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March 4th, 2008, 11:46
Thanks steel wind, that was a very interesting read. What I didn't quite get from your post was how the publishers return of investment is handled. Do they get a constant percentage per sale, or do they get all until their investment plus a previously fixed interest is recouped, and then the surplus goes to the developer?
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March 4th, 2008, 13:05
Originally Posted by GhanBuriGhan View Post
Thanks steel wind, that was a very interesting read. What I didn't quite get from your post was how the developers return of investment is handled. Do they get a constant percentage per sale, or do they get all until their investment plus a previously fixed interest is recouped, and then the surplus goes to the developer?
Quite a few developers in your post.

The developer gets an advance against royalties, letīs say 5 Mio$. For every sold unit he gets royalty rate n%, resulting to X for example 10$. The publisher keeps the royalties until the whole advance is recouped. Plus the COGs (Cost of Goods), plus whatever else the contract says. So the developer doesnīt see a dime until at least the 500.001st sold full price unit. More probable is 600k though.
While the developer pays back his advance the publisher already collects money, the other half of the ca. 20$ they make per game. At 500k the developer breaks even and the publisher has earned ca. 5M$.
Iīve read thatīs the reason why contracts sometimes include a "recoup rate" higher than the actual royalties. Itīs doubtful a new developer has the leverage to negotiate this though.
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March 4th, 2008, 14:30
Originally Posted by Gorath View Post
Quite a few developers in your post.
Ooops. Fixed. I meant publisher, of course

So according to your example, at the time the developer brakes even, the publisher has made a 50% profit? Not a bad rate calculated over two to three years! And even if the game sells only halfway to the break even point for the developer, the publisher is already breaking even? It makes it even harder to understand though, why publishers would not invest in a developer that had even a moderate success, if the odds are stacked so nicely in their favor. Maybe I should become a publisher? It sounds like a hell of a lot better investment thant the stock I bought last year
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March 4th, 2008, 14:54
General rule is that the publisher keeps everything that it isn't paying out by way of costs or royalties. The surplus, whatever it is, is theirs. This should not be perceived as "unfair" because the publisher is the party who is taking the greatest financial risk.

Hits are quite lucrative. That's why the game business is a hit driven one where sequels are the rule. But you need to remember - the publisher has to offset against all of this the losses it takes when titles tank. They are involved in a lot of titles all at once - not just the hits.

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March 4th, 2008, 15:37
Originally Posted by GhanBuriGhan View Post
Ooops. Fixed. I meant publisher, of course

So according to your example, at the time the developer brakes even, the publisher has made a 50% profit? Not a bad rate calculated over two to three years!
Not that great really, for a three year investement a 50% profit is only returning 15% a year.
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March 4th, 2008, 16:05
Itīs very lucrative for hits and offers mid to long term perspectives for solid sellers. Both because a new IP is created and usually the publisher as the one taking the risk (but effectively not paying the development in these two cases!) of course demands ownership. Quick sequels / (stand-alone) add-ons require less budget and give access to comparably easier to control revenue streams.
Especially small publishers seem to have problems to stay in business while publishing B and C games. Maybe 10k Silent Storm here, 20k Russian Fallout clone there plus 25k random Eastern European shooter is simply not enough to compensate for a complete flop nobody wants. 500k Gothic 3 is a better starting position for compensating shovelware.
So the trend over the last couple of years is that small indies and publishers below the critical mass are consolidated. (So much that itīs a common semi-joke that studios are only founded to create an IP and then sell the whole thing to a major. Molyneux has done it twice. )
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March 4th, 2008, 17:21
What I just don't understand is, why developers don't try to put copy protection into something positive ? Something that makes gamers wanting to buy it ?

The "feelies" of Infocom, for example. The Sierra adventures.


The current business model - and as a result, the belief - regards copy protection as a protection of investment - it has no feelings, no emotions, everything is just considered from an economical perspective.

Reduce costs - use a CD-ROM copy pritection instead of an actually cool looking book that reads like a novel but contains "hints" without which the game wouldn't run.

Why ? Because the value of novels doesn't transfer into a belief-system that's based on money. Money cannot measure emotions. But emotions are transported by novels, good written novels, especially !

The whole publishing process is driven like a robot drives and manages a bar. Or even a cinema. Or a brothel, to express this even more extremely.

The gab between the economy-based belief system and the real emotions transported by games is soooooooooooooooooooooo wide that it will crack up at one point, I fear.

Robots sell emotions ? Yeah, sure.

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March 4th, 2008, 20:23
Originally Posted by Alrik Fassbauer View Post
What I just don't understand is, why developers don't try to put copy protection into something positive ? Something that makes gamers wanting to buy it ?
Because they tried that before and it didn't work?

I get what you're saying about the emotive response, and it's something CDProject identify as one of their main strategies in eastern europe, but I don't think it works in the western market where piracy is driven by ease of availability as much as anything else.

However I guess publishers are trying to provide more with the collectors editions - I don't mean just sticking it in a tin, but proper efforts like The Witcher and Guild Wars.
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March 4th, 2008, 21:16
@Steel_Wind: thanks for the education!
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March 5th, 2008, 00:31
@ steel wind:

I want to thank you for educating us as well. (although someone at the rpgcodex made the same comment you made). I just think that this is good info to spread this word to as many people as possible. Especially to those people who think that
developers work for free (or bananas or something like that). It also clarifies that it really is the publisher that makes a ton of money, not the developers.

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March 5th, 2008, 00:51
They're also the people that close developers down even after their first game turns a profit and don't have the patience for a group of devs to build a reputation. I don't have the game but it's been on my going to get list for awhile. Picking it up now after this leaves a bad taste in my mouth though.
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March 5th, 2008, 04:22
This is an amazing thread. I'm about to upgrade my PC to play all the stuff I've missed since 2006 including Gothic3, The Witcher, NWN 2 and yup Titan Quest. I'm limiting my budget to around $1500 since this is undoubtedly my last build before I cave to console (assuming there is a keyboard + mouse).

Not to make light of the situation, but seeing Dungeon Lords on that list of pirated games… priceless!

"For Innos!"
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March 5th, 2008, 08:01
Originally Posted by aries100 View Post
@ steel wind:

I want to thank you for educating us as well. (although someone at the rpgcodex made the same comment you made). I just think that this is good info to spread this word to as many people as possible. Especially to those people who think that
developers work for free (or bananas or something like that). It also clarifies that it really is the publisher that makes a ton of money, not the developers.
Well - that depends on the developer. If you've got the money to self-fund - you are doing pretty well - assuming your games are doing pretty well.

Mind you - it's the owners of the developer who are doing pretty well - as opposed to the shareholders of the publisher. In both cases, whether it's the publisher or the developer who is eating the lion's share from the kill - the grunt developer in the trenches is usually working the same long hours for moderate pay to make games that you - hopefully - will love. They aren't doing it to get rich. If they were in it for the money, they'd be working IT at a bank or investment firm and going home at 5:00 pm and have their weekends off.

It's a depressing topic and there is no magic wand. But if you want to help? Try something easy. Next time you find yourself about to pirate a game you were feeling iffy about and were curious. Just….stop. Don't do it. But that's not enough. It isn't enough to just stop at stopping. Instead, go out the next day and buy the goddamned game you were curious about. Yes, jump into the pool with the uncertain water. Even if you aren't sure you'll like it? Just do it.

I guarantee you that you will play that game longer and give it more of a fair shake and end up enjoying it far more if you bought it than if you pirated it. It's human nature to put more emotional investment into things in which we put a financial investment. Treat yourself. That emotional investment can and does pay off.

But… not always. If the game you hoped you'd might like turns out to suck (and yes, it might) chalk it up to your personal bit to keeping PC gaming alive. And in two, three or four months time - do it all over again and take the plunge on a game you were curious enough to try to pirate but iffy enough about to not buy it on release.

Individual choices can - and do - matter.

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March 5th, 2008, 12:38
Originally Posted by ToddMcF2002 View Post
Not to make light of the situation, but seeing Dungeon Lords on that list of pirated games… priceless!
It was ? didn't notice … But these pirates must've been real masochists …

“ Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius – and a lot of courage – to move in the opposite direction.“ (E.F.Schumacher, Economist, Source)
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