Sign in to follow this  

Idea for a new type of publisher

This topic is 4687 days old which is more than the 365 day threshold we allow for new replies. Please post a new topic.

If you intended to correct an error in the post then please contact us.

Recommended Posts

Publishing, it seems to me, is the bottleneck of the game development world. Thousands of people are out there who would love to make a good game, have the talents and the drive to make that game, but no funding or organization. Enter the Indie game publisher. We have a few existing Indie publishers, but they don't offer money to potential developers as EA or other large publishers do. Fair enough since Indie developers would be considered a very high risk. But what if an Indie publishing company existed that would fund the independant developers? Would you sign a deal with a publlishing company that was willing to loan you 100,000 dollars to get your game done? The company could sit down with the developer and discuss their idea, and if the idea was doable, and fun, then they could work out a milestone deal. Let's say that they worked out 8 milestones over the period of two years. Every 3 months if the Indie met their milestones, the publisher would loan them another 12.5k dollars. If the Indie failed to meet two milestones, the publisher would have the option to stop funding, and the Indie would have to begin repaying the loan (at a reasonable interest rate). Of course, if all milestones are met, the Indie would still be responsible for paying off the loan, but the publisher could then pull the payments from the proceeds of the game, perhaps even withholding royalties until the loan was paid in full. Upon repayment, the Indie would again retain rights to their game. I would think that most Indie's could get a team constructed and work on a game for 20k/year (assuming 5 employees, or a smaller number of employees and buying their resources from a third party). The publisher would not be risking too much, since its dishing out only 4k/month with the option to pull out at the first milestone if the developers seem inept. Would you be willing to do this if you were an Indie? Of course, your games would probably never see the shelf at Wal-mart, because printing, distributing and advertising costs are outrageous. They would probably have to be sold online, and that markets not enourmous, so there would be a risk that you would have a partial loan to payback, even after a succesful distribution. But because you would retain rights to the game upon repayment of that loan, you would be free to sell it to EA/Vivendi/whoever in hopes of larger revenue. This would simply be a way to get a team organized and have food on your table while you are able to put a game together. Any feedback?

Share this post


Link to post
Share on other sites
Ok here are my comments/opinions on this [smile].

Quote:
Original post by bit64
Publishing, it seems to me, is the bottleneck of the game development world. Thousands of people are out there who would love to make a good game, have the talents and the drive to make that game, but no funding or organization.


I agree and disagree with this statement. It is true that there are lots of people out there with the talents you have described - but they should not need the funding or organization handed to them to get something accompished. I think that those people should be able to make a game with 0 funding and have to manage the organization themsevles. Now I say this because I truly feel that there are enough free resources and tutorials online now that making a decent game is very realistic and possible. Being able to start with nothing and create something so grand is what separates the boys from the men in game programming. (err something like that [wink]). Once you can do it like that from nothing - doing it with something is a lot easier. The orginization I feel is also programmer/developer responsibility. They should be able to handle it all themsevles.

Quote:

Enter the Indie game publisher. We have a few existing Indie publishers, but they don't offer money to potential developers as EA or other large publishers do. Fair enough since Indie developers would be considered a very high risk.


Agreed!

Quote:

But what if an Indie publishing company existed that would fund the independant developers? Would you sign a deal with a publlishing company that was willing to loan you 100,000 dollars to get your game done?


I like your idea - but from that so far, let's think about it. 100k is a heck of a lot of money. I pay about 4k a semester for college right now - and every penny will (Lord willing) be earned back with my knowledge learned. But this idea of giving out this kind of money on something such as this does not seem that feasible. This idea would be rather used for some research based application - imagine a new way to do something or find a better way. This will be continue in the next paragraph.

Quote:

The company could sit down with the developer and discuss their idea, and if the idea was doable, and fun, then they could work out a milestone deal.
Let's say that they worked out 8 milestones over the period of two years. Every 3 months if the Indie met their milestones, the publisher would loan them another 12.5k dollars. If the Indie failed to meet two milestones, the publisher would have the option to stop funding, and the Indie would have to begin repaying the loan (at a reasonable interest rate).


Oh man! I think this could be very devestating. Here's why. If I were to start making a game now - and extended it for 2 years - it will probabally be outdated and 'old' when and if it was finished. I think you have a great idea though about the limited funding per milestone. However, I said this was devestating because imagine if the first milestone was missed. The indie's are out 12.5k in which the must repay. In all honesty - if they could afford this, why would they choose funding. I think this system would have to have some other means of monetary managment - but I do not have a solution at the moment.

Quote:

Of course, if all milestones are met, the Indie would still be responsible for paying off the loan, but the publisher could then pull the payments from the proceeds of the game, perhaps even withholding royalties until the loan was paid in full. Upon repayment, the Indie would again retain rights to their game.


Let's just say that all are met and the game is neat - but do you think, on average it could ever generate enough revenue to cover the 100k or X amount spent? Then the indie's would be in debt after they had spent all that time making and game and end of having to pay for working on something.

Quote:

I would think that most Indie's could get a team constructed and work on a game for 20k/year (assuming 5 employees, or a smaller number of employees and buying their resources from a third party). The publisher would not be risking too much, since its dishing out only 4k/month with the option to pull out at the first milestone if the developers seem inept.


While this once again sounds good - how could a company be willing to do this? We're not talking about 1 group - but many - and 4k a month multiplied by anything is a lot of risk - especially with the odds of "hitting it big" with a title.

Quote:

Would you be willing to do this if you were an Indie? Of course, your games would probably never see the shelf at Wal-mart, because printing, distributing and advertising costs are outrageous. They would probably have to be sold online, and that markets not enourmous, so there would be a risk that you would have a partial loan to payback, even after a succesful distribution. But because you would retain rights to the game upon repayment of that loan, you would be free to sell it to EA/Vivendi/whoever in hopes of larger revenue.


If someone came to me and gave me this kind of proposition, I would honestly decline. The main matter of fact is that when you are dealing with this kind of money - and the associated risks - it just isn't worth it. I mean worse case: you make a game on time and sell it, but it generates such little revenuse that you end up having to pay back a huge loan. Not only are you out of work - having worked so hard for 2 years - but you are actually in debt! As for selling it to someone in hopes of larger revenuse - likely but I do not think it is very probabale.

Quote:

This would simply be a way to get a team organized and have food on your table while you are able to put a game together.

Any feedback?


While having food on the table during the game is great - I think the bigger issue is wheter or not there will be food on the table after tha game, and that's what I think it all comes down to.

I think you have a great idea. I mean it'd be nice to see somthing like this pop up. I hope I have not came across at bashing, insulting, or anything with what you have said. I just think there are a few kinks that would have to be improved in this theorey and its application in modern times. Feel free to tell me what you think about what I have said - good/bad/agree/disagree/etc... I think you have a great way of thinking. Great work [smile]

- Drew

Share this post


Link to post
Share on other sites
Quote:
I hope I have not came across at bashing, insulting, or anything with what you have said.


Not at all! This is great feedback.
I am currently at a point in my life where I would like to start a little side business, and I am trying to find a creative way to make Indie game development a little easier for people, and I have the funding available to do this sort of thing. It's late and I'm tired, so there are definately some things that I need to iron out a little more. I guess the way I am seeing it, is an alternative to living off of a high interest rate credit card or a lowpaying job for the time that it takes to develop a game, while getting some industry direction and a guaranteed publishing agreement (albeit, an internet release). But you bring up some excellent points. Much work would need to be done to determine what kind of sales a good internet released game could rake in, everything would then have to be based from that.

Quote:
Oh man! I think this could be very devestating. Here's why. If I were to start making a game now - and extended it for 2 years - it will probabally be outdated and 'old' when and if it was finished.


Absolutely, but this holds true with published games as well. The solution is to make sure that the developers are targeting technologies that are two years out, it is hard to do, but certainly much easier today than it was 5 years ago. It would be the publisher's responsibility to forsee the value of the game 2 years down the road and accept or reject (or refine) the proposal based on that.


Related thought:
With the dawn of networked console gaming, I think that there is a huge oppurtunity open to sell games over the internet. I feel that the average Joe who owns an <your fav console> would gladly pay 20 dollars to download a new game directly onto his console if he didn't have to get out of his recliner. :) Even if it is from a developer/publisher he is unfamiliar with. Granted, this is not possible with the current generation of consoles (space limitations) but should become more feasible with the next generation.

Thanks again for your excellent response.

Share this post


Link to post
Share on other sites
I agree with Drew on that a first organized game project of larger scale should be done with no funding. It might not be the easiest way (by far) but probably the most rewarding afterwards. If you manage to pull it through, you would have:

- A thight group of people that literally can perform miracles.
- A product which you can show to future publishers when negotiating for funding about which you can say "Look what we managed to make with two empty hands, then imagine what we could do with a little funding." A very good position for negotiation.
- Probably a very cost effective organization, being less dependent upon funds, which is never a bad thing, whatever business you are in.

Apart from all that you would have a selfesteem and belief in your abilities that would be hard to come by otherwise.

This doesn't say you cannot apply your ideas on later projects. They seem very promising.

Good luck
-
Staffan Einarsson
Sala, Sweden

Share this post


Link to post
Share on other sites
Guest Anonymous Poster
1. I found my limited liability company (becuase only people who are utterly insane do a game company without being a company)
2. I take your loan
3. I default, and ... you get nothing. I walk away from a company that went into insolvency. As long as I didn't defraud you, I haven't done anything wrong.

So.. you'd have to get special things put upon the company directors, PERSONAL things, which is starting to get real nasty.

Shrug. Why is it that when there is *already* a viable and intelligent business model for "solving" this "problem" in existence that everyone is still ignoring it? Go and look at F4G. Copy them! They're making decent (not huge, but decent) profits...so steal the business model.

If...and this is a very very big "if"...you can get enough investors to back your fund. Or a crazy-enough multimillionaire to do it on their own.

Share this post


Link to post
Share on other sites
Normal publishing advances are "fully recoupable but non-refundable". That means the publisher can reclaim the advance from royalties but if the game does not earn enough royalties (or never gets finished) then they can not get a refund. That is why publishing is risky.

If you change the advance so that it is refundable then you change the basis of the publisher developer relationship and the business model for both companies. If you loan money you need to ensure the company you loan it too is capable of repaying. Unless you are a millionaire and can afford to just lend money to anyone, your bank/investors will look at your business plan and see that these advances are refundable (and that the developer is liable for this debt). Before your bank/investors lend you the money to lend to the developer they will expect you to ensure the developer is financially stable enough to repay the debt - that basically means that the developer would most likely have to offer some sort of security (their home) against the loan. If they can't or wont do that your investors would be unlikely to allow you to make an advance.

There is also the issue that if the developer could afford to pay back the loan they wouldn't need to borrow the money from you. They could borrow it from the bank instead and thus get a better deal on the project once it was finished. Most developers (especially indies) are not in a position to borrow that sort of money and repay to either the bank or the publisher.

Share this post


Link to post
Share on other sites
Quote:
Original post by Anonymous Poster
Shrug. Why is it that when there is *already* a viable and intelligent business model for "solving" this "problem" in existence that everyone is still ignoring it? Go and look at F4G. Copy them! They're making decent (not huge, but decent) profits...so steal the business model.

The reason is that F4G, like almost all investors, will only invest in established, financially stable developers who already have a publishing agreement in place. In other words they work with those who least need the help.

There are some funds available in the UK and Europe for new start-up/indie developers, in the form of arts related grants. These are now being rolled out to cover game development. The trouble is that they are almost always local (meaning they are limited to companies based in a specific area). In addition they are actually match funded loans, which means that to get the money you must find an equal amount of money first. You also need to have a good business plan and your project needs to pass their evaluation process and be considered likely to actually make it to market. All in all the process can take anywhere from six months to a year.

Share this post


Link to post
Share on other sites
I planned on funding this myself, not through a bank loan.
Anyway, good feedback thanks.

Quote:
Shrug. Why is it that when there is *already* a viable and intelligent business model for "solving" this "problem" in existence that everyone is still ignoring it? Go and look at F4G. Copy them! They're making decent (not huge, but decent) profits...so steal the business model.


Then why ever do anything original? :)


Quote:
There is also the issue that if the developer could afford to pay back the loan they wouldn't need to borrow the money from you. They could borrow it from the bank instead and thus get a better deal on the project once it was finished.


Most banks that I know wouldn't loan money (except a personal loan) to indie developers. It's not your traditional business model.

Quote:
Most developers (especially indies) are not in a position to borrow that sort of money and repay to either the bank or the publisher.


They could always borrow less! It would ultimately be my responsibility to match loans against my knowledge of sales and the probability that their title would generate that much. Lending more money that I believe I could recoup would be irresponsible.


Thanks again.

Share this post


Link to post
Share on other sites
Most publishers wont fund indie/budget titles because
a) indies are generally less experienced and as such much higher risk.
b) the rewards from even a successful indie game are quite low compared to those of standard retail/full price software.

Given that developers are high risk anyway you are targeting the highest risk area of a high risk area without the prospect of big rewards. Having said that, if you have the money to spare then get to it.

Share this post


Link to post
Share on other sites
Quote:
Original post by bit64
They could always borrow less! It would ultimately be my responsibility to match loans against my knowledge of sales and the probability that their title would generate that much. Lending more money that I believe I could recoup would be irresponsible.


You dont understand.If an indie needs x amount of money for development,he needs more than x+ worth of immovables to be able to pay it back.Because when you apply for a loan, your mortgaged properties will worth lesser than their real value.So in any circumstances, you need funds to get funds.That's not only the rules of game development, it is also the rules of finance.You can only borrow money from your friends if your both hands are empty.Legal establishments will look for recompensation by mortgaging your real estate, car etc.

If you are thinking of getting loan from any establishment without providing a guarantee, it is sad but you are just dreaming.Firms would financially be in big trouble not only from games that fail, also a lot of people would try to exploit this opportunity to ripp the firms and run away with the money.

Share this post


Link to post
Share on other sites
Quote:
You dont understand.If an indie needs x amount of money for development,he needs more than x+ worth of immovables to be able to pay it back.


No. You don't understand. I am not trying to get a loan, I am thinking about loaning out my 'own' money to independant developers to help the game industry move away from the state of static development that I currently believe it is in. Since this is my own money, I get to dictate why and to whom I loan it to, regardless of collateral and ability to repay.

Share this post


Link to post
Share on other sites
Quote:
Original post by bit64
I planned on funding this myself, not through a bank loan.
Anyway, good feedback thanks.
...
No. You don't understand. I am not trying to get a loan, I am thinking about loaning out my 'own' money to independant developers to help the game industry move away from the state of static development that I currently believe it is in. Since this is my own money, I get to dictate why and to whom I loan it to, regardless of collateral and ability to repay.



*Perks up* [smile] I have to admit, you are quite some entrepreneur. What I think you should do is draft up a design model showing your idea in action - your idea is definitly there and has been discussed. All you would have to do is come up with the actual design - showing a complete sample of what would happen. I think undoubtly you could definitly find people - but finding people who will be working on something worth while is another aspect.

Anyways if you decide to persue your idea - I'd like to have a general chat about it sometime. The whole approach of it intrigues me and is something that would be of intrest to me. Best of luck in your endevors!

- Drew

Share this post


Link to post
Share on other sites
Quote:
would said loan service be available internationally?



I would like for them to be, but honestly I have no idea what that would entail. I am still in the early stages of planning. I need to know if this would be worth my time first :) If I find that it is something I want to pursue I imagine I would need a good lawyer and accountant to answer those questions.

Share this post


Link to post
Share on other sites
Sounds like you wan't to be an Angel investor. High Risk, High Returns. I think this idea is good although I would never loan out an astronomical amount of money.


Has anyone ever thought of gathering up a team that invests their own money into the project, lets say $2500. Each developer would have an equal stake in the product. The devlopment money can be spent on real licensed software, professional Audio, etc... If you have 10 developers this would start the devlopment company with $25,000 of self invested capital. This would also pay for incorporating a business, and the personal investment would be an incentive for you to work your ass off to reap the benefits. If more money is needed you can ask for matching funds from an outside sponsor/investor such as the individual above.

Share this post


Link to post
Share on other sites
Quote:
Original post by Codemonger
Has anyone ever thought of gathering up a team that invests their own money into the project, lets say $2500. Each developer would have an equal stake in the product. The devlopment money can be spent on real licensed software, professional Audio, etc... If you have 10 developers this would start the devlopment company with $25,000 of self invested capital. This would also pay for incorporating a business, and the personal investment would be an incentive for you to work your ass off to reap the benefits. If more money is needed you can ask for matching funds from an outside sponsor/investor such as the individual above.

You mean do what every professional start-up developer does?

Share this post


Link to post
Share on other sites
Quote:
Original post by Drew_Benton
I agree and disagree with this statement. It is true that there are lots of people out there with the talents you have described - but they should not need the funding or organization handed to them to get something accompished. I think that those people should be able to make a game with 0 funding and have to manage the organization themsevles. Now I say this because I truly feel that there are enough free resources and tutorials online now that making a decent game is very realistic and possible. Being able to start with nothing and create something so grand is what separates the boys from the men in game programming. (err something like that [wink]). Once you can do it like that from nothing - doing it with something is a lot easier. The orginization I feel is also programmer/developer responsibility. They should be able to handle it all themsevles.


As nice as it would be to say that no one should need funding to get something accomplished, I think the relatively small number of indie games tells us reality doesn't quite match our hopes.

As great as free resources and tutorials are, it's still a lot of work to put a game together, and more than anything, that work requires time. Time which is hard to come by when you're working 40h a week. Which is where bit64's funding comes in handy.

I really think your idea has merit bit. At 20k each, 5 people working full time on a game for 2 years could really make something wonderful. At the same time, it's also risky business. To be successful, you'll need teams full of talent, and as someone who's tried to work on an indie team, that's hard to do.

I really think if this were to work, you'd have to have a hand in putting together those teams. Even something as simple as sorting out individuals based on a portfolio/demos to determine the cream of the crop, and then letting them match themselves up (because another important part of the equation is that everyone have an interest in the game being produced). I think that would greatly increase your chances of ROI.

And to answer your question, provided I had enough confidence in the team, I'd definitely sign that contract.

Share this post


Link to post
Share on other sites
I'd definitely sign such a deal, providing that I was confident about myself and my team with regard to the project in question! I'd, however, be more pleased to have a "traditional" contract with added security.

However, what basically happens in your concept is: The full risk is placed on the developer, and the team will be completely broke after just one botched project, having to pay back their old loan AND try to make ends meet with a new one - no money is "generated", it's just loan business.

I think you can get that from a Bank (e.g. Team of 5 people, each one takes a 20k loan during one phase of the project). No need for a publisher anymore.

A 20k loan is easy to get nowadays. What's not easy is to make 100k to pay it back once the game is out.

Share this post


Link to post
Share on other sites
Quote:
think you can get that from a Bank (e.g. Team of 5 people, each one takes a 20k loan during one phase of the project). No need for a publisher anymore.

A 20k loan is easy to get nowadays. What's not easy is to make 100k to pay it back once the game is out.


Indeed that kind of loan is easy to get, if you have a job. However, if you want to start a game development company and dedicate your time to making a great game, this would be an oppurtunity to do that. That's all. You won't have to flip burgers on the weekend.

[Edited by - bit64 on January 20, 2005 5:23:40 PM]

Share this post


Link to post
Share on other sites
I think its a good idea. You have a solid grounding on what you want to do, its just a case of fine tuning the details of what you want to do.
And yes, if I could get a team together I would go for this sort of thing. However, there is the marketing side of it, for example. If the application made, were to be sold on the internet, where would it be sold? what would it cost? etc. etc. These are things I wouldnt want to worry about as a developer. So I propose that you set up a website where you sell the games directly, and hence become the largest indie-game seller on the internet (unless there are any other sites out there already), of course advertising your presence on various other sites around the net. Whats your opinion on this idea?

Share this post


Link to post
Share on other sites
Quote:
Whats your opinion on this idea?



Quote:

From earlier post:


With the dawn of networked console gaming, I think that there is a huge oppurtunity open to sell games over the internet. I feel that the average Joe who owns an <your fav console> would gladly pay 20 dollars to download a new game directly onto his console if he didn't have to get out of his recliner. :) Even if it is from a developer/publisher he is unfamiliar with. Granted, this is not possible with the current generation of consoles (space limitations) but should become more feasible with the next generation.


Games would sell in the range of 10-20 dollars each and would have to pay 10% for licensing fees. However the developers would receive about 80% of the profits (minus what they owe), and the remainder would be used to support other projects and distribute DVD's to grocery stores and gaming magazines.

Share this post


Link to post
Share on other sites
Quote:
Original post by bit64
Games would sell in the range of 10-20 dollars each and would have to pay 10% for licensing fees. However the developers would receive about 80% of the profits (minus what they owe), and the remainder would be used to support other projects and distribute DVD's to grocery stores and gaming magazines.

While I realise you are doing this to help developers you also need to make some money if you want it to be a long term venture. The game software industry is hit driven so 90% of the titles you fund will lose money. Now, while the contract will state the developer must refund the advance, we all know the vast majority won't be able to or will only be able to do so in payments of $20 a month. So, unless you make substantial money from the 10% of titles that make money you simply won't be in business. The profit on $10-20 software is tiny and if you give 80% of it to the developer you are never going to have any more money to invest into new titles.

Share this post


Link to post
Share on other sites
Quote:
Original post by bit64
Quote:
You dont understand.If an indie needs x amount of money for development,he needs more than x+ worth of immovables to be able to pay it back.


No. You don't understand. I am not trying to get a loan, I am thinking about loaning out my 'own' money to independant developers to help the game industry move away from the state of static development that I currently believe it is in. Since this is my own money, I get to dictate why and to whom I loan it to, regardless of collateral and ability to repay.


No, i certainly understand you.That's why i said "Firms would financially be in big trouble not only from games that fail, also a lot of people would try to exploit this opportunity to ripp the firms and run away with the money".

Some questions come to my mind at a first glance:
How can you be sure that the profits that has been earned from the game will cover the loans you supply?
What experience do you have to be able to guess what kind of games bring what amount of sales results?
Do you have any opinion about the PC game industry endorsement?
Have you ever made a market research about game types and their selling amounts?

As you see, if you want to help indie developers that's something very respectable but you must have huge balls to do it.The circumstances may not be as you think.If you want to help indies you should also be able to make money to help them more as Obscure said.I was a finance coordinator of a finance corporation and i did this for 4 years.So i really know what i am talking about.Financers always consider this; "what are the risks, what are the profits".If the risks will be much more than profits, they dont invest or lend money.In your situation, the profit may be charming but the risks are a lot higher than the possible profit.So my suggestion would be to think as much as you can and do not make an attempt unless you are very sure about what you are doing.Also you must be financially secured plus you should have a lot of experience in this business area, before taking such risks like that.

I really support your idea and i would really want someone to make this idea turn to reality.Heroes are needed in every battle and i never forget that no battles can be won without heroes.But depending on my experiences, you are playing with fire and watch out yourself because you might get burned more than you can ever imagine.Good luck.

Share this post


Link to post
Share on other sites
Just one thought: if you are a publisher that publishes "indie" games, what is the difference between you and for example Activision? Size?
Activision signs contracts with developers and publishes their games (maybe funding the developement). So?

On the other side, I am freelancing beside my 40h job, and it is not easy at all, so I can understand what you mean, but the reality is rougher I think...

Share this post


Link to post
Share on other sites
The difference is mainly one of scale but also related to the type of developer.

Activision fund and publish games but they only sign up titles they consider will be big, triple A titles (of course they may end up being rubbish but that is just the nature of the business). We are talking $1million+ budgets and they only sign up big teams that have proven development experience working on big titles.

Indie in the sense that it is being used here means small independent developers. Often one man and his dog, sometimes ful time but many working part time while doing a day job.

Share this post


Link to post
Share on other sites

This topic is 4687 days old which is more than the 365 day threshold we allow for new replies. Please post a new topic.

If you intended to correct an error in the post then please contact us.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

Sign in to follow this