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FAQ: The Business & Law of Game Development

Thank you for reading the FAQ, which contains answers to some very frequently asked questions. Feel free to ignore the stickied post entitled "Read this before posting". It just tells you to read this FAQ and to check the forum for previous threads that cover your topic of interest.

This FAQ relates specifically to the Business of Game Development so all answers are business related not technical.


General

Q. How much do game programmers, artists, producers, etc., get paid? (last updated Aug 2010).


Q. How do I get funding for my game? (last updated Aug 2010).


Q. I want to develop games for console (Playstation, Xbox, PSP etc)? Do I need a license or special development kit? (last updated Aug 2010).


Legal - Copyright, Trademarks & Patents

Q. What is the difference between Copyright, Trademarks and Patents?


Q. Does Copyright mean I need a license to put real cars, guns, Star Wars characters in my game?


Q. Can I use Copyright material or Trademarks if my game is free?


Q. How do I get a license to use copyrighted content, trademarks, or other IP?


Independent Game Development/Shareware

Q. Is it possible to make a living as an independent game developer (or as a shareware developer)?


Q. What are the best third-party online payment options?


Answers - General

Q. How much do game programmers, artists, producers, etc., get paid?

A1. Short Answer: Not enough... but more than people who do jobs that are a lot less pleasant.

A2. Longer Answer: "Game Developer" magazine, and Gamasutra.com, conduct an annual salary survey that provides a national (US) perspective on this.

The 2010 Salary Survey is published in Game Developer Magazine. A digital version can be purchased from https://store.cmpgam...Digital-Edition for $3.95.

For those seeking entry level positions a special (and free) Game Careers Guide edition of the magazine features edited highlights of the 2010 survey focusing on entry-level jobs in video game development. This can be viewed at http://gamedeveloper...oper/2010cg#pg1

In addition you can view highlights of the 2009 survey at http://www.gamasutra...p_4_Percent.php

NOTE: You have to have an free account on Gamasutra to view this article.


Q. How do I get funding for my game?

A. (submitted by Dan Marchant - Obscure Consultancy)

- Budget/Indie or full price (aka AAA games).

Budget game and indie game are generally self funded as Publishers wont pay up front development fees for these titles. If you are looking at full price, AAA PC or Console games or digitally distributed (Xbox Live Arcade/Playstation Network) then publisher funding is an option, provided that you have a proven industry track record.

- Self funding

Games cost a lot to develop. If you have the money, and the guts to risk it, then the rewards can be much greater. If you fund/develop a game which turns out to be great then publishers will queue up to sign it and the financial returns will be greater because you took all the risk. Of course if the game isn't great then you may end up with a finished product that no one will sign.

An alternative to risking everything on a big game is to develop a smaller indie game. In most cases indie developers start off working on games in their spare time (while working a day job). This eliminates the financial risk but does mean you game will take longer to make.

- Indie Funding

Most indie games are zero budget/self funded. That means the developer works on the game in their spare time (no wages to pay) while working a day job. If the first title makes money they can then use that to go full time and fund their next title. If the first game doesn't sell then they continue on part time developing their next game.

While most indie games are self funded there are a few sources of funding available such as The Indie Fund, which is a funding source for independent developers, created by a group of successful indies.- Indie Fund and Kickstarter, an innovative "crowd funding" system for creative projects - Kickstarter.


- Publisher funding

If you can't (or won't) fund it yourself then publisher funding is an option for larger games. If you have a good demo, good team and a good presentation in place there is a chance that a publisher may sign you. That chance is dramatically reduced if you do not have industry experience. Publisher's hate to take any risks so they often only sign teams with an industry track record.

The pros of publisher funding are that they take the financial risk. The cons are that they almost certainly own your game and maybe even part of your company in return for the cash. They will also take the lions share of the profits. That funding will most likely depend on you meeting agreed milestones and failure to do so may result in them witholding payment and your company going bust.


- VC funding

Very difficult to come by. This is basically a more professionally arranged and more time consuming version of publisher funding.

The pros are that you have agreed funding up front (or possibly just funding to get to an agreed demo stage). This allows you to keep greater creative control of the game and get a better deal when you sign with a publisher. The cons are that it is even more time consuming to get VC funding agreed than publisher funding. They may also take a large slice of the company, may retain the rights to kick you out of your company if things go wrong, will require you to pay them interest (so you have to borrow more money from them to pay back to them as interest), you have to pay their legal fees and a host of other possible restrictions and conditions.

In either of the last two cases you will need a really good demo and a fair amount of paperwork before you even start talking to them. You will need (or must have someone in your team that has) industry experience and in the case of VCs will need to show proven company/management skills. You will need to fund the development of the demo and the preparation of paper work because you wont even be able to start talking to a publisher or VC without them. Once these items are complete you will then need to survive and keep working for anything from three months to whenever while they decide.


- Grants and Tax Breaks

Funding may also be possible via local grants or tax breaks. These are usually limited to specific regions and many won't be available for creative projects. You will need to research locally available grants/tax breaks (unless you want to move to Canada) to find those that are applicable.  

Additional links: If you are considering the publisher funding route check out the following.....


Preparing a Product Pitch


Video game acquisitions process


Q. I want to develop games for console (Playstation, Xbox, PSP etc)? Do I need a license or special development kit?

A. Answer: This will depend on the type of game you are making and the actual console you hope to work on.

You can develop indie games for Microsoft's Xbox LIVE Indie Games (XBLIG) or for Sony's PSP Minis without having to set up a company or have proven industry experience developing commercial games.

For more details of these two systems see:

XBLIG - http://creators.xna.com/en-GB/ and,

PSP Mini - Link Needed

If you want to work on Xbox 360, Playstation 3, Wii, Xbox LIVE Arcade, PSN or Wiiware you need to apply to the particular console company to become an approved developer. The exact process varies but it generally means proving that you are an experienced game developer with a financially stable company. The console companies won't approve hobby/inexperienced teams to work on their consoles.

The following is a quote from Nintendo's developer application page:

"Please email the following application requirements to xxxxxxxxxx@noa.com:

* Your company's full legal and incorporated company name (including Ltd., Inc., Co.), address, telephone and fax numbers and a main contact and that person's email address.
* A list of the principal members of your company, and their relevant game industry experience.
* A list of published game titles (any platform).
* A list of any subcontractors, subsidiaries, branch offices or other related companies that you anticipate will aid in development. Please describe how they will serve to assist in software development.
* List any employees under the age of 18 working at your company.

Once we have this information, we can determine if it would be appropriate to send a developer non-disclosure agreement for your review and signature. We will contact you after we have made a decision."



In addition you may have to submit a concept for approval and will then need to buy development systems, which will cost several thousand dollars.

Nintendo authorized developer applications http://warioworld.com/apply/

Sony Computer Entertainment Developers Network http://www.scedev.net/a>

Microsoft registered developer applications - New Link needed


Answers - Legal - Copyright, Trademarks & Patentsh

Q. What is the difference between Copyright, Trademark and Patent?

A1. Answer: Talk to a lawyer. Making mistakes over Copyright, Trademarks and Patents can be very expensive. However in addition you can read this GameDev article, which provides an easy to digest introduction to these issues for developers.

Legal Issues for Rookie Development Studios Part II - Just what are these games made of...legally speaking?

In addition the following is also helpful.

10 Big Myths about Copyright Explained

And if you're even thinking about making a clone or fan game:

Clone Games and Fan Games: Legal Issues


Q. Does Copyright mean I need a license to put real cars, guns, Star Wars characters in my game?

A1. Short Answer: Talk to a lawyer.

A2. Long Answer: Yes you almost certainly do need a license. Copyrights, Trademarks and Patents protect different things and there is a very good chance that part of the item you want to use is protected by one of these laws.

Will they catch you? maybe, maybe not. If your game is rubbish and no one likes it then the IP owner probably won't hear about you and won't come after you. If you make a great game then people will talk about it and the IP owner may come after you. Many film studios employ companies to search the net for people infringing their IP rights.

If they do catch you they will likely force you to scrap your project. If you don't comply they will sue you in court and that will very quickly become very expensive. Better just to come up with your own ideas.


Q. Can I use Copyright material or Trademarks if my game is free?

A1. Short Answer: No. It doesn't matter if your game is for sale or given away free. Intellectual Property laws protect the owner of the IP regardless. The only exception to this is the doctorine of "fair use" - the right to make fair use of something. However fair use is an ill defined concept as shown by the following quote

How much of someone else's work can I use without getting permission?

Under the fair use doctrine of the U.S. copyright statute, it is permissible to use limited portions of a work including quotes, for purposes such as commentary, criticism, news reporting, and scholarly reports. There are no legal rules permitting the use of a specific number of words, a certain number of musical notes, or percentage of a work. Whether a particular use qualifies as fair use depends on all the circumstances. See FL 102, Fair Use, and Circular 21, Reproductions of Copyrighted Works by Educators and Librarians.


Source: United States Copyright Office

No one can tell you how much of something you can use before getting into trouble. You could pay a lawyer a lot of money and they still wouldn't be able to give you an answer. If the IP owner thinks you are making use of their IP unfairly they can sue and it will be up to the court to decide. Win or lose it will cost a lot of money so it is best to avoid the issue by not using existing IP.

In addition the following article covers fair use in book publishing. While not 100% applicable to games it does help explain "fair use".

Fair Use of Trademarks article


Q. How do I get a license to use copyrighted content, trademarks, or other IP? - provided by Frob

A1. Short Answer: Call the company. If they are interested you will need to sort out a licensing agreement (work with a lawyer on the details.)
A2. Long answer:b> Step 1> Find the group who you think own the rights.

All you need is a phone number, bonus points if you find the real name. This should only take a few minutes. Use Google, the 'contact us' link on company web pages, or even old-fashioned telephone listings. You are just looking for a phone number.

Step 2: Call them.
Don't email. Don't fax. Don't send a certified letter. Pick up the phone and actually call the company. Have the secretary direct you to whoever handles re-distribution or other applicable licenses.

Step 3: Ask them if they actually have the rights to what you want.
If they don't have the rights, ask them who does and repeat from step 1. If they do have the rights, proceed.

Step 4: Convince them to license the content to you.
Some companies will just tell you "no" outright. A few companies might listen to your plight and do it at no cost. Almost all companies will give you a license in exchange for enough money and/or royalties.

Step 5: Work out the details and obtain permission.
If all you want is permission to use some pictures in your tiny project there probably won't be much negotiating. You might get a piece of company letterhead explaining what you can do, with the company owner's signature on it. You might instead get an email (hopefully with a digital signature).

But for any significant licensed content it will be more work. It will involve many phone calls, discussions with lawyers and accountants, a few in-person visits, signatures, and transfers of money.

Q. Is it possible to make a living as an independent game developer?

A1. Short Answer: Yes, eventually.

A2. Longer Answer: It is possible to make a living as an "indie". However, it takes a considerable amount of time to get to the point where you earn enough money to live. As an indie developer starting out you will be unknown. People can't buy your game if they don't know who you are. In addition your first games will probably not be very good (compared to existing indie games in the market) and it will take time and effort to develop your skills and get known. It can often take several years to get to a point where your games are good enough (and you have developed a sufficient number of them) that you can earn a living just from indie development. Most indies start out doing it as a hobby while working a day job in order to support themselves while their business grows.

There are also different types of indie developer
Lone wolf Indie - These are the independent developers who work alone (often from home) or with a small number of contractor staff to develop and self-publish games. They design, develop and publish their own games.

Contractor/Freelancer Indie - These are the "hired guns" of game development. They create games for publishers and even non-game-dev-related companies that want small-ish games developed (for a web page, for a CDROM giveaway, or whatever). Or their specialists, like artists or sound engineers, who do contract work for a particular project.

Independent developer/publisher - These are the slightly larger developers who work in a team, often based in an office. Are indie in that they are not owned by a publisher. They may self-fund their projects or work on publisher funded games. The games they design and develop and publish their own games.

There is also the "wannabe" indie, but this type isn't trying to make a living as an independent developer. Instead, they are trying to land a gig as an employee in the game-dev industry. Their focus is more to demonstrate their abilities rather than to make a salable product.


Indie related resources

The Indie Game Development Survival Guide by David Michael

Contracting Artwork for Your Game by David Michael

Indiegamer forums


Q. What are the best third-party online payment options?


Black Cat Systems has created this handy list:

An Overview of Shareware Registration Services

While not a complete list of all available options, it's one of the best single sources for this type of information.



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