, as long as developers see their "flexibility" as an advantage, they'll keep going out of business as soon as the publisher is done with them.

More thoughts,

13.

Brian said: Let me say it again: the current publisher/developer system is in place because developers, as a rule, are overeager and bad at business. ... the system will continue until the developers decide not to be taken advantage of anymore

Would you expand on that, Brian, with examples from our industry? What specific things do you think a business-savvy developer can do to change this imbalance and not be taken advantage of?

Examples from book and movie industries aren't really compelling here -- there are too many other factors involved that make these examples not entirely relevant.

And on the points these industries have somewhat in common, it hardly helps the "developers' rights" argument. For example, do you have any idea how many fiction books are written vs. published each year? I've been told conservatively the figure is a few hundred to one, depending on the publisher. And published authors will tell you that book publishers are among the most rapacious in terms of how they handle an author's rights, and that anyone who signs a publishing deal without an agent and a lawyer is getting taken. Similarly, raising money for a movie uses methods (e.g. completion bonds) that are still not often used in games, for good economic reasons. Also, the IP issues surrounding movies and books are far more entangled than you imply. And of course, it's rare that the writer, director, or star of a movie receives a direct portion of the movie's revenue, much less that the end up with ownership of the IP!

Many developers are both over-eager and ignorant of business dealings. But not all are. And even those who aren't face the same uphill battle for funding (not all of which comes from publishers by any means).

In the end, there are alternatives to the "We give you money, you do all the work, we own everything afterwards" system of developer/publisher relationships.

Granted that no one would want to be stuck in a business relationship that's that lopsided, what specific suggestions do you have? What alternatives do you see? And what confidence do you have that such alternatives are actually feasible?

I have to say, as someone who's been hip-deep in this for years, the alternatives that I see are few. Publishers are often not the preferred method of funding game development. But commercial investors traditionally shy away from this area both because it's seen as being frivolous and because games are perceived as high-risk/hit-driven -- though this may be changing a bit, and very slowly, with MMOs (that is, funded MMOs appear to not be "hit driven," but funders are slow to recognize this). And of course commercial investors -- VCs and the like -- want a healthy slice of the company-ownership (not just IP ownership) pie for their investment.

Angel investors are always a possibility, but these have their own ups and downs, and are often interested in funding lower amounts than A-list games today require. They too require a healthy return and require some ownership of the IP to offset their risk.

Finally there's "friends and family" and one's own savings/credit -- always the first stop for any small businessperson (if you're not willing to invest in your own enterprise, why should anyone else?). That's a necessary but insufficient alternative for funding a non-hobbyist, potentially profitable game development for almost any of us.

If you have other alternatives, I'd be interested in hearing them. Talking about what rights we "should" have though, in the face of the economic realities of game development, doesn't really help anyone.

14.

I think it is quite legitimate to talk about what rights we "should" have. It is an important precursor to securing those rights.

I find it depressing that it is flatly asserted than in a capital vs labour power relationship, capital must always win. By that theory, we should all be working at substinance wages in sweat shops.

The trouble with game development is that it is sexy. Lots of people want to be game developers. Adam Smith made an interesting point that Actors of his time were paid well because their profession was considered inappropriate. Today Acting is a legitimized profession, complete with the lottery-style winning for a few dozen big names, and what has happened to the average actor's salary?

Let us note that these rights are not entirely economically constrained. There is no economic reality that requires the capital investor to own the IP. The IP's worth is tied to the success of the game. If the game fails, gaining access to the IP doesn't mitigate the loss to the Publisher. Demanding IP is thus not so much a risk-reduction tactic as a pure grab for more of the pie when the game succeeds.

15.

Mike Sellers wrote:
Would you expand on that, Brian, with examples from our industry? What specific things do you think a business-savvy developer can do to change this imbalance and not be taken advantage of?

The number one thing is to realize that not every game has to be AAA quality to be worthwhile. Following from this, developers need to be willing to do something besides hunt publisher money. Connor Cochran, Peter S. Beagle's business manager once said, "Unless you're willing to walk away from a negotiation, you're not negotiating, you are just begging." Developers are so eager to see their name in the lights that they beg publishers for the ability to sign away their souls for a deal, figuring this is the best they'll be able to get (and it is, if they only look at publisher-funded options).

Granted that no one would want to be stuck in a business relationship that's that lopsided, what specific suggestions do you have? What alternatives do you see? And what confidence do you have that such alternatives are actually feasible?

Again, not every game has to be AAA to be worthwhile. The author of the bill of rights, Eric Zimmerman, and his company gameLab have made tremendous games that you won't find competing with Quake 4 or HalfLife 2 on store shelves. However, his company has managed to make excellent games while retaining a lot of independence and retaining their IP. Sure, perhaps Eric's not one of the top 5 most recognizable developers, but his company has done significant and very admirable work. They saw a need, a niche they could service, and they've done admirably. If I'm able to do even half as well as gameLab has, I'll count myself successful.

It's the same as any other business: look for a need and service it well. Part of the business ignorance on the part of developers is the desire to go in and do what has already been done before. A group of people get together and want to build a bigger, better version of a game that's already been done: a AAA-level FPS. RTS, RPG, TLA, whatever. Publishers rub their hands in glee at this situation and they exploit the developers because of this.

One viable alternative is to start small. Instead of making the AAA-level MMO that requires $30M+, you could work on a smaller game. You could then buy the rights from the company after they shut it down, just as an example. ;) Okay, sure, my case is an isolated example, but it's possible to do stuff on a limited budget. I'm not rich or famous from running Meridian 59 these days, but I have nearly 4 years of experience running a game from the nuts and bolts of development up to management and marketing. Enough people know me and know my work that I'm starting to get some very profitable consulting gigs sharing this knowledge. From this I can save money, invest in myself, and make something worthwhile.

I'm also looking into getting some debt investment in order to make another game. Not equity investment, but something where I will retain ownership after the debt is paid off. Why am I able to do this? Because I'm patient, and I've shown my ability to do more with less over the past four years. When I say "I will do X", people have confidence that I will do that. I'm not interested in a "get rich quick" scheme, and I am not looking for investors who what that, either.

How can I be sure these alternatives will be successful? I cannot, no more than I can sure of anything else in business. But, I'm staking a lot of my career on the fact that I think the option I've chosen will be successful. I could go work for a larger company making lots of money, maybe even get my name in the lights for a bit. But, I've chosen an alternative route after much consideration.

Finally there's "friends and family" and one's own savings/credit -- always the first stop for any small businessperson (if you're not willing to invest in your own enterprise, why should anyone else?). That's a necessary but insufficient alternative for funding a non-hobbyist, potentially profitable game development for almost any of us.

It was sufficient for me. It was sufficient for Daniel James. It was sufficient for Andrew Tepper. All of us have done a lot with very little, relying mostly on friends, family, and credit cards. Of course, these aren't the big, sexy WoW-style games that everyone wants to make. These aren't the sexy games which get your name immortalized forever as a trailblazer who broke income records. These games are, however, enough to allow us to make other games, sometimes with the possibility of actually retaining ownership of our original IP.

My thoughts,

16.

Brian Green wrote:

Publishers counter with the same words Matt used above, claiming that they shoulder most of the risk. And, while this is strictly true, the amount of risk taken by each party isn't quite reflected in the profits enjoyed by both sides. The developer takes the risk in developing the prototype of the game, which publishers usually won't fund. Then they take the risk of hoping a publisher will fund the game at a reasonable level. After the game ships, the developer then takes the same risk as the publisher: will the game sell and make money? Of course, most of the time the publishing agreement specifies that development costs are an advance against royalties, which means the publisher will recoup their costs before the developer will see any money (who's taking the larger risk here?). But, if the game doesn't sell the game developer goes out of business, while the publisher has a number of other favorable deals and can farm out the IP to another team without any complications. And, we won't even talk about opportunity costs for the developer developing this game.

Do you seriously think the opportunity cost and cost of prototyping for a game developer is worth, say, the $10 million a publisher is risking? The simple answer is "not even close," unless said developer is a superstar developer, in which case it doesn't need the bill of rights. Further, developers are compensated during production, which generally represents the vast, vast majority of work on a game. There's little reason to compensate a developer who is being paid a salary much beyond the salary (incentives are always good, of course, but we're talking pretty small in the scope of the project.)


Uh, why is the publisher investing money in the developer, then? Because they like the way they smell? A developer comes to the publisher with original IP, a prototype, and a core team, enough for the publisher to want to invest and own the IP, and suddenly the developers become inept at creativity? It doesn't make any sense to throw money at someone in whom you don't have some confidence.

You're presenting a false dichotomy. It is not a choice between "inept" and "expert." It's a range. I've certainly paid people to do things that I could have personally done more competently. I pay them to do those things because I simply don't have the manpower to do them myself, not because that person may be better than I am at something. I'm having people develop a new MMO for us right now, for instance, but they -certainly- are not getting final creative say. Why? Because I'm more of a creative expert than the team is. However, I have other things to do and while I can provide the "last word" on creative issues, I cannot code the game, fill in the details of the design, build the world, build the website, build the live team, etc etc. There are a thousand reasons to pay people to perform work on games for you that don't require them being creative experts.

Mike Sellers wrote:

Eric's "bill of rights" seem to me to be pretty divorced from reality. Noble perhaps, idealistic certainly. And ideals are a good thing. But these, I think, are so misplaced as to render a developer who buys into them less effective in dealing with a publisher than they are with a cold, clear understanding of the economics involved.

Absolutely. Well-said.

Brask Mumei wrote:

Demanding IP is thus not so much a risk-reduction tactic as a pure grab for more of the pie when the game succeeds.

A grab for higher returns is a valid risk reduction tactic insofar as what you're seeking to do is maximize return for risk rather than simply minimize risk (in which case you'd invest in T-bills).

Brian Green wrote:

In the end, there are alternatives to the "We give you money, you do all the work, we own everything afterwards" system of developer/publisher relationships. It is just sad that I can point to the book or movie publishing business as a more enlightened way to handle creative works.

A first-time author may retain IP rights because he or she typically funded the production of the work, completely. He or she took -all- the risk. Very few financially successful developers outside of small players like Three Rings or my company can or are willing to do that. They are unable or unwilling to shoulder the necessary risk, so there's really no reason why a publisher should reward them much beyond salaries.


It was sufficient for me. It was sufficient for Daniel James. It was sufficient for Andrew Tepper. All of us have done a lot with very little, relying mostly on friends, family, and credit cards. Of course, these aren't the big, sexy WoW-style games that everyone wants to make. These aren't the sexy games which get your name immortalized forever as a trailblazer who broke income records. These games are, however, enough to allow us to make other games, sometimes with the possibility of actually retaining ownership of our original IP.

What it means, of course, is that there's no need for the bill of rights, since there's no actual need to go to a publisher. Or rather, stated in a different way, if you want to make a big splashy game, you better be able to either fund it yourself or be willing to recognize that the risk you're taking is negligible compared to the people providing the money.

--matt

17.

Eric is a generally bright guy and some of the goals -- such as "own your ip" -- are excellent ideas that should be kept in mind when negotiating contracts, but much like Raph's "Declaration" putting them in terms of "rights" is somewhere between naive and silly. Framing it this way indicates a fundamental misunderstanding of both the problem and what rights are. "Rights" granted by whom? Rights from whom? Do we really want the government mandating contractural relationships with publishers to this level of detail? I don't think so. Is Eric really talking about a union? Well, that's an interesting idea, but it certainly doesn't give you rights -- ask the 30,000 GM workers who learned last week that they're going to be laid off what rights the UAW gives them.

Obviously, we've been over this territory before (in the various discussions after the GDC rants) and not a lot has changed since then. Greg Costikyan is putting his money where his mouth is (which is very cool) but some very successful independents cashed out/got scarfed (Snowblind, Pandemic, and Firaxis).

The problems, of course, all come down to the cost of game development and the asymmetric reward structure of any hit-driven market. If development was always cheap enough, we wouldn't need publishers. If there was a fixed return, we wouldn't need publishers. But neither of these are true. Hell, the first won't happen when variable spending has a direct relationship to reward and we wouldn't want the latter. By ignoring those realities and instead constantly framing the issue as an us versus them (of developer against publisher) the real issues and possibilities are ignored. Other creative industries face similar problems -- as Psychochild discusses -- but they don't address them with "right" they address them through intelligent negotiation of contracts. Just as Raph's "Declaration" makes far more sense as "really good customer service ideas" than as a "avatar rights", a cleaned up and specific version of of Eric's list could work well as a negotiating crib sheet but is not as a "Bill of Rights."

18.

Well said, Cory.

... some very successful independents cashed out/got scarfed (Snowblind, Pandemic, and Firaxis).

This is another important point implicit in the economic part of the discussion. One of the most important things to understand when you start a business is how you want to end it. Do you have in mind "going public" and becoming a large company? Or staying small, retaining ownership for yourself, and running what's called a "lifestyle business"? Or do you intend to create a business of some middling size that is eventually acquired by a larger company, cashing out the owners and investors?

It amazes me how often people don't think this through when they're starting a company. For some going through an IPO sounds terrific -- all that fame and fortune. But the realities are somewhat different, to say nothing of the tiny proportion of companies that ever get there.

For others running their own small business as they see fit, even if it never makes much money or accrues much value, is sufficient. Many have a hazy idea that they'll run their business for some number of years and then cash out, but without thinking about to whom they'd sell or why someone else would see their company as having real value.

So, to loop back to Brian's comments above and Eric's "rights," it's entirely possible to create and run a small MMO company that attracts a few thousand faithful subscribers, but never builds far beyond that. This in fact seems to be the course that most of the "boutique MMO" companies are on. What hasn't really been shown yet is whether a company like that can grow through the "lifestyle" phase where it supports a few employees on relatively low salaries, and into a viable business that might hold value for an eventual acquiror.

Can an indie company grow incrementally by releasing small/non-A-list games and without equity or publication money, to the point of having a viable exit strategy? Thus far in MMOs I don't think anyone has done so. It'd be great to see someone come up with a new and viable business strategy that enables such incremental growth. So far though, such alternatives have not appeared.

19.

Matt Mihaly wrote:
Do you seriously think the opportunity cost and cost of prototyping for a game developer is worth, say, the $10 million a publisher is risking?

Absolutely. The publisher thinks so, too, otherwise they wouldn't be pouring that money into the venture. In fact, the publisher thinks the project will be worth considerably more than the initial investment. It's a basic economic truth: how much is something worth? As much as someone else will pay for it. If someone's giving me $10 million to do something, then I'd value that service as worth at least that much.

Is there risk? Sure. The development team could fuck up and waste the money. Note that this tends to be a damper on any of the managers' chances to repeat this. The developer also takes risks as well: that the publisher won't go out of business, that the publisher won't breach contract, that the publisher won't pull some kind of trick to delay payment and force the developer closer to the edge of insolvency, etc. Of course, when any of these happens you rarely hear about it; when you get screwed over once, guess what's the best way NOT to land another deal? That's right, prove that you'll be a thorn in a publisher's side if things do go south. So, best to STFU and keep eating it with a smile if you want to have any chance of making a AAA title.

A first-time author may retain IP rights because he or she typically funded the production of the work, completely. He or she took -all- the risk.

Really? So, J.K. Rowling bought printing presses, bought the paper, bought binding machines, bought into a distribution network, and did all the work herself for her first book? A mother on welfare did all that on her $4000 advance? Amazing.

Of course, you know as well as I do that the publisher took a huge risk in printing her book. She got plenty of rejections from publishers that didn't want to take the risk. But, eventually, she found someone that thought the risks were in their favor and they paid her a token amount of money and then used their expensive presses, paper, binding, warehouses, distribution systems, etc. to publish her book. There's a good chance the book wouldn't have found its market. But, no where along the line did the publisher require total ownership of the Harry Potter IP. HER book (not just the publisher's) was incredibly successful, and she was able to reap the rewards from it just as her book publisher has been able to.

Mike Sellers wrote:
[I]t's entirely possible to create and run a small MMO company that attracts a few thousand faithful subscribers, but never builds far beyond that. This in fact seems to be the course that most of the "boutique MMO" companies are on. What hasn't really been shown yet is whether a company like that can grow through the "lifestyle" phase where it supports a few employees on relatively low salaries, and into a viable business that might hold value for an eventual acquiror.

Perhaps you'd like to say Bang! Howdy to the people proving you wrong? Three Rings is definitely not a "lifestyle" business, just as they're not a corporate megapower. I'm not savvy to the internals of Daniel's business, but I assume that his company was able to develop this game without signing away the rights to it.

And, as I've said before I might come along and show you another game that manages to do something similar. Will I be able to do it? Who knows? I'm taking a risk, and I hope to get some reward from it.

Finally, why does there have to be an exit plan? Why does the company have to be acquired? What's wrong with releasing a quality game, making some money off of it, then re-investing those profits into another game, wash, rinse, repeat? What's wrong with keeping control of the business and focusing on making quality games instead of looking for the quick cash-out? Perhaps my thinking is a bit old-fashioned here, but I think it might be the best way to see a bright future for game development.

20.

Brian: If someone's giving me $10 million to do something, then I'd value that service as worth at least that much.

True, but then if they're giving you $10M for something, then they own that thing -- it becomes a work for hire. Which is where this whole thing started. Zimmerman et al. want to get the $10M for doing something but apparently without transferring any ownership to the people funding their work. That sounds stirring as a manifesto, but it's not economically realistic.

I said: What hasn't really been shown yet is whether a company like that can grow through the "lifestyle" phase where it supports a few employees on relatively low salaries, and into a viable business that might hold value for an eventual acquiror.

And Brian replied: Perhaps you'd like to say Bang! Howdy to the people proving you wrong? Three Rings is definitely not a "lifestyle" business, just as they're not a corporate megapower.

I have great respect for Daniel and Three Rings. I know a bit about what they're doing. First, "Bang! Howdy" isn't out yet; it may or may not ever come out (certainly not wishing them ill, just being realistic). Second, "Puzzle Pirates" has thus far been successful, but only in a boutique/lifestyle sense. I know Daniel could scare up an acquiror or two if he wanted, but the number of subscribers vs. likely run rate of the company is going to put a damper on the value he could get (and Three Rings almost certainly will do better as an independent for a while longer).

At this point, Three Rings is the most likely of the boutique companies to break out of the lifestyle-company gravity well. But they haven't done it yet. As I said before, whether they will or not remains an open question.

Finally, why does there have to be an exit plan?

You need one only if at some point you want to realize the accumulated value in your company, and aren't prepared to sell shares publicly (an enormous undertaking). So if you have only your money in the company, that's fine. That's why they call them "lifestyle" businesses. OTOH, if you are using anyone else's money -- even friends and family -- it's reasonable to expect that at some point they're going to want to see not only their money back, but a healthy return too. This typically means a "liquidity event" of some sort, which most often means acquisition.

Now it is possible to pay off investors with your profits, but you have to get them to agree to this (usually in advance, at the time of investment), and you have to have sufficient profits to do so. This in effect turns equity funding into debt funding, and isn't something most companies can pull off. If you have enough money to run your MMOG, develop a new one, pay your people, and pay off equity/debt investment, you're doing pretty well. With cash flow like that you'd be a plum target for acquisition -- but would have the freedom to decide not to be acquired. A terrific and rare set of circumstances.

And again, no one has shown that such is possible in MMOs. It might be, but claiming that it is or should be isn't the same as showing it.

21.

And again, no one has shown that such is possible in MMOs. It might be, but claiming that it is or should be isn't the same as showing it.

This is probably the most prolific statement so far.

MMOs are a a VERY different beast from other game genres.

With the Non-MMO games, you usually have a "Tag and release" type relationship with publishers. You get your development costs layed out, come to an agreement with a publisher, hit your milestones, game goes gold, sell boxes, (if on pc, patch on occassion), move on to next project.

That of course is a completely simplified and does not take into account multi-platform or multi-game deals, or even franchises. But for the most part, once a game goes gold, the work is done and its up to marketing to do the next step.

That is not so in MMOS. You go through similar steps BEFORE the game goes gold as non MMOS, but the buck does not stop there.

After release, you then have to finance your live team, server farms, customer service, billing support, etc etc.

Who is going to pay for that? The first few months after release are SO critical to an MMO's financial lifespan (See AC2). Box sales and player subscriptions only go so far. Gotta do expansions now...

So once again a company is at the publisher's mercy. Can you, Brian, honestly say that an MMO developer in this generation of games can follow this creed if they are trying to get their MMO out there?

I am not just talking AAA games. Don't get me wrong, you have done well with Meridian 59. But can you honestly tell me that if you were creating M59 today you could follow Eric's lofty ideals?

22.

Mike> So once again a company is at the publisher's mercy. Can you, Brian, honestly say that an MMO developer in this generation of games can follow this creed if they are trying to get their MMO out there? . . . I am not just talking AAA games. Don't get me wrong, you have done well with Meridian 59. But can you honestly tell me that if you were creating M59 today you could follow Eric's lofty ideals?

Linden Lab has over 70 employees, Second Life is rapidly approaching 100k residents, and we have more control than Eric desires. If I was doing something new and trying to make another online game/world/experience I wouldn't feel a lot of pressure to go to conventional publishers first. There are numerous bootstrapping and funding options available outside the conventional publisher model. You just have to decide to go after them -- you already have all the "rights" you need.

23.

Linden Lab has over 70 employees, Second Life is rapidly approaching 100k residents, and we have more control than Eric desires. If I was doing something new and trying to make another online game/world/experience I wouldn't feel a lot of pressure to go to conventional publishers first. There are numerous bootstrapping and funding options available outside the conventional publisher model. You just have to decide to go after them -- you already have all the "rights" you need.

I think Second Life's design allows for these types of funding decisions, making it the exception, not the rule.

What about the more game-like titles? Ultimate Baseball Online for instance...

It was indy for a long time, until ESPN bought them out. Before that, it was in "beta" forever, rarely making progress. It could not make it without some sort of outside VC.

Besides, Second Life came out in 2003, and was in development a good while before that. If you were starting development today, would you have been able to do what you did then?

24.

Cory: Linden Lab has over 70 employees, Second Life is rapidly approaching 100k residents, and we have more control than Eric desires.

Cory, this is somewhat off-topic, but I'd like to get a clarification: are you saying that SL has almost 100K active/paying customers? Or that it has almost 100K who have signed up at some point in the past, or something else? The difference between these is significant. For example, about three years ago Ultima Online passed having had a million accounts -- but that's a far cry from saying that UO has a million current users.

From what I understand, SL typically has about 2000-2500 concurrent users. If that's so then either your actual current customer base is much smaller than the 80-100K number bandied about, or you all have an entirely new usage model on your hands. That is, as far as I know other MMOG or MMOG-like game/worlds see a relationship of 10%-20% concurrent usage to overall active customer base. If you're typically seeing about 2000 concurrent users (assuming that's accurate), then either your active customer base is much smaller (10K-20K or so), or you have concurrent usage at 2-3%. The former puts SL in "boutique" territory, while if this latter is the case, it's hugely significant as a new data point in monetizing online worlds (but extraordinary claims require extraordinary evidence, so the data would be important).

Getting back to the topic here, Linden Labs has been successful at creating a new property without being shackled to a publisher, which makes a lot of sense. Did you do this without significant external investment without giving up equity (and thus IP ownership)? Or did you go a different route to fund the project?

25.

Mike Sellers> Our concurrency numbers are rapidly approaching 4000, about 17,000 residents were in SL in the last 24 hours, and 50,000 in the last 30 days. Our usage splits strongly between a small number of extremely regular residents and a large number of casual residents who pop in for specific events. We also see a lot of residents leaving for periods of time to look at other games or because of real-world interference, but then they come back later. Our funding has been covered elsewhere, but yes, like most tech startups, we have traded ownership in the company for investment. However, we are extremely happy both with our valuations and the investors we have, since they bring extremely useful knowledge and experience to the table.

Mike Sherman> Yes, I'd do it this way again. If anything, I'd be more focused on bootstrapping and less on gaining early investment.

26.

Mike Sellers wrote:

True, but then if they're giving you $10M for something, then they own that thing -- it becomes a work for hire. Which is where this whole thing started. Zimmerman et al. want to get the $10M for doing something but apparently without transferring any ownership to the people funding their work. That sounds stirring as a manifesto, but it's not economically realistic.

Exactly, well said Mike.

--matt

27.

Mike Sellers wrote:
True, but then if they're giving you $10M for something, then they own that thing -- it becomes a work for hire. Which is where this whole thing started. Zimmerman et al. want to get the $10M for doing something but apparently without transferring any ownership to the people funding their work. That sounds stirring as a manifesto, but it's not economically realistic.

The publishers get the right to sell the game and reap the lion's share of the profits; I guess that's not enough? The publishers get something quite obvious for their $10 million investment, and the publisher has some level of confidence that this is a worthwhile deal because they're paying the money.

Further, most deals I'm aware of allow the publishers to recoup that initial investment for the royalties they would pay to the developer. I've analyzed a few publisher/developer agreements for law firms, so I know what I'm talking about here. So, in reality the publisher isn't really paying for everything here, they're just loaning the money to the developer. Yet, in the end the publisher ends up owning everything because they talk fast and convince everyone they're taking so much "risk".

Are we even speaking the same language here? It isn't like Eric or I want the publisher to drop $10 million in our laps then go away and never see the money again; we want the publisher to make back their investment and we want the developer to see some return on their investments as well. In addition, we think it's possible for the developer to retain the right to the original IP they have developed as part of the deal. We know it works because we've seen it in work in other industries with high risk and the publishers still make out pretty well.

Retaining the IP is important for one reason: it allows the developer to continue to exploit that IP and make money from it. Under the standard arrangements the publisher doesn't even have to develop sequels with the original developer, even if it's IP they own. We've seen this happen with Tomb Raider and Core, the original developer of the franchise.

Anyway, it looks like we're not going to agree here. So, you keep making your games your way and see where that gets you. I'll keep starving a bit now, working under your chuckles of "lifestyle businesses", and we'll see where it gets me. I can't say I know 100% where each of our paths leads, but I've observed enough that I think I'm making the right choice.

Take care,

28.

I'm all for developers negotiating as equals with publishers (when that's even necessary -- avoiding the publisher deal altogether is often a better method, if you can do it). In many cases this would mean that developers retain primary ownership of the IP, though I can think of many ways to slice this (e.g., ownership goes to one or the other with diminishing future royalty rights to the other party).

But negotiating as equals means understanding what both sides need and want. As you said earlier, it means not being over-eager or ignorant of business practices. But it also means not being ignorant of business realities. When Eric says he wants "full ownership" of what others pay him to develop (#1), or the right to approve all distribution and marketing, or (#8), this just strikes me as woefully naive. Most of the rest of the things he mentions are either already in place (e.g., the right to legal representation!), or are truly items up for negotiation. As a list of items to ask for, this might work (though some are hopelessly vague in contractual terms), but then it goes back to being a negotiation: you're probably not going to get everything you ask for.

Finally, don't think I'm denigrating the choice of running a lifestyle business. In many ways that's less risky than trying for something larger -- and certainly maintains your own autonomy and reduces your financial entanglements. It's only a poor choice when it's made unconsciously. If you intend to run your business as your own for ten or twenty years and aren't overly concerned about the value of it after that (or what you do after that, having hopefully built up sufficient savings along the way), then that's a fine choice.

Unfortunately, I see a lot of people who don't give the end sufficient thought at the beginning, and who think they can just naturally take a small lifestyle business and grow it incrementally into one that will have significant value to others (investors/acquirors) at some point down the line. That may work. I don't know of any industries where it's not risky -- rear-loading rather than front-loading the risk. And it's never been done in MMOs. Which isn't to say that it can't be done or even that MMOs aren't a better avenue for attempting this than other types of products and services.

The other methods of financing a game development business have their own risks of course, and flame-outs are sadly common. But that's part of the risk-landscape when you try to do something new.

29.

Brian Green wrote:

Further, most deals I'm aware of allow the publishers to recoup that initial investment for the royalties they would pay to the developer. So, in reality the publisher isn't really paying for everything here, they're just loaning the money to the developer. Yet, in the end the publisher ends up owning everything because they talk fast and convince everyone they're taking so much "risk".

A loan? What lender, in their right mind, would lend 10 million to your average development team with -no- collateral at all? If you can find me a lender to do that, please point me in that direction. It is in no respect a loan.

When a publisher funds a game, it is an investment, and an -extremely- risky investment at that. The publisher ends up owning most everything because that's what the nature of the relationship dictates. The publisher is risking an enormous amount of money. The developer is not risking all that much: It gets paid by the publisher's money.


we want the publisher to make back their investment and we want the developer to see some return on their investments as well.

What investment does the developer make, exactly, that is remotely equivalent to the money the publisher is investing? Compensated time is not an investment, incidentally. It's the people doing the compensating that are making the investment and taking the risk. Now, if a development team takes below-market salaries, they are taking a risk equal to the difference between the salaries they could get elsewhere and the salaries they're being paid. (That won't come anywhere close to the 10 million that's risked by the publisher of course.) If the development team does a prototype on their dime, that's a risk. But, those are all reasonably measurable in dollar terms and when stacked up against the 10 million at risk do not add up to all that much proportionately.

Frankly, I think Eric's bill of rights (badly mis-labeled, as Cory rightly pointed out) is a bit embarassing for game developers. Every developer already has those rights until he or she chooses to sign them away. If you need to be told you already have those rights, you're going to be a miserable entrepreneur anyway.


So, you keep making your games your way and see where that gets you. I'll keep starving a bit now, working under your chuckles of "lifestyle businesses", and we'll see where it gets me. I can't say I know 100% where each of our paths leads, but I've observed enough that I think I'm making the right choice.

The fact that you're willing to carry on with M59 while making a pittance should just demonstrate that the "Bill of Rights" is not needed. I KNOW it's not needed, personally. We're into the 7 figure annual revenue range now (and have been profitable consecutively for 7 years), and while that's nothing compared to WoW, it shows me that "lifestyle" businesses are perfectly viable. We've had buy-out interest, but never enough to be interesting. The buy-out interest seems to always be predicated on the idea that we can't possibly grow any more with our resources, and lo and behold, every year, we do.

Mike Sellers wrote:

And it's never been done in MMOs. Which isn't to say that it can't be done or even that MMOs aren't a better avenue for attempting this than other types of products and services.

I'm not sure that's true. I'd point to both Runescape and Habbo as examples of MMO lifestyle businesses that turned into huge, non-lifestyle businesses.

--matt

30.

With all these comments about indie MMOs, why has no-one brought up Runescape.

The Gower brothers founded Jagex Inc. in 2000, to manage their online project, Runescape. Runescape has grown into a huge game, with over 150K concurrent players logged into 90 worlds, at peak times. And it just keeps growing in size, too.

As far as I know, they developed and produced their game, and retain IP ownership.

31.

I don't know how I missed Mr. Mihaly's post ... I could have sworn it wasn't there before I typed. My apologies.

32.

Matt just brought up Runescape, and I was writing about it when you posted. I'd like to know more about Runescape's history, funding, development, growth, and stability (and a breakdown of paying vs. non-paying users, as with Second Life). Analyzing why this project has taken off when others have foundered or stayed more or less static would be highly instructive: is it a bellwether for future development models, or a curious statistical outlier of limited applicability to other projects? Difficult to tell.

33.

On a slightly related topic... I find it interesting that Runescape (and other "lifestyle" games?) started with small user population and gradually grew larger, at a rate faster than the 30%+ overall player population growth. Conversely, most major MMORPGs (funded by people that want to see their money back in a few years, not just an annuity) start with a bang, and then only manage to sustain their population in following years.

I wonder how much the "I'm in it for the long haul" attitude differs between the lifestyle and publisher-funded approaches? And how much that affects the long-term viability of the game/world?

34.

All I know about Runescape's breakdown is that they claimed sometime in the last 6 months to have 3 million accounts and 300k customers paying $5/month. I'm too lazy to google the source up, sorry.

Habbo is another extremely successful example of this kind of thing as well. Two guys starting a project on their own as a lifestyle kind of thing and then later on bringing in professional management and whatnot. Habbo currently does nearly $100 million annually.

--matt

35.

I started playing Runescape back in Nov. 2001. The game was about about 11 months old at that point, with 3 servers of about 1K players each. There was no members version (subscriber model) until Feb. 2002, I think.

What is the key to their success. This is my own humble list of key items:

1) Simplicity. K.I.S.S. Very basic menus, basic game mechanics, basic combat tactics, basic user interface. I'm not saying that simplicity is the only way to go, but there is a market for it.

2) Stability. This game almost never crashed. Downtime for updates was very short (the few minutes it took to transfer files over). Very few bugs, those that were reported were corrected in a reasonable timeframe.

3) Regular updates. New content (quests, items, monsters, minigames, map areas) is added weekly for paying members.

4) Low system requirements. This game will run on a 400 mhz Celeron with 64 mb RAM (although 128 mb would be much better). Again, going for older systems is surely not the only way to go, but there is a market for it.

5) Portability. Runescape is written in JAVA and will run in any browser window. No big client download required. So it runs equally well on Unix, Mac, and Windows platforms. You can log on at work, school, library, net cafe, and be up and running in minutes (on any JAVA enabled machine).

6) Price. There is no software or expansion packs to buy. Membership is only $5.00 a month, considerably cheaper than most other MMOGs that charge $10.00 to $15.00 a month.

7) Ad sponsored option. You can play a limited version of the game for no direct cost to you. The ad sponsored servers have banner ads that presumably offset bandwidth costs. This provides a huge playerbase of which many will eventually try a member's subscription. From a social (and merchanting / resource gathering) standpoint, this huge playerbase is very appealing. Members and non-members can interact freely on non-members servers.

8) Interesting server allocation. All 90+ servers are exact copies of one another (except member's servers have all the member's features enabled). Players can freely chat with each other across servers, and can switch servers at will to meet up with friends, trade, etc. You just log out, pick another world of your choice, and log in.

9) Persistence. There have been no player wipes since the Dec. 2000 release. Even in the transition from Runescape Classic to the new Runescape 3D, all character data was transferred over. The move from classic to 3D was done over time, with dev information, player input, and both versions running concurrently for a while. (Classic is still available as a nostalgic toy, for members only.)

In a nutshell, they aimed for a market (lower budget) that other MMO companies weren't capitalizing. They executed their plan in stages, using revenue to build up slowly, instead of incurring huge upfront costs. They used ad sponsoring from the start, as a revenue tool. They were professional; they treated their gaming community with consistency and respect, and they didn't let their egos get the better of them.

Could it be done again? I would bet so. Given a small dedicated team of professional minded individuals willing to make a lower production quality title in exchange for retaining ownership. Yes.

36.

I started playing Runescape back in Nov. 2001. The game was about about 11 months old at that point, with 3 servers of about 1K players each. There was no members version (subscriber model) until Feb. 2002, I think.

What is the key to their success. This is my own humble list of key items:

1) Simplicity. K.I.S.S. Very basic menus, basic game mechanics, basic combat tactics, basic user interface. I'm not saying that simplicity is the only way to go, but there is a market for it.

2) Stability. This game almost never crashed. Downtime for updates was very short (the few minutes it took to transfer files over). Very few bugs, those that were reported were corrected in a reasonable timeframe.

3) Regular updates. New content (quests, items, monsters, minigames, map areas) is added weekly for paying members.

4) Low system requirements. This game will run on a 400 mhz Celeron with 64 mb RAM (although 128 mb would be much better). Again, going for older systems is surely not the only way to go, but there is a market for it.

5) Portability. Runescape is written in JAVA and will run in any browser window. No big client download required. So it runs equally well on Unix, Mac, and Windows platforms. You can log on at work, school, library, net cafe, and be up and running in minutes (on any JAVA enabled machine).

6) Price. There is no software or expansion packs to buy. Membership is only $5.00 a month, considerably cheaper than most other MMOGs that charge $10.00 to $15.00 a month.

7) Ad sponsored option. You can play a limited version of the game for no direct cost to you. The ad sponsored servers have banner ads that presumably offset bandwidth costs. This provides a huge playerbase of which many will eventually try a member's subscription. From a social (and merchanting / resource gathering) standpoint, this huge playerbase is very appealing. Members and non-members can interact freely on non-members servers.

8) Interesting server allocation. All 90+ servers are exact copies of one another (except member's servers have all the member's features enabled). Players can freely chat with each other across servers, and can switch servers at will to meet up with friends, trade, etc. You just log out, pick another world of your choice, and log in.

9) Persistence. There have been no player wipes since the Dec. 2000 release. Even in the transition from Runescape Classic to the new Runescape 3D, all character data was transferred over. The move from classic to 3D was done over time, with dev information, player input, and both versions running concurrently for a while. (Classic is still available as a nostalgic toy, for members only.)

In a nutshell, they aimed for a market (lower budget) that other MMO companies weren't capitalizing. They executed their plan in stages, using revenue to build up slowly, instead of incurring huge upfront costs. They used ad sponsoring from the start, as a revenue tool. They were professional; they treated their gaming community with consistency and respect, and they didn't let their egos get the better of them.

Could it be done again? I would bet so. Given a small dedicated team of professional minded individuals willing to make a lower production quality title in exchange for retaining ownership. Yes.

37.

sorry for 2x post.

38.

Mike Rozak said: I find it interesting that Runescape (and other "lifestyle" games?) started with small user population and gradually grew larger, at a rate faster than the 30%+ overall player population growth. Conversely, most major MMORPGs (funded by people that want to see their money back in a few years, not just an annuity) start with a bang, and then only manage to sustain their population in following years.

Mike, I think the number of VWs/MMOGs that have grown from small numbers to large can probably be counted on one hand: Runescape, Habbo, maybe even Kingdom of Loathing (no idea, but it's a fun thought :) )? I'm defining "small" as less than 10K and "large" as more than 100K regularly paying users. While others such as Puzzle Pirates and Second Life have respectable numbers of active paying users, they have not as yet been able to bridge the numerical chasm that seems to exist somewhere between 30K and 100K paying users (I suspect but can't prove that there are important network effects that arise in that range). With a couple of exceptions (as noted), it seems that MMOGs that make the jump to over 100K regularly paying users do so almost immediately; those that don't make this leap initially almost never do. Contrary to what you say above, those games that do hit 100K+ subscribers early on do much more than just maintain those; most if not all that exceeded this threshold have seen significant growth in succeeding years.

The problem facing a "slow-growth" model is there isn't a linear growth pattern from 10K to 100K users (if you're more or less happy with 10K or so users, that's great -- but I'm talking about moving to a larger audience). Given the number of high-profile games that have maintained user bases at or below 100K users without being able to break through to higher numbers (see mmogchart.com for some examples), I think this issue is an important one: How difficult is it to create a game that will bring in and thrive under a player-base that grows by multiple orders of magnitude? Runescape and Habbo show this transition can be made at least under some circumstances. But the number of games that have tried and failed to do so should be instructive, especially as the MMOG market matures in its expectations.

39.

Mike Rozak said: I find it interesting that Runescape (and other "lifestyle" games?) started with small user population and gradually grew larger, at a rate faster than the 30%+ overall player population growth. Conversely, most major MMORPGs (funded by people that want to see their money back in a few years, not just an annuity) start with a bang, and then only manage to sustain their population in following years.

Mike, I think the number of VWs/MMOGs that have grown from small numbers to large can probably be counted on one hand: Runescape, Habbo, maybe even Kingdom of Loathing (no idea, but it's a fun thought :) )? I'm defining "small" as less than 10K and "large" as more than 100K regularly paying users. While others such as Puzzle Pirates and Second Life have respectable numbers of active paying users, they have not as yet been able to bridge the numerical chasm that seems to exist somewhere between 30K and 100K paying users (I suspect but can't prove that there are important network effects that arise in that range). With a couple of exceptions (as noted), it seems that MMOGs that make the jump to over 100K regularly paying users do so almost immediately; those that don't make this leap initially almost never do. Contrary to what you say above, those games that do hit 100K+ subscribers early on do much more than just maintain those; most if not all that exceeded this threshold have seen significant growth in succeeding years.

The problem facing a "slow-growth" model is there isn't a linear growth pattern from 10K to 100K users (if you're more or less happy with 10K or so users, that's great -- but I'm talking about moving to a larger audience). Given the number of high-profile games that have maintained user bases at or below 100K users without being able to break through to higher numbers (see mmogchart.com for some examples), I think this issue is an important one: How difficult is it to create a game that will bring in and thrive under a player-base that grows by multiple orders of magnitude? Runescape and Habbo show this transition can be made at least under some circumstances. But the number of games that have tried and failed to do so should be instructive, especially as the MMOG market matures in its expectations.

40.

Hmm, I double-posted too - apologies.

41.

Well, that transition from 10k to 100k is made much easier by having your design be scalable from the start. Your game has to work well as user population rises, both from a gameplay and from a software architecture / server farm point of view.

I've seen promising beta indie MMO titles slow or stop in growth, because the gameplay stopped working at a certain population, or the software / server couldn't handle the load and lag became intolerable.

I know what I'm saying sounds obvious. Well it is, in theory. However, in execution, it seems to be more difficult to achieve scalable gameplay and server/software architecture.

42.

While I'm on the subject of scalability, I should also throw in customer support and community management. A dev company with inferior c.s. and poor community management skills might be able to eek by (albeit inefficiently) with a smaller userbase. As the userbase grows, the energy needed to inefficiently manage a huge group of players might well prove crippling.

Ditto for internal management, from equipment and bandwidth purchases, to team distributions on various parallel projects. Not to mention all the management that goes into the running of any business. I've seen "sick" companies (not only MMO devs) that manage themselves very inefficiently. This problem only grows worse as the company grows, a corporate culture gels, and peer politics comes into play. Ugly stuff. A successful company will need to manage itself efficiently if it is to grow into a 100k userbase entity. Easier said than done. But do-able, certainly.

43.

Blackrazor wrote:

Could it be done again? I would bet so. Given a small dedicated team of professional minded individuals willing to make a lower production quality title in exchange for retaining ownership. Yes.

That was an excellent summary of Runescape, Blackrazor. I've spent a lot of time looking at Runescape, though I'm not what you'd call a long-time player. I also have a question for you: How important do you think Runescape's character portability feature is to Runescape players? (I'm referring to the ability to play on any server with your character, at will.)

--matt

44.

Character portability in Runescape is a huge thing. It's pure genious on two levels:

Players rely on it for being able to meet up with friends, where-ever they may be. You aren't limited to friends on one specific server, the whole (virtual) world is your oyster. It's also a useful method to escape griefers. And for resource gathering, players will server-hop.

From a game development point of view, having these servers helps the scaleability of the project. You simply add more worlds as your playerbase grows, knowing that the players can move about at will. The worlds tend to auto-load balance, based on the normal ebb and flow of players. This way, you don't need instancing, as each game world could be considered an all encompassing instance.

45.

Matt > How important do you think Runescape's character portability feature is to Runescape players?

Kinda OT, but definitely an interesting question. Toontown pushes this one step further, allowing Toons to jump between servers at will (without logging out/logging in) - essentially making Toontown one world. Mike Goslin links it to facilitating social interaction:

Additionally, a Toon may always teleport to another Toon on his or her friends list. This creates a social space that emphasizes friendship and teamwork rather than walking around looking for other people. The ability to teleport to a friend extends to all copies of the world, so there is no concept of being isolated on a particular game server. In the cartoon world of Toontown, it feels natural for a Toon to pull a portable hole out of its pocket, toss it on the ground, and jump into it as a way of getting around quickly. [Gamasutra, 2004]
One of the areas where Runescape and Toontown have both been successful is in appealing to younger players (or is this a false impression on my part with respect to Runescape?). I could see how being isolated on the wrong server would be frustrating for kids (hell, its frustrating enough for adults...).

46.

While we're tossing around examples of successful (100k) indie MMOs, I'd like to include Neopets. It's a bit of a web based hybrid, with limited, but still substantial interaction, in duels and especially in auctions and player-owned stores.

Content builds regularly, with an evolving storyline, and community events. The big wars that last for weeks are huge player attractions.

Like runescape, it built up over time, and it relied on ad sponsoring as a revenue stream from early on. Neopets tends to go more for merchantizing, cobranding, and sponsor themed minigames.

===

Another humble example: Adventure Quest

www.battleon.com

This a flash-based MSORPG (massively singleplayer online role playing game). You log onto an online service, but essentially battle alone against the ai. Quite an active forum does compensate for this.

The charge is a 14.95 flat fee, but they find creative ways of inticing you to pay it more than once (to onlock additional upgrades, or obtain rare items).

This game routinely hits its server cap of 7k to 14k concurrent players, and would probably go much higher were this cap removed.

Just goes to show that almost anything can succeed and grow, if you plan it right. If you fail to meet your expectations, it might be time to do some soul-searching.

47.

Thanks again Blackrazor.

One point though: Character portability doesn't duplicate all of 'traditional' instanced areas' benefits. I'm thinking of the focused, story-laden dungeon crawl, for instance, which tends to be nowhere near as good when you've got multiple parties trying to do it at once.

Say, I hate to do this on a public forum, but I'm dying to ask this....What is it you actually find personally so entrancing about Runescape? I strongly suspect I'm not the only one reading this who wonders. I have an account there, and I try to play occasionally, but I find the game to be....lacking. I also cruise the forums sometimes but find the forum discussions to be intolerably juvenile. I had sort of begun to assume that the only people playing Runescape were teenagers. You're either not a teenager, or you're an exceptionally well-spoken and thoughtful one. Either way, you seem HIGHLY unrepresentative of the Runescape members that I, at least, have encountered.

So what's up? What do you find so compelling as to cause you to play for 4 years? Have you maxed out your character or multiple characters? Is there some endgame that I'm missing out on? I just don't get it, and I find it really frustrating not to understand since I think it's relatively easy to understand the success or failure of almost every other MMO out there.

--matt

48.

Peter Edelmann wrote:

"One of the areas where Runescape and Toontown have both been successful is in appealing to younger players (or is this a false impression on my part with respect to Runescape?). I could see how being isolated on the wrong server would be frustrating for kids (hell, its frustrating enough for adults...)."

Yes, it does seem that the average age of Runescape players has dropped, as the overall population has risen. Runescape has a portal on miniclip, which can only help to further this trend.

Still, it's nice that as far as Runescape is concerned, there is no wrong server. I think that feature could appeal to any age group.

49.

Well, these days, Runescape intrigues me more from a design perspective than from a play perspective.

True that I've been playing for four years, but I don't play all that regularly, anymore. I still keep current however, as Runescape has certain design characteristics that I feel are useful to a successful low-budget MMO, that the "big boys" seem to have missed.

I'm a 38 year old married father of four, that is interested in game design as a serious study, and perhaps as more if the right opportunity comes along.

In Runescape, I am a crafter / chef / smith, on the non-member worlds. I used to have plenty of company my age, when runescape was "young". There are still good people around, but you have to know where to look.

Still, I prefer to spend my time studying and discussing game design these days. But play is still important. The day I lose interest in play will be the day I stop discussing games and lose all ambition to design virtual worlds.

For me, it is a fundemental love of play that inspires me to think about game design issues and solutions. Maybe one day, that will bear tangible fruit.

50.

Send me an email, Blackrazor.

matt (-at-) ironrealms (-dot-) com

(Sorry, his email addy isn't part of his .sig here.)

--matt

51.

I know what I'm saying sounds obvious. Well it is, in theory. However, in execution, it seems to be more difficult to achieve scalable gameplay and server/software architecture.

Yeah, I was gonna say: with advice like that, you could be a consultant! Execution is everything (WoW being Exhibit A).

The examples of Runescape's and ToonTown's social affordances are excellent ones, but they also feel like low-hanging fruit to me -- a classic example of putting making the architecture serve the user rather than the other way around. We have a long way to go before we make the typical MMO experience as approachable as it should be.

I second Matt's question about Runescape's appeal. It could be the combination of no client (java-based), low hardware requirements, and sociability (including initial free access). At the same time I doubt that if you came out with a product with those characteristics today it'd do as well. Market timing counts too.

52.

I gave nine points that I felt best highlighted what was "enticing" about runescape, from a player's perspective.

I wouldn't advocate copying them exactly, however. While imitation may be the sincerest form of flattery, a sound business plan it is not.

Still, there are useful lessons to learn from Runescape, especially if you desire to produce your own low-budget MMO.

Basically:

1) Make something that works reliably and cleanly. Avoid clutter. Be creative, but make sure that creativity helps the gameplay. It has to be fun to play, from day one.

2) Make sure your playerbase knows that you appreciate and respect them. Make sure that there are lines of communication. Avoid downtime. Avoid wipes. Fix bugs promptly.

3) Look to low cost, ad sponsored, and easily accessible solutions as part of your design. Give the players a deal that the "big boys" cannot, by being flexible with your revenue stream. Grow slowly, using your own revenue stream.

4) Play your own game. Get some opinionated friends to play it too. Ask yourself, from the player's perspective: Is this fun? Could it be more fun? What makes it fun?

5) Avoid making fundemental changes midway through. No matter how good you think the change is. You don't pull the foundation off of a skyscraper, just because you've discovered a better one. Remember that the stability of the player community you have built will likely be more important to players than any new gimmick you would like to introduce.

6) Game design is architecture. It is art, with a purpose in mind. Try to keep that purpose focussed squarely on the player and playability.

53.

Very well said.

54.

Interesting development in the discussion.

It is interesting to note that developers of Runescape could have developed something with a lot of dazzling eye candy (which of course would have cost a lot of money), but instead developed something that is suitable for a vast majority of players around the world (a very large addressable market). They hit a sweet spot early on and build upon their early successes.

Blizzard also took similar direction in the design of WOW and found a following among Mac users and also people with mid-end computers (and were unable to play other games with higher system requirements).

Gameplay is core, but making something easy for people to play anytime, anywhere, and on any platform is currently in vogue now. Moreover, the business model of the week is ‘Free + Premiums’ (e.g. Free + Item Sale, or what have you), and Jagex been using this model for a while now.

From my perspective, Jagex offered a low-cost entry choice for people on the net, at the time, looking for online entertainment and learning about MMOs. They were able to convert over the years a good number of these folks by building a good community (and allowing the freedom for like-minded players to play together and conversely avoid others). Many like Blackrazor don’t play as much, but they still stick around the community, perhaps even continuing to pay the nominal $5 per month to maintain their ‘hobby’.

So there is still a good possibility of developing a successful MMO franchise without the help and finances of a publisher. Once it has a certain level of success, the bargaining position with publishers and other investors are better.

So, here’s a thought exercise on what could be reasonably done:

A Java-based with gameplay of Diablo, humor or Kingdom of Loathing, optional leveling of ProgressQuest (at a premium of course), lots mini-games (Flash, mobile, old Atari or C64 games, etc) to pass the time while you wait for friends to join, tools to build & decorate your own in-house and web homepage, etc.

Anyway enough rambling.

Frank

55.

Now that we're completely off subject and talking about runescape: I'd like to know if Guild Wars put a dent in Runescape's numbers...

As pointed out, one of runescape's advantages is that it's free to download, free to play (at first), and only $5/month if you want the extended content. This should attract non-working (pre-16) teenagers, which is why (I think) the ages of Runsescape players are so low.

Guild Wars is $50 to buy, but free to play (with limited content). It is likewise a good magnet for teenagers, especially with christmas/B-day present potential. (Of course, it is PC specific, likes broadband, and is loaded with eye candy, which reduces the potential market.)

56.

I'm not so sure that discussing indie MMOs is OT.

The concept of rights (especially retaining IP ownership) for a developer is a laudible goal. One reason it won't happen in the current climate is because so many devs feel that they have no choice but to sell their soul for the cash to produce and maintain a AAA MMO title.

If most developers felt comfortable with the idea of doing an indie MMO as a lifestyle choice, that might change the balance of power. Producers might find themselves chasing developers, offering cash for better production quality, in exchange for a slice of the pie.

I think the only thing that will empower developers in their negotiations with producers, would be a sense of choice.

As Brian Green wrote:

Connor Cochran, Peter S. Beagle's business manager once said, "Unless you're willing to walk away from a negotiation, you're not negotiating, you are just begging."

====

As for Runescape, I don't think it is losing market to GW, or any other game. Players do move around or play multiple games, but Runescape's numbers have been consistently growing.

A couple people were asking what it was that I found intriguing about Runescape. Well, I fundementally believe that MMOGs revolve around persistence and socialization.

It is essentially a chat room, with something built-in to chat about, and a way of recording your chat-worthy accomplishments.

I've never been a fan of questing. I prefer to wander about, making up my own reasons for being there. My goals in the game were to develop my own personal biography (which I did), and to obtain self-sufficiency, by using the environment around me to fashion whatever I needed. That meant skilling up in cooking, crafting, and smithing ... a time consuming and expensive process.

What is the end game?

1) Some folks go in for clan wars (massive battles in the wilderness). Or other large public themed events, like costume parties, drop parties, bronze-battles, weddings, etc. There are player run organizations (T.E.T.) that run events such as these on a regular basis.

2) PvP (usually mugging others in the wilderness). Or rune mining, which amounts to playing "cat and mouse" with the muggers.

3) Staking (high stakes gambling duels).

4) Others just like to explore whatever new content Jagex has produced, they literally come out with something new every week, for members.

5) Still others try to collect rares; these are items new longer produced in the game, and can only be bought from other players for truely obscene amounts of gold.

6) Some players compete on the high score lists, to be the best in skill total, or to have the highest xp in a chosen skill.

7) Others love to merchant, and come up with ingenious marketing schemes. Some of these people just prefer gold to xp (as personally fullfilling), while others do it to pay for #5 or #6.

8) Truely eccentric stuff, like the O.O.C. (Order Of Cabbage) that collects cabbage off the ground, and also runs some events.

What do 1 to 8 have in common? They are all social activities, more or less invented by the players, using the existing game structures. The best thing that Jagex did was to provide the framework, and not get in the way.

forum.tip.it is a good place to check some of this stuff out. You'll have to register for their forum to get in, but I've always found it safe and worthwhile.

Are there immature brats there, too? Certainly. But lots of good stuff about how players spontaneously form communities and cultures on their own, if given the chance. They don't have to be led by the devs to do this, it's natural human behavior, assuming the game's ruleset doesn't discourage it.

57.

Again, as a lurker, I'm late to the party. But here are some thoughts:

It saddens me that some people just accept as a fact that the capital investors in gaming will always own the IP. I will grant that other mediums are different, but I think it is sufficient to note that in a lot of other publishing environments, creators, despite outside funding, are able to retain partial or full ownership of their IP.

I think the publisher model sucks. I also think that it is very hard to do anything but conform with the market as it is right now. I don't think this means that we, as developers, should accept current reality as just "how things work."

We are stuck in a local minima and we need to get out. I'm not sure that indy development is going to get us out of that hole. It may, but if it does I think that will take a long time. I strongly agree with the sentiment that if you aren't willing to walk away from a negotiation, then you aren't negotiating. At this point I think developers would be greatly advantaged by some form of union, formal or informal. We need to improve our bargaining position.

I've worked with outsourced groups. I know they can't replace us. I know we have great value. Our talent is at least an equal partner to a publisher's capital. Great AAA games wouldn't exist if either were lacking. We just need to work to get out of this local minima. It will be an uphill battle and it will involve doing things that, at least from a present perspective, are not optimal on the market. That's what collective bargaining is all about. It doesn't make sense to threaten a strike in order to earn money tomorrow. It makes sense to threaten a strike in order to earn money in a year. And I'm not saying that a game developer's union, if it existed, should strike. Not unless things got even worse. But just existing as an organized entity that can discuss and publicize grievances with publishers would be a great start. This list of "rights" does at least serve as a list of good targets for such an organization (although I also disagree with distribution/marketing -- let publishers do the things that actually ARE their job).

I'd say a lot of poor economics starts with thinking of today and forgetting about, or overly discounting, tomorrow. I'd start railing about discount functions and their misues here but I think I'll get back to work.

58.

TheMadHatter wrote:

I'm not sure that indy development is going to get us out of that hole.

It's gotten some of us out of the hole already. Which "us" are you referring to?

The people indie development will get out of the hole are people who are:
1. Talented.
2. Making the right product at the right time.
3. Willing to take a lot of financial risk on themselves.


Our talent is at least an equal partner to a publisher's capital. Great AAA games wouldn't exist if either were lacking.

Out of the total percentage of games made by the games industry, great AAA games make up an insigifnicant percentage of deals. Bioware might well be worth the equal to the publisher's capital. Random studio A (and that includes my company and 99% of companies in the industry) is probably not.

It's a moot point anyway. Value is what the market says it is, and the market has spoken, over and over.

--matt

59.

It's gotten some of us out of the hole already. Which "us" are you referring to?

"Out of the hole" to me means that you don't have to be a talented entrepeneur as well as a talented game developer in order to use your talent and realize at least some value and ownership for your creations. And it means creating a market where you don't have to risk years of your life and the livelihood of your family, just to exercise your talent. It doesn't mean that anyone gets to be a game developer. It just means that there are significant real opportunities for talented individuals to create and own high quality, mainstream games.

The existence of a single developer (or small handful of developers) who makes it as an indy is far from evidence that there is a viable market for talented individuals to make good on their talent in the gaming industry.

Value is what the market says it is, and the market has spoken, over and over.

Current value is what the market says it is. I would argue, of course, that current value is often quite moot. Current value, for example, in relations with unequal power. I would not be willing to say that the value of serfs tilling land in the middle ages is insignificant simply because their feudal lords leave them only enough to live on.

This your cue, sounding quite neoclassical, to tell me that that isn't a "free" market so it doesn't count. Leading to my cue as a PAE afficionado (http://en.wikipedia.org/wiki/Post_Autistic_Economics) to tell you that I think our current market is often far from free.

Our current value is undermined by our lack of power. Publishers are in a far better place to negotiate because of their consolidation and they have no fear of using this position. That's why I feel that developers need better organization. To reach a point where we can negotiate on more equal footing.

At which point, according to your logic, our value will somehow magically increase. Because of course it didn't exist before we figured out how to negotiate. Or something like that.

60.

TheMadHatter wrote:

"Out of the hole" to me means that you don't have to be a talented entrepeneur as well as a talented game developer in order to use your talent and realize at least some value and ownership for your creations.

Eric's bill of rights, first of all, is meant to apply to game developer studios I believe, not employees of publishers or even individual employees of game development studios. If I'm mistaken on that, I apologize, but I was part of the discussion Eric asked for to refine that document, so I'm pretty sure he's referring to what I think he's referring to. The whole document is, after all, about developer vs. publisher, not employee vs. employer.

In that light, what you're saying is, "You shouldn't have to be a talented entrepreneur to be a successful entrepreneur." I guess that'd be great, but I mean, so would free pie on every street corner.

There aren't that many positions open in life for "success without talent" I'm afraid, and a game development company operates on enough radically different frequencies (creative, HR, coding, project management, art pipeline, etc) that the game development company is going to have to have some entrepreneurial talent to succeed. I mean, that's the definition of an entrepreneur: starting your own thing. An author can do it because an author doesn't have to worry about anything but the creative frequency.



And it means creating a market where you don't have to risk years of your life and the livelihood of your family, just to exercise your talent.

You can go work for any number of games companies and publishers to exercise your talent. Nobody said that exercising your talent has to include running an independent game development house.


It doesn't mean that anyone gets to be a game developer. It just means that there are significant real opportunities for talented individuals to create and own high quality, mainstream games.

Well that's a new demand. It's not enough to be rewarded financially and have the opportunity to exercise your talent, but you want it to be a mainstream game as well? What's the logic there?

And I'm sorry, but there aren't opportunties for individuals to create and own high quality, mainstream games. Individuals don't make high quality mainstream games. There are opportunities for game development companies, but the quantity of resources and the amount of work dictates that single individuals are not going to own a large portion of what the developer gets unless that individual somehow contributes a disproportionate share of the uncompensated work.

Best way to contribute a disproportionate share of the uncompensated work on a team with 50 people? Fund it. That's what a publisher does. That's why it owns most of the high-quality mainstream game.

Look, fundamentally, you're asking a publisher to risk millions of dollars while you, drawing a salary, risk little. You're being compensated for your contribution whether the game succeeds or fails or even if it's eventually cancelled. The publisher risks 0 compensation. Take some of that risk on yourself if you want. Certain people that work for my company have gotten ownership because they took some of that risk on themselves and worked without salary for a period.


That's why I feel that developers need better organization. To reach a point where we can negotiate on more equal footing.

Sure, fair enough to feel that way, but trace out the logic for me on how this would work? What sort of organizational structure would give development companies more power?

--matt


--matt

61.

In that light, what you're saying is, "You shouldn't have to be a talented entrepreneur to be a successful entrepreneur." I guess that'd be great, but I mean, so would free pie on every street corner.

That restatement doesn't really work. I mean quite simply that there need to be significant opportunities, for non-talented entrepeneurs, but talented designers, programmers and artists, to work on games where they can have partial ownership (and similarly for development studios to main creative control).

Right now that isn't the case.

That an independent here or there scraped out a living doesn't speak to a healthy market for talented game developers. The argument doesn't work any more than saying, "I won the lottery, therefore other people can too, therefore welfare is unneeded." There are other significant factors to consider such as how realistic it is for someone to actually follow your particular path to success.

And I'm sorry, but there aren't opportunties for individuals to create and own high quality, mainstream games.

I said to have partial ownership. Royalties and other revenue-sharing models, for example. And there are such opportunities in other markets. I think we could have the same. I think both levels of the heirarchy, the studio itself and the employees should be considered. Studios will work best if they are able to exert creative control over IP that they develop. Individual developers, i.e. programmers, artists, sound engineers, designers, etc., will perform best if they are able to have partial ownership of their creations (and are deserving of such). I'm sorry if I didn't make that point very clear.

Look, fundamentally, you're asking a publisher to risk millions of dollars while you, drawing a salary, risk little.

Of course the publisher is going through high risk. That is their primary addition to the project. But there is more to the market than risk. Without investment, the project can't happen. But without talent, it can't happen either.

If you only think that rewards come as a result of risk, then of course you are right. But I think that is simply absurd. And a poor way to create innovation. When I invent a new mousetrap, I don't sell it for $5 to a bunch of VC's just because I don't have personal risk. It has a value in the market of ideas that has nothing to do with risk and everything to do with the rarity of the talent it took to create said idea. Intellectual property law is a outside regulation specifically intended to honor this principle and maintain incentive for inventiveness.

Similarly, we'll have a healthier market when we can find a way to reward, with partial ownership, the talent that it takes to make a game. No, I don't think we need the government to step in. But I don't think that just because the market is the way that it is . . . that it is, somehow definitionally speaking, the way it should be.

Saying that value is what the market will pay only works because you have defined value to be "what the market will pay". If this sentence is a tautology then it is a tautology. There are other meanings of value that include the demand and supply for something BEFORE elements like negotation and power imbalances enter the equation. Talent is in demand and in low supply. It does have value. But EA, et al, have no reason to pay that value if they can get away with paying less by using their advantaged position in the market.

As far as how to organize? That's a very good question deserving a thread of its own. A start is to look at Hollywood in the first half of the century. It wasn't independent movies that allow actors and actresses to ask for things like revenue sharing. It was organization.

62.

That restatement doesn't really work. I mean quite simply that there need to be significant opportunities, for non-talented entrepeneurs, but talented designers, programmers and artists, to work on games where they can have partial ownership (and similarly for development studios to main creative control).

Right now that isn't the case.

First, "needs to be"? How's that again? I'm with Matt -- by this same token there needs to be free pie on every street corner (mmm... pie). But it's not likely to happen.

That said, there are environments for talented designers, artists, and programmers who aren't also strong entrepreneurs. First, there's steady employment at big game dev companies. Second, there's hitching your wagon to a company started by an entrepreneur. Both methods work. And in both cases you typically get compensated (salary, benefits, stock, royalties, etc.) commensurate with -- not in excess of -- your contribution and risk.

But if you're baldly asserting that there needs to be some method for non-market-savvy individuals to take their specialized skill and have others see it as valuable in a competitive marketplace... well, we're back to the free pie.

Without investment, the project can't happen. But without talent, it can't happen either.

That's true. And now we're back to a pretty simple supply and demand relationship. Between funding and talent, guess which is more limited? There are people trying to "break into" the games industry all the time. Every day. Investors and publishers turn down tens or hundreds of pitches for every one project they fund. See the relationship? So yeah, you need talent to make a commercial game. Okay, unfortunately that's not really a limiting factor (at least from the publisher's take-a-risk POV). The limit lies elsewhere.

If you only think that rewards come as a result of risk, then of course you are right. But I think that is simply absurd.

Well, what would you replace it with? Please be specific. And have you put this to the test in the real world's markets?

When I invent a new mousetrap, I don't sell it for $5 to a bunch of VC's just because I don't have personal risk. It has a value in the market of ideas that has nothing to do with risk and everything to do with the rarity of the talent it took to create said idea.

You seem to think that talent and ideas are rare. Sadly, they're not. Ideas -- good, life-changing, billion-seller ideas -- are as common as dirt.

The risk is in the creation of the idea: in moving it from "wouldn't it be cool if" to an actual demonstrable product that makes other people say, "wow, that's cool!" There's almost always huge risk in making that leap -- you don't know if it's going to work, and often it doesn't.

So if someone funds you to take your "wouldn't it be cool if..." idea to see if you can make it into a product, guess who's taking on the risk? I'm not saying that such a funder should then own your idea -- your ability to manifest it out of nothing is worth potentially a great deal -- but they will justifiably ask for a significant share.

But I don't think that just because the market is the way that it is . . . that it is, somehow definitionally speaking, the way it should be.

For those of us actually trying to get something made and sold, inside or outside of the big studio system, the market is what it is. Saying otherwise is a bit irrelevant. You may have the greatest game ever made, but if you can't get it made for lack of funding, or if you make it and can't get people to buy it, its greatness is, in terms of the market, also irrelevant. That sucks, sure. But it is what it is.

63.

There are people trying to "break into" the games industry all the time. Every day. Investors and publishers turn down tens or hundreds of pitches for every one project they fund.

IMO this is highly erroneous. Really good talent isn't something that can be picked off a tree. Sure there are millions of kids clamoring to make video games when they grow up. There are also lots of kids who want to be astronauts or the president. Most of them won't make games, more because they simply don't have the knack than because the market is saturated.

I've heard similar fears about how all of our jobs will just be outsourced to Asia if we dare complain about our plight. All poppycock. Having worked with a number of outsourcing agencies I have to say that they too suck. I'm not saying, of course, that there aren't smart, talented people in Asia. Rather a lot of them already have good jobs. A lot of them go to universities in the US, etc., already. India may be the biggest supplier of tech support call center workers, but the US and Europe still has a pretty good stranglehold on talented tech workers.

That said, there are environments for talented designers, artists, and programmers who aren't also strong entrepreneurs. First, there's steady employment at big game dev companies. Second, there's hitching your wagon to a company started by an entrepreneur. Both methods work.

They work? The current game market is doing a good job of spurning creativity and innovation? There is actually more than a one in a thousand chance that a truly talented game designer/programmer/artist can actually bring their talent to a significant audience and not just waste years of their life and their kid's college fund? No.

Developers are getting paid well? Working fair hours? Receiving appropriate rewards when their creativity results in something that millions of people enjoy? No. No. No. Sure, there are instances. There are always exceptions. By and large the rule is: no. The doors are shut. Creative control is not in the hands of those who are actually creative.

But it is what it is.

But what it is, isn't necessarily good. Nor is "what it is" static. What it is is something that changes every day and is affected by actors in the market such as yourself and I.

When I say we "need" this and we "need" that I just mean that for our market to reach its potential we'll need to somehow open up the market to where developer talent is directly rewarded for its worth and creative talent retains greater ownership and control over ... its creativity.

We have a market now that excels in mediocrity. Some of that can be blamed on consumers but not all. And it is not standing still. In fact it is getting worse. 20 years ago we wouldn't have had this conversation. We would have been certain that we could just sit in our garages and make great games and that would be that. Times have changed. Not all of it is the fault of production companies. But not all of it is just "what it is" with no room to change. The current state of the market does not denote some Platonic ideal of how the world must be. It is not an alien concept that creative talent should be able to maintain control over that which it creates. The game industry is very nearly the worst entertainment field for respecting this however. Crunch time, no revenue sharing, creative companies only being able to hope that they will be purchased by someone with money, the indy that makes it being a rare exception, etc. These are not signs of a healthy creative market.

Before we even start to talk about how to get out of this hole I think we need to at least admit there are problems, even if we can't agree on them initially, and that as actors in the market we do have a potential to try and create changes.

Sitting around going, "but our value is what the market offers us" doesn't help anything. I've never understood that attitude. It's an attitude of laziness. And it primarily comes from people who are fortunate to have made things work even when the overall market situation is poor and thus assume that anyone can succeed. The market changes. The markets of today are far more fair than the markets of 200 years ago and they still have a long way to go. Especially our own.

64.

I'm guessing from your comments that you've not started your own development company, and possibly have never worked in a large game development company?

Really good talent isn't something that can be picked off a tree. Sure there are millions of kids clamoring to make video games when they grow up.

Good talent that can deliver isn't something that can be picked off of a tree, but there are many people who at least at the outset of a project appear to be talented. Differentiating between the "really talented" and "not so talented" is a very difficult thing to do, even when someone has a track record. Going back to my earlier point, in the suppy-and-demand relationship between presumptive talent and funding, "talent" is on the clear and overwhelming supply-side.

And if you think it's just kids trying to get into games, you're wrong. I get enquiries all the time from successful people in other businesses who want to get into this one, somehow (in addition to the high schoolers, college students, and post-college drifters who are always around).

Further, you may not be aware that the games industry employs more people each year and at higher salaries. The industry is growing fast. Maybe your beef is that it's not growing fast enough, or that it's too hard to bring an idea to fruition?

We have a market now that excels in mediocrity. Some of that can be blamed on consumers but not all.

We have a larger, broader market, a growing market with spreading demographics. This market by definition is no longer made of the early adopters either in its funding or its consumption. As a result, what was once the playground of the avant garde is now seen as something for everyone. Funders typically want lower risk (the fact that something like 2-5% of boxed games -- not MMOs -- that are released make a profit should make funders skittish). Customers typically want a game like the one they enjoyed before, but not just like it. To you, this looks like mediocrity. To others, it looks like reality.

Look, I'm hardly trying to argue against creativity! I am, however, arguing against starry-eyed, pie-in-the-sky (or on every street corner), "the world owes us something" kind of desire for creativity. If you really put it to work -- beyond wishing or just talking about it -- creativity is hard. It's hard to make some idea real. I don't know anyone who sits in a workshop like old Gepetto, dozing while a blue fairy comes and does his work for him. Nor do I know anyone, including the luminaries in game development, who have an easy time of making their ideas real or getting them funded and developed. It's a difficult business crossing many disciplines with many unknowns. Of course it's hard!

20 years ago we wouldn't have had this conversation. We would have been certain that we could just sit in our garages and make great games and that would be that.

That's a nice fantasy, but it's really not true. Sure many things were different twenty years ago -- but the audience was much smaller, and many more people made crappy games (by themselves or with a friend) that never went anywhere. (Further, twenty years ago, most people who are now interested in computer games were working hard on paper RPGs or hex-based games that never went anywhere.) We tend to remember the few who succeeded in working their way out of their garage, not the many who tried it and found the market very difficult (even then) to navigate.

Back to work.

65.

Mike basically said everything that needed saying in reply, but I wanted to add a couple things:

MadHatter wrote:

I've heard similar fears about how all of our jobs will just be outsourced to Asia if we dare complain about our plight. All poppycock. Having worked with a number of outsourcing agencies I have to say that they too suck.

Those people in Asia are just as much a part of the games industry as anyone else is. Let's try not to get into a jingoistic thing here. You do seem to be admitting that not everyone in the games industry is a "creative expert" though and thus there's no basis for Eric's Bill of Rights to grant creative control to all developers.


As far as how to organize? That's a very good question deserving a thread of its own. A start is to look at Hollywood in the first half of the century. It wasn't independent movies that allow actors and actresses to ask for things like revenue sharing. It was organization.

I'll tell you why actors and actresses in Hollywood have power: Because the public sees them in movies. Tom Cruise is a brand that has -proven- to sell, over and over again. Tom Cruise, of course, is the exception. Most actors work for scale, which is to say, low wages. Tom Cruise gets paid regardless of the quality of his work because of the cult of celebrity.

There is no analogue in games. Game developers aren't appearing on the screen. Players, by and large, don't give a crap who made the game. A few hardcore players may here and there, but generally, what matters to game players is the quality of the game or the appeal of the license. Few to no players are going to be willing to buy a game they wouldn't otherwise buy simply because a particular developer's logo is on the box.

I think that's a good thing, personally. As a serious film fan, I always find it a little galling to see X actor in Y film merely because he's famous, rather than being right for the role. The cult of celebrity is why the handful of actors and actresses have real power in Hollywood. It's got very little to do with talent. I just don't see the public paying a premium to play the same game made by studio Y instead of studio X like they will to see the same movie with Big Star A in it rather than new actor B in it. (Public pays a premium at large, not individually, by turning out in much larger numbers for films with stars in them.)

I suppose, actually, that the analogue in video games are brand characters like Mario, but that doesn't help developers really. It takes so much marketing money to create a brand character like Mario that only a large publisher can afford to do it anyway.

--matt

66.

Too busy working to keep up with this, but for what it's worth:

Regarding my apparent "jingoism", please read my entire comment before replying. I've met lots of intelligent Asian programmers. None of them worked as outsourcers. I've worked with plenty of outsourcers too. They've been very friendly, very well-meaning, and generally if they had the talent they needed to do their jobs well, they'd have better jobs. The Western World doesn't have a monopoly on intelligence. But it does have some of the best systems in the world for both: training growing talent, and encouraging talent from other countries to immigrate.

Look, I'm hardly trying to argue against creativity! I am, however, arguing against starry-eyed, pie-in-the-sky (or on every street corner), "the world owes us something" kind of desire for creativity.

You are just slapping this hackneyed stereotype on me because you think it dismisses me. Because it's convenient.

There are very real problems in our market however. I haven't started my own development company and I don't think that is relevant to the conversation. I don't think that starting your own development company should be the only route to exercising your creativity as a game developer. Just as I don't think a good singer should have to start their own record company just to reach a market. Singing is a talent that has little in common with business management and it shouldn't have to. And if the sale of music is tied too strongly to business management (I'm not saying they shouldn't have strong connections of course), then singers and consumers suffer as those with great singing talented and no business management skills are overlooked.

Right now we see that, outside of indy work, which is largely unsuccessful and unviable outside of a few exceptional cases (which certainly should get credit, but don't discount the plights of OTHER ailing markets), the production wing of gaming has far too much control. And this stifles creativity on a daily basis.

If you don't see the production end of gaming stifling creativity then I have to question what large development companies YOU have worked with. And how much of the gaming industry you actually do follow. Because I see management, marketing, production, having far more impact on crucial game development decisions than programmers, designers and artists all the time. And f'ing up on a near-daily basis (SWG NGE anyone? Or do you think the development team wanted to release that buggy POS?).

Should those in charge of production, managing, marketing, capital, have a say? Absolutely. Should they have complete creative control? Absolutely not.

Is the market favoring what I think we need right now? No, of course not. Of course it is easier to make money just going with the flow. I'm not denying that. But right now we have a market that stacked heavily against developers and isn't that great for consumers either. And it's not like the fact that market is very poor at the moment should somehow mean that the market is destined to be poor.

But I guess I should just go back to crunch 109 hours a week and be happy that I get to make games?

I would also question these "successful people from other business wanting to get into gaming". Are you saying that these people are talented game programers, designers, game artists or sound engineers? Even though they have apparently never done any of these things? That you can make such a leap tells me that you already know very little about what it means to be a good game programmer, designer or artist.

I know plenty of people in the gaming industry. I know a lot more people who want to get into the game industry. Mostly programmers as that as my background. They are great C programmers, great Java programmers, etc. Need some web services? Done. Need a database? Done. When it comes to games, the vast majority of these people don't have the passion, the problem-solving skills, the creativity and/or the ability to handle completely novel problems on a regular basis that are all required to be a good game programmer.

Which is why you see Google spending tons of money to scour Asia for talent. They could go hire a dozen outsourcing firms for the money they spend on recruiting alone. But that wouldn't fill their needs. They don't need to fill seats, they need truly talented people. And the supply on such people isn't great.


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