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Hi, We all know that small-time game developers would get 5-20% royalty, 20 being the best. But how about the big time games. Lets say MMORPGs like Everquest, etc. They have publishers. Are they getting only 20% of the revenue? Big time games spend massive amounts of cash into the development and I don''t see how they could make any profit with 20% unless they really succeed. I was curious about that. Would anyone know? Thanks in advance

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Big time games require lot''s of advance royalties so I guess that most of the developers will never se more than 25 % in royalty and even less if it''s a console title.

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quote:
Original post by WonderWorld
Big time games require lot''s of advance royalties so I guess that most of the developers will never se more than 25 % in royalty and even less if it''s a console title.


What about all the big time games that don''t require advanced royalties. I always hear of these big games under development by teams of dozens of people for years. Its almost towards the end of the development that I hear talks of them signing up with some publisher or considering various publishers.

It makes no sense to me for a team of developers to invest over a million dollars, provide their own support, develop the game for years with many people and get 25% at best?

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quote:
Original post by Jester101
I rather take 10% of 1000K than 80% of 10K.


Yeah but the point is: (This is for a game like Nomads or Horizons that don't sign up with publisher until the very end discluding advanced money. Horizons is in fact not even signing up with a publisher because they have the right idea!)

Take a look:
Developer makes game
Developer pays over a million for game
Developer works on game for years
Developer advertises game and gets word out into the public before a deal with a publisher is even made
Developer provides support and maintains contact with customers and potential customers
Developer fully tests product
Developer does everything required when developing a game

Publisher packs it up in a CD and Box (which I may add is very cheap when purchased in bundles like they do)
Publisher sends game to the stores (Shelf space which they own)

Publisher takes 80%, Developer takes 20% and developer should be jumping for joy for getting that 20% since thats as good as it gets?

Does that seem right?




Edited by - SD2 on September 8, 2001 3:52:08 PM

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Guest Anonymous Poster
quote:

Take a look:
Developer makes game
Developer pays over a million for game
Developer works on game for years
Developer advertises game and gets word out into the public before a deal with a publisher is even made
Developer provides support and maintains contact with customers and potential customers
Developer fully tests product
Developer does everything required when developing a game

Publisher packs it up in a CD and Box (which I may add is very cheap when purchased in bundles like they do)
Publisher sends game to the stores (Shelf space which they own)

Publisher takes 80%, Developer takes 20% and developer should be jumping for joy for getting that 20% since thats as good as it gets?

Does that seem right?



It doesnt seem right, cause its not right.

Developer makes a prototype for a game on their own budget.
Developer successfully pitches game to a publisher.
Publisher pays developer money (for AAA title it could be your $1M figure) to make game as an Advance On Royalties. By milestones.
Developer works on games for (a) year(s) getting paid by the publisher by the milestones.
Developer does testing on the game. Publisher does most testing on the game in likelihood, as developers are usually less staff.
Publishers advertise game is magazines, and if console game, maybe TV. (4 magazines at $8,000 per 1 page full ad, for 5 months (leading up to release and after) = $120,000)
Publishers pay the (basically bribes) Marketing Development Funds (MDFs) to retail stores to stock the games. This can be $50,000 to $100,000 PER CHAIN of stores. (5 store chains at $50k each = $250,000)
Publishers pay for all the initial run (and later) CD/Boxes to be created, stored and shipped to the stores. ($4/box for 30,000 unit first ship = $120,000)

Whats the totals:

Developers made a game, and got paid to live during that time, similar to a normal job.
Publishers spent ($1000K+$120K+$250K+$120K) about $1,500,000 on the game.

If the game sells 0 copies, the developers have lost nothing. The publisher has lost $1,500,000. Which is why they get the Lions Share when the sales come in, they are taking the majority of the risk.

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quote:
Original post by Anonymous Poster

It doesnt seem right, cause its not right.

Developer makes a prototype for a game on their own budget.
Developer successfully pitches game to a publisher.
Publisher pays developer money (for AAA title it could be your $1M figure) to make game as an Advance On Royalties. By milestones.
Developer works on games for (a) year(s) getting paid by the publisher by the milestones.
Developer does testing on the game. Publisher does most testing on the game in likelihood, as developers are usually less staff.
Publishers advertise game is magazines, and if console game, maybe TV. (4 magazines at $8,000 per 1 page full ad, for 5 months (leading up to release and after) = $120,000)
Publishers pay the (basically bribes) Marketing Development Funds (MDFs) to retail stores to stock the games. This can be $50,000 to $100,000 PER CHAIN of stores. (5 store chains at $50k each = $250,000)
Publishers pay for all the initial run (and later) CD/Boxes to be created, stored and shipped to the stores. ($4/box for 30,000 unit first ship = $120,000)

Whats the totals:

Developers made a game, and got paid to live during that time, similar to a normal job.
Publishers spent ($1000K+$120K+$250K+$120K) about $1,500,000 on the game.

If the game sells 0 copies, the developers have lost nothing. The publisher has lost $1,500,000. Which is why they get the Lions Share when the sales come in, they are taking the majority of the risk.




I specifically said in the case when the developer makes game out of OWN money and test out of own money such as the examples I gave: Nomads, etc.

I allready know in cases where publisher pays for the whole thing, it seems fair. I am talking about cases where the developer handles everything such as with Nomads and Horizons!

How much do they get? Cause if still 20%, thats very unfair.

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1. In the case where the publisher funds the development, the up front money it pays the developer is an **advance** on royalty. The developer sees **no** royalties until all of the advance has been made back in profit from sales. Think of the advance as being a loan from the publisher to the developer - the loan must be payed back (from sales) after this point any further profit goes to the royalties.

2. In the case where the developer funds the development, they start getting royalties as soon as profits are made from sales. So it is more fair. (after considering costs for marketing, distribution, ~55% retail discount, ~20% combined taxes etc)

3. Developers rarely 100% fund their own games anyway - money commonly is raised through the stock markets (thats how publishers usually raise their money too) for larger companies, banks (for "dead certs" like licensed titles), completion bonding etc. Often partial advances are used where the developer finds say 40% of the costs themselves and the publisher funds the rest.

4. For games which are 100% funded by advances developers don''t rely on royalties for making a profit, instead the amount of advance is increased. Unfortunately the definition of "break even point" used by publishers is very umm "flexible"... Unless a game makes the top 5 in the charts the developer usually won''t see any royalties.

--
Simon O''''Connor
Creative Asylum Ltd
www.creative-asylum.com

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