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AuSemMau

Is publisher-funded XBLA/PSN an approachable target for smaller studios?

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Most writeups you find (Obscure, for instance) tend to address publishing on a whole, and usually focus on AAA games. Clearly at those budgets, your IP is toast, even getting the deal is incredibly difficult, etc. Never even mind that a small studio getting a AAA contract is all but unheard of, unless someone there has some incredible contacts (or an awe-inspiring track record).

How much of that changes if your target is XBLA/PSN? Is IP ownership more possible? Is it at least more practical to get a deal?

For instance, let's say your budget is around 1 million. At the $15 price point, assumedly the publisher recoups at around 90k sales - if their cut is the same 75%-ish that indies get, though I'd imagine it might be better - which is a fairly rational number to imagine (hits make more like 150k to 250k+). Certainly a safer bet than the absurd sales a AAA takes to recoup, which it may not even IF you have a massive, massive ad push, which further increases costs, etc. That is of course assuming you can demonstrate competency (solid prototype), a solid team with industry experience / shipped titles, don't fub the demo, etc.

For that matter, taking the above example - what kind of chances do you have of getting such a deal, assuming you've gone the route of a solid prototype, have your core team set up, don't fub the presentation, etc? Would that budget still be seen as too high (the above's for a 2-year larger sort of game, you'd certainly need less for a smaller arcade'y game)? Is such a deal at least an approachable target for a small relatively unproven studio, unlike AAA?

EDIT: (mind, of course, that a smaller studio can aim for PSN or XBLA as an independent already - I'm just thinking specifically of those larger projects with budgets an indie either couldn't or really shouldn't shoulder)

EDIT2: VV Er, added a bit more clarification to your #2. Let's presume your assembled team has industry chops and shipped titles of note, and is doing a prototype-driven demo as opposed to soft sort of video/powerpoint presentation. When I say "new studio," I'm thinking of people splintering off an existing studio to form their own new one - so they've worked together even, but their new studio has a track record of 0 and no big names.

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Well the only good feedback you could use would be from someone that has had an xbla or other game funded.

I'm going to guess that it is still very hard for 2 reasons.
1. publishers are simply hard to get deals with. This is why when they see a modern combat game do well, they try to steal those profits and spend as much money there as possible.
2. Someone without any shipped titles is still a 1 million dollar risk. I just don't think publishers are really into trusting people they can produce a product.


I think the best way to get money is through venture capital / angel investors.

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I don't know about PSN but for XBLA you basically need to become a registered Microsoft developer to get your game on. They only have so many slots for XBLA games with larger companies getting most of them just by being the larger company.

I worked on a team that was trying to do a XBLA game that got turned down. It was a good game that had good graphics and (we thought) good gameplay but it didn't make it through because there was already a similar game in the pipe. Mind you this was just for the chance to be able to buy a devkit and not the actual approval process.

The cut for XBLA is much smaller then what you would get with a regular Indie Arcade game. Pretty sure it varies from title to title but as far as I know its nowhere near 75%. The indie games are only 70%.

The company I worked for was your edit 2. We demoed probably a 80% complete game. Lucky for us the engine we used supported PC so the game ended up going to Steam. Make sure to leave yourself a plan B if XBLA falls through. Of course, depening on the previous experience of your team it may give you an edge since you have demonstrated getting quality games out in the past. Our team had a lot of people where that was their first job.

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AuSemMau,

Your approach is more realistic than going for a AAA multi-platform deal out of the box, but the answer still depends on how much of your dev costs represents a risk to the publisher that it will recoup those costs plus a profit margin.

Stating your game needs to sell over 100K+ units to get out of the red means it needs to be a substantial hit on PSN/XBLA (how many games sell this many units?) which may reduce the appeal of financing your entire cost of development even with a solid demo. Therefore you need to present the publisher with comparable titles and see where you stack up in terms of unit sales (which everyone pretty much has to guess at) to assuage the fear they are chucking 1M into a hole filled with gasoline in a match factory. Also $15 is a premium price and many games sell for much less than that. However that being said, you can make yourself more attractive to a potential publisher by funding more of the initial development costs yourselves or obtaining outside financing that shifts some of the risk from the publisher.

With regards to the self-published indie route, PSN offers good deals if you can get into the Pub Fund which operates as a negative pick-up type deal. You deliver the game, they put cash in your account. This can be used to obtain short term financing for development but I don't think they go above $500K and the game would be exclusive to PSN. XBLA as previously noted has limited slots and if you don't have a publisher it is next to impossible to get your game concept approved. I have worked with developers with released titles on PSN that have been told to get a publisher, went and got a publisher and then were told that the game was not right for the platform. Neither PSN or XBLA really likes allowing self-published indie games to appear on the other platform which is a huge hurdle for making money back on the game. Wii-ware seems to be open to most concepts, but I have yet to hear of any runaway success on that platform from any indies.

FYI - No platform owner offers 75% cut to indies as far as I know. In fact it can be much less than Apple 70/30 split. So there are drawbacks to self-publishing on the console side that makes getting a publisher very helpful (especially going cross-platform).

The other thing to consider is to release the game on Steam for PC first and then look for publisher support on other platforms. If the game hits on Steam, then you may be able to get further financing for ports to PSN or XBLA and retain more rights in the IP than going straight to the publishers.

Good luck with your new venture!

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Original post by AuSemMau
How much of that changes if your target is XBLA/PSN? Is IP ownership more possible? Is it at least more practical to get a deal?

5 years ago the answer would have been yes. XBLA/PSN were new and publishers were all jumping into digital distribution and also the casual space (which they thought were different) so there was a lot of opportunity. Sales on XBLA and PSN didn't really meet their expectations so many have now cut back on the amount of XBLA/PSN titles and also on the budgets so deals are much tougher to get.

If the publisher is funding the game (or rather loaning you the money) they will expect the IP.

Quote:
For instance, let's say your budget is around 1 million. At the $15 price point,.....
Sadly budgets of this size are pretty rare now and there is big downward pressure on price so those assumptions are stretching it.

Quote:
Certainly a safer bet than the absurd sales a AAA takes to recoup...
Unfortunately publishers don't see it that way. Small projects generate a smaller return, but the publishers overheads are just the same (their giant corporate offices, producers, company cars, upper class flights for the executives etc). The fact is that the likelihood of success is equally slim for digital and triple A. The difference is that a "massive" digital hit will barely pay to run their company cars for a month whereas a hit Triple A game will fund the whole company for years to come.

If you have a bad triple A game you can still sell it by spending millions on marketing because the size of the market at retail/on disk will allow you to recoup. It has now become clear that top, top digital titles have sold 1 million, very successful ones do 250k-500k but the vast majority sell only a tiny amount. With those sort of numbers marketing spend simply doesn't work. You can't significantly raise sales via a big marketing spend because the market size won't allow you to recoup.

Starting a studio
I have worked with several start-ups over the years and 5 years ago was probably the golden age as publishers rushed to get into casual and digital. Now they have realised that the sales wont cover their overheads they are scaling back and it is much harder to get deals. The big publishers who could afford a $1 million budget won't sign a new studio (unless you are the leads on Assassins Creed 2, GTA 10 or Modern Warfare 16.5). The fact that you have made games ceases to count because now you are a new team. I have sat in meetings with people like SEGA and they admit they really like the work that new Team X are doing "but they are no SEGA ready" - meaning you have not shipped games as Team X. - Many developers think this is silly but having seen many start-ups I have to agree. Making a game as an employee is a million million miles away from the stresses and pressures of making a game when it is your company.

To get anything close to a decent deal you need a substantial amount of skin in the game (50% of the dev budget). Without that trying to set up a small studio is like rolling a dice. You score six you get a deal, anything else and you don't.

If you don't already have substantial funds then the best option is to do outsource work for other large developers to build up enough money to take a risk on a project pitch. You will need to be doing something to earn money because getting an original game signed will take a 6 months to a year from the moment your demo is finished and ready to show.

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Original post by Obscure
The big publishers who could afford a $1 million budget won't sign a new studio (unless you are the leads on Assassins Creed 2, GTA 10 or Modern Warfare 16.5). The fact that you have made games ceases to count because now you are a new team.

To get anything close to a decent deal you need a substantial amount of skin in the game (50% of the dev budget). Without that trying to set up a small studio is like rolling a dice. You score six you get a deal, anything else and you don't.

If you don't already have substantial funds then the best option is to do outsource work for other large developers to build up enough money to take a risk on a project pitch. You will need to be doing something to earn money because getting an original game signed will take a 6 months to a year from the moment your demo is finished and ready to show.

So, just to make sure I'm clear -

Barring miracles, the only way forward now if your goal is to move to whatever you'd call the tier above small downloadable games but below AAA (AA? Whatever you'd call the level that Flower, Castle Crashers, Fat Princess, Shadow Complex, etc play at), is to start an indie studio, make your living from contracting / Flash games / smaller stuff with your game on the side, and then either:

1.) Pitch your prototype and win at this point
2.) Release an indie game on XBLA/PSN/(and probably Steam), and use the inertia from that to push for an actual funding deal for your next game
3.) Get lucky on #2, make a bundle, self-fund your larger project from there. Or maybe still go publisher anyways to distribute the risk.

... and for #1, is your "prototype" at that point far enough along for your aforementioned 50%, then? Or is it indeed the same just-a-prototype you'd usually pitch, but now you've got the history as a contracting studio behind you to sell it?

Even if you have the skin in the deal is (what would then be half of) a $1mil-ish budget still too large for the space as far as publishers are concerned? Or does it get more likely at that point? I mean as an indie, just recoup + a little extra is fine, but I can totally understand if to them any investment over $250k/etc means they couldn't make 5x on their investment so what's the point.

EDIT: Which, really, sounds about like the path for AAA. Just minus the "fund it yourself" option and adding the "you'll still get IP screwed the first time no matter what" option. Though I imagine AAA is still more of a long shot.

[Edited by - AuSemMau on July 21, 2010 6:44:44 PM]

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Original post by AuSemMau
...is half of a $1mil-ish budget still too large for the space as far as publishers are concerned?

In the current market, with a new start-up developer, it is too much. Publishers are talking $300k-$500k these days and even that is hard to recoup. Obviously with a license like Street Fighter those limits don't apply but that isn't the type of project we are talking about.

[/quote]....I mean as an indie, just recoup + a little extra is fine, but I can totally understand if to them any investment over $250k/etc means they couldn't make 5x on their investment so what's the point.[/quote]
When a publisher does their projections prior to signing a game they do them with average sales figures. At retail quite a few wont even reach average, many will just be average while a tiny few will excel and fund the whole company for three years. This is because being at retail gives every title at least some awareness and many benefit from significant marketing. However on XBLA etc the sales seem to be split between a tiny number that sell really well (Castle Crashers, Worms, Street Fighter, etc) and the rest which tank with virtually no sales. The difficulty in browsing XBLA games and the lack of marketing seem to result in a much tougher market. Publishers know this so when doing the numbers they are going to use much lower projections - resulting in downward pressure on budgets.

Even if you are paying half the cost, the publisher knows that it is unlikely that the game will recoup $1 million. So, unless you are willing to sign a deal where they earn back all their money first, they are unlikely to sign a $1 million game; and if you sign such a deal you are unlikely to recoup your half (which isn't a very good way to start a business). At a smaller budget there is a chance to get a game signed. Not a big chance but certainly a lot better than a $1 million game.

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You've also got to take into account that Microsoft/Sony ultimately control which games are accepted for publishing on XBLA/PSN, not just your publisher. In order to make sure games currently being published on there succeed, they don't want to flood their respective stores with games (like the AppStore, etc), so they're kind of restrictive as to who/what/when they publish.

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Original post by ObscurePublishers are talking $300k-$500k these days and even that is hard to recoup. Obviously with a license like Street Fighter those limits don't apply but that isn't the type of project we are talking about.

Fair enough, I suppose even that was aiming a bit high for a studio's first title. I can certainly see why self-funding is the more popular option if that's the budget range, at least. It's still a lot to raise/save/make as a profit, but potentially doable. Thanks for the information!

(I'm of course still curious to hear other opinions / experiences - more knowledge is always better)

[Edited by - AuSemMau on July 22, 2010 8:30:55 AM]

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Hello all,


It is not possible to selfpublish a game on the XLBA, you need to go first party with Microsoft or Third Party with a publisher. You can self publish with peer review in the Xbox Live Indie (XBLIG), but the revenues from that platform are lower because, the amount of games is huge, quality is usually regular to low, and most of the xbox players don´t visit it.
With Sony PSN, you can do self publishing but in order to do that, you need firt to become an official Sony developer, submit and approved the concept, develop it and finally do the Quality and Assurance part of it before submiting it to Sony.

If in Sony cases, it is apparently possible to do it, in reality it is very hard, because Sony quality criterias are very high and you need to have some resources as to go through the process with Success. Which means that you will need either a Publisher or a financial partner backing you up.
In the case of the publisher you will be negotiating the IP and in the case of financial partner the ownership of your company/project, which in the end seems similar.

My personal opinion, is that IPs are only important if you are a proven game developer, if not, the IP is something that doesn´t have value because the value of the IP is bring not by the developer but by the publisher's financing and marketing. If you have the luck to have a publisher interested in your project, don´t loose time in discussing the IP, take the money and develop the best game you can, you will have time later on to create other IPs.

regards,
D.

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