New Production, Old Development and Publisher 2.0

An article on Gamasutra suggests an alternative business structure for the industry, one that hinges on flexbility and modularized corporate units, much like what I've been discussing recently. The key difference suggested is between a development company, like say Turbine, that requires millions of dollars to support dozens of employess in a central office in developing several projects simultaneously, and a production company, like the innovative International Hobo, that operates with a small core staff to incubate projects and develop them externally. Its basically the difference between object oriented programming and systemic programming, and its the difference that, I believe, will allow my company to survive.

"On-site control is an illusion, and while the camaraderie of a large office space is nice, it is also the least financially efficient way of getting production work done in an age of broadband. A development company spends $5,000 dollars and more per month per desk in wages, rent and other costs. A production company uses a roster of professionals charging professional rate fees who work from home or their outsourcing firm. These professionals are hired based on work available, so the production company pays on material rather than time."

Thats an agility that transcends buzzword methodology fads. The hollywood of games is the internet.

That would've been a dramatic way to end a post, but lets parse this a bit further.

"Unlike the development company which puts its finger in about a dozen pies, the production company has but one goal: Make one profitable game at a time. They do this by avoiding the death-traps of franchises, product lines, technologies, etcetera. Those are goals for other companies."

I should note that the model of the game production company is made distinct early on from service or ad-based game business models, but it also seems semi-orthogonal from the "indie" model suggested by Manifesto games, where royalties and IP ownership are indeed the focus, even if the indie company could be described as a "production" company along these lines. I wonder if these two models can't be made congruent or cleanly orthogonal.

The article ends with "Welcome to the games industry, version 2.0." which is fairly bold, but I think a true 2.0 model of the industry requires accounting for a shift in how publishers do business, as well as developers as described. The emerging penetration of broad band and digital distribution makes download sales a viable, and much more profitable, alternative to physical retail. I know the Activision guy said digital distribution is a long ways off, but thats because Activision is going down the tubes. The flexiblity of digital distribution allows for a flexiblity in marketing, and there are a variety of tactics for online marketing, at a variety of monetary scales, that an online publisher can persue.

So my idea of Publisher 2.0 includes the following traits:

- digitally distributed unit sales are a major, if not primary, focus of revenue

- promotional campaigns are targeted specifically on the net, and the lack of saturation marketing means the campaign's activity is date flexible, so you don't get the vaporware blues and the hype is more often than not user generated in response to more subtle catalysis

- IP is recognized as having more aggregative value when the producer (specifically the key talent involved in the original production) is kept consistent, regardless of ownership

- a portion of the investment fund, %10-15, is spent on demos which won't nessecarily recieve full financing

- royalties are assigned on a gross revenue basis, so the publisher's loan being recouped comes for their net profit, not from the fraction of that profit which, after the loan is repayed, becomes relegated to developer royalties

Anyone have any other things they'd add?

I think it's a workable model, but:

1. I want my core programming team either on staff, or with a direct financial incentive in the success of the game; the quality of code is harder to judge than the quality of art, and most software outsourcers try to get by with as little as possible for the money. I want people who are really committed to the project. (I know iHobo is using an Indian team, but my impression is that Chris Bateman knows them personaly, and they do have an upside in the game itself.)

2. Art asset development is maybe easier to outsource, but even here, I want the art director as part of the core team, to ensure a consistency of look even though art production may be done by lots of independent people remotely. Also I'll note that coordinating a bunch of freelancers then becomes a major management task--it's feasible, I think, but it's something you have to take seriously.

I agree on both counts, an art director and technical director should be part of the core team, along with a marketer, a financeer, and a manager. In Bateman's case he founded a company, Fantasy Labs, as a wholly owned subsidiary of iHobo with joint membership between him and the lead programmer there. At least 80% of the PwF royalties are going to a hash fund to grow that company, so basically he's creating a dev company to compliment his production company, a programming firm, which considering the currency conversion and relative cost of living in India isn't unwise. So yeah, their whole future livelyhood is incentive in that case.

I think this model is interesting because its extensible, so if you want to start a programming firm as a subsidiary, or an R&D firm, or an advergaming firm, what have you, you can invest in these things as a start-up without endangering your core production company past the initial costs.

Business is kinda cool when you can analogize it to object oriented programming and modular game design.