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In this post I share my thoughts about the publishing and financing models in our industry and where these models may be heading and what form they could take in the future.

Majdi Kraiem, Blogger

August 9, 2013

8 Min Read

Please allow me to introduce myself for this first post: I am a senior producer at Ubisoft, and more specifically its Partners division in Paris, which is an entity working with third party studios. Before that, I also worked in both external and internal development at Cryo, Dreamcatcher and Game Consulting. The last notable games I produced include Call of Juarez Gunslinger and Might & Magic Heroes VI.

I recently read Lorne Lanning's interview and found his comments about the publishing business an interesting subject to write about, coming myself from this side of the industry. This post is more inspired by, than reacting to the interview as there isn't much to disagree with.

To draw the usual picture, the biggest publishers are pitched hundreds of games a year to just sign a handful of them. There are also well known rigidities in the old publishing model that can lead to a painful experience for studios not used to it (or tired of it). So, it is no wonder that 'broken' is the adjective commonly used to describe the traditional game financing model.

But maybe the old model never really was supposed to work, as the role of supporting an ecosystem of video game studios wasn't part of publishers’ core missions - and as far as I remember a part of any official corporate mission statement.

It didn't help either that in the last decade the publishing business shifted from a majority of games developed by independent studios to mostly in-house productions. Which reminds me of a time when a number of medium sized publishers operated the opposite move by letting their internal development staff go to source all their projects to external studios. So, there was a time with more opportunities for studios, when the market was a little bit less hit driven and publishers still figuring out what their business model should be.

While traditional publishers were focusing on a vertical strategy, integrating game and product development internally, something had to take upon the role of financing small, to medium sized developments. That's when crowdfunding, alpha funding, and new digital platforms and publishers came in. Even big names in the industry had to turn to alternative ways to finance their ideas. It is not to say that publishers or platform-holders are not backing a fair number of games, especially in the digital space, but it would be a stretch to say that their general attitude toward risk has changed.

About the recent relative setbacks in Kickstarter funded games, there is a way to look at it positively. In an alternate reality, where traditional publishing would be the only thing around, many of those games would simply not exist. Also anyone can check publicly traded game companies' annual reports and see how much money is lost to abandoned projects (not saying that those companies are poorly managed, au contraire, great companies like Blizzard cancel and delay games; and more generally only if you do not experiment and try to innovate will you find yourself in a position to not cancel projects). As it has been pointed out recently, the upside is it welcomes internet to the trenches.

Getting back on the topic of publishers, Lanning also noted that a number of them are having trouble justifying their value. Fair point but for the biggest publishers there is maybe a dissonance between their denomination and what is expected from them by the rest of the industry, like providing funds and services (which represents at the very best 20% of a publisher’s business), and what their main purpose actually is. Going out of my way, and the example is probably poorly chosen, but the movie business has its Major Film Studios so maybe something more evocative than 'publisher' would have been better to lower expectations.

Not that changing names or branding publishers differently would make much of a difference. Change is already happening within the industry, and hopefully for the best when it comes to the publishing business practices, including more opportunities to self-publish. It's not perfect, and there will always be anecdotal evidence to the contrary, but the situation is improving as there are now more alternatives for developers and indies.

It is also interesting from someone's perspective managing third party games for a publisher. If you believe that motivation is a key ingredient to make a good game, it makes more sense to work with a studio that chooses you as much as you choose it. So if studios now have different options to go with, and still decide to partner with a publisher because they think there is something in it for them, it's for the best, and it's going to help build better relationships and games.

So what's next? Even for someone who wants to believe in psychohistory math (Asimov's fictional science to predict the future), making predictions in this business is risky (and a little arrogant). Still, it is likely that a new breed of enablers and publishers will take a significant place in the future. Those would be like the successful developers and indies we can already see turning into enablers, providing funds or means to access to funds, and various type of support, from incubation services to helping with ports.

To make a comparison with the tech industry there is no reason in my opinion that like successful tech entrepreneurs who turned angels and VCs, this doesn't keep happening at a bigger scale in the game industry. Ok, VCs have long left the traditional video game space, but all the more reason to think that more of the video game financing has to come from the industry itself, as it takes more than looking at the numbers to be willing to invest in games. In the next ten years, as the market keeps growing, there will necessarily be dozens more of highly successful developers, and maybe some of them will make the jump to offering their financial support to other developers.

Also, beyond the success stories, developers are getting skilled at understanding their audience, which by the way was more of a publisher specialty as they could afford surveys, playtests, to hire experts, and accumulate data and a valuable experience during their many years of making and selling games.

Now with all the experience sharing and information available, and a more open approach to development with the possibility to get feedbacks from gamers at every stage of a development, independent developers can tailor games to a specific audience without too much difficulties. Not that it should be the only way of making games, far from it; it just shows that studios developed skills that where not part of their process 5 years ago. And the same thing could be said about PR, sales and marketing. 

But beyond the fact that developers can be successful without the help of anyone - I don’t think that is true for all of them. To make an analogy with book publishing, some talented writers would never finish a book without an editor behind them, others would need to be encouraged to do some rework, and so on. The point is they are also well placed to gauge the potential of a game. Indeed, not all developers are great at pitching their ideas, so it helps when someone knowledgeable takes the time to look at the details to figure out that some particular mechanic, or design idea is promising, or that some cool math behind the controls would make a game feel great to play.

While a welcome step forward, many have come to realize that crowd-sourcing the funding or even the screening (steam green-light) of games has its own limitations. I could elaborate on the subject and add my voice to the critics but what I think is that the industry will always need - along with what already exists - dedicated economic agents whose purpose is to take undiluted risks. Because it needs, like any other types of art media, people and organisations to support, and believe in undertakings and visions even - and especially - when no one else does. It may take a different shape than formal publishing but it will still have to take upon the challenge of finding gems, backing and mentoring talent, and providing awareness.

Also a passion for games and a common background in development will make former developers turned backers a compelling option for studios looking for partners. It should also continue to be a natural trend of a fragmented market made of a multitude of niche that publicly traded publishers cannot really handle alone - especially as their efforts are put into a narrow product portfolio that is supposed to provide the needed level of cash-flow to sustain massive structures and investments, and the desired level of predictability and growth ultimately required by their shareholders.

Maybe it's a form of sponsorship or label producing that will emerge and take a significant place in the future of video game financing. Who wouldn't be curious to check out the next game developed by X and "brought to you/produced by the creator of [your favorite best-selling independent game]"?

Some of you may remember the sequence when Notch offered to Schafer to make psychonauts 2 happen. Lets more of this happen in the future, but let’s not do it over twitter.

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