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Default Iron Lore Closes!

March 3rd, 2008, 17:51
Originally Posted by zakhal View Post

If the claim about 90% piracy is true then sims should have sold 290 million total, half-life 80 million, doom3 35 million - thats quite a lot to except from sales - console sales even .
I think that you're missing what the Iron Lore bloke said in the other article - he doesn't expect all of those pirated copies to translate into real lost sales. Not even most of them. But a portion of them? Yes - and that need not be more than a few percent of the total pirated copies out there. I think he even says that 1% would have made enough of a difference.

Pirates often say they would never have bought the game anyway. Publishers often like to claim that all pirated copies are lost sales. The truth, as is often the case, lies somewhere in-between. And it doesn't take a small shift towards the publishers point of view to make a huge difference in the amount of profit you make.
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March 3rd, 2008, 18:06
Originally Posted by Holly Avenger View Post
I think that you're missing what the Iron Lore bloke said in the other article - he doesn't expect all of those pirated copies to translate into real lost sales. Not even most of them. But a portion of them? Yes - and that need not be more than a few percent of the total pirated copies out there. I think he even says that 1% would have made enough of a difference.

Pirates often say they would never have bought the game anyway. Publishers often like to claim that all pirated copies are lost sales. The truth, as is often the case, lies somewhere in-between. And it doesn't take a small shift towards the publishers point of view to make a huge difference in the amount of profit you make.
That is doubtlessly true. And pirates shouldn't lie to themselves that they are actually doing something thats OK or even good. One may consider the piraters a potential market (just as everyone who has never heard of the game). But then, if the best you can come up with to market to these people is to MAKE THE GAME CRASH WITHOUT EVEN A MESSAGE (example from the IL dev venting in the other thread)- then they have just not been thinking about it real hard, or have they?
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March 3rd, 2008, 18:12
Originally Posted by GhanBuriGhan View Post
But then, if the best you can come up with to market to these people is to MAKE THE GAME CRASH WITHOUT EVEN A MESSAGE (example from the IL dev venting in the other thread)- then they have just not been thinking about it real hard, or have they?
Yeah, that amazed me too - what a daft thing to add to your game… totally hidden security measures that act just like a random game crash.

It gets even worse when you consider the popularity of no-CD hacks. There even legitimate purchasers of the game would be hit by these same random crashes. It really didn't do anyone any favours. If you have to include this sort of thing, at least exit gracefully with a nice error message!
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March 3rd, 2008, 18:40
Regardless of the accuracy of the piracy claim, publishers do have a legitimate point that consoles are a safer, more profitable bet at the moment. You've got to factor in that most of these publishers are publicly traded companies. It's not sufficient to just make a profit. They are driven to make the best profit possible for their capital investment. Today, because of the simplicity & reliability on the consumer side of the equation and the low piracy on the publisher side of the equation, that would seem to be consoles. A publicly traded company can't afford to choose to make more PC games than it's competitors just because they do make some profit or they'll be left behind. Their stock price will fall, and they'll effectively "lose" the game. The game isn't just profits. It's maximum profits.

That's where the beacon of hope in the form of this consortium comes in. They have a real, financial interest in seeing PC gaming not just continue, but become more profitable so that more PC games get published because, of course, if no one's willing to publish a significant number PC titles anymore, their business will suffer or die.
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March 3rd, 2008, 18:55
Theres a metric ton of good pc games coming in future. PC gaming is anything but dying.

HINT: The best profit most likely isnt in diablo clones. Im happy to see that genre die. Its a waste of development resources. Next Im hoping somthing painful will happen to space siege.
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March 3rd, 2008, 19:45
The key to fighting PC game piracy is to abandon the legacy approach to making and selling software. There's no reason these applications need to be like other applications. Because they're games, there's all kinds of room for creativity.

Stop making and selling entire applications. Create applications where collaboration is required, and then protect the software at the point of that collaboration. So customers would be buying into games instead of buying complete games. They would be entering into a partnership with the developer, knowing that the developer would never release all the code for the game all at the same time.

My idea is similar to GothicGothicness's, except it doesn't involve collaborative computing. I'm talking about developing and licensing blocks of code that are made available to the customer modularly.

One nice thing about that is that it would enable CRPG developers to create diversity, the idea being that no single end-user would ever have the complete application.
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March 3rd, 2008, 20:21
Thinking about it, my last post probably wasn't all that clear, so here's a little more.

What do customers do with game applications that they don't do with other applications? They mod them. Look at games like Morrowind. Modders have changed just about everything imaginable, and that's within the constraints of a modding tool. No one mods word processors or Web browsers. They mod games.

And what's the result of that? Variety, of course, but that variety translates into end users running all kinds of different versions of the game. So why do developers only ever offer a single version?

Developers can create variety within their original game and provide pertinent aspects to customers in collaboration. They could be very clever about it. Not only would that provide an obvious level of piracy protection, that kind of collaboration is 100% appropriate for this particular genre.
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March 3rd, 2008, 20:29
I'll just chime in here with a comment on piracy (not a recommendation, though).

I found this bit of news when searching the internet yesterday: (I think I first saw it on Kotaku? )

"As we believe that we are decreasing the number of pirates downloading the game with our DRM fixes, combining the increased sales number together with the decreased downloads, we find 1 additional sale for every 1,000 less pirated downloads. Put another way, for every 1,000 pirated copies we eliminated, we created 1 additional sale." Frm this thread here at at gamesetwatch:
http://www.gamesetwatch.com/2008/02/…_and_pirac.php

Here's the follow up story:

http://www.gamesetwatch.com/2008/02/…al_games_-.php

As you may well know I don't condone piracy in any shape, way of form, but I do think that is telling that 50 000 pirated copies only will mean an extra sale of 50 copies.

I think it is also telling that if the sales were 1% af 50 000 (e.g. 500) Titan Quest would have done much better in today's market place which really is all about the money and making money. In the old days in the 1990s, it was more about being a happy gamer, and maybe a developer that made games for other fans of RTS, FPS or other game genres. Today, it seems to be that because gaming has ben taken over by the the big corporations, they need to make as much profit e.g. maximum profit in the shortest amount of time possible - or else their stock will begin to go down on the stock exchanges of the world for every quarterly financial report they file with said stock exchanges.

And that's probably why see EA etc. making the same game year after year after year with a few minor quirks and addendums added to them. And that's probably also why THQ decided not to give Iron Lore Studios anymore money - simply because ILS didn't meet their projected sales expectations or hauled enough money in to the stock & shareholders of THQ. In other words THQ might just have a profit of 1.5 of the dollar instead of the 1.8 of the dollar THQ promised its boards that Titan Quest would make.

I played the demo and ffound it to be rather good. Yes, it was a Diablo like clone, but I've found the ganeplay interesting and challenging as well as liking the settings and the story (of sort). Granted there were not much story in Titan Quest to begin with, but I do think there were a bit more story than in Diablo 1 and
Diablo 2. I bought the original Titan Quest and also bought Titan Quest Gold. I sort of was looking forward to a story set in another far far way time, maybe in the time of the Bablynians etc. Guess that'll never happen now
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March 3rd, 2008, 20:54
Originally Posted by zakhal View Post
If the claim about 90% piracy is true then sims should have sold 290 million total, half-life 80 million, doom3 35 million - thats quite a lot to except from sales - console sales even .
Personally, I don't expect woman to pirate games as much as men do - and the SIMs are mainly bought by women, if it is true what I have read once.
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March 3rd, 2008, 20:58
Originally Posted by Holly Avenger View Post
It gets even worse when you consider the popularity of no-CD hacks. There even legitimate purchasers of the game would be hit by these same random crashes.
I feel guilty in the sense that I'd *really* like to play my legally aquired (read: "bought") games WITHOUT the CD-ROMs.

First, because of the scratches, which second make the games unplayable which third stays so, because at one point companies just "forget" to let replacement CD-ROMs be manufactured.

To me, it's like transferring all of the contents of a music CD onto a music cassette, because I KNOW that audio cassettes are FAR more sturdy and robust than CDs !
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March 3rd, 2008, 23:11
Building in seemingly-random crashes as a means for fighting piracy was a terrible, terrible idea. Why would a developer ever want to discourage anyone who's playing their game? It's in a developers best interest to keep everyone who's involved in any way with their game happy (even pirates).

The best way to combat piracy is to make the authentically-obtained game much more desireable. There's no way to do that if there's only one authentic version and it gets pirated. If that happens, then the developer has nothing more to offer.

That's why RPG developers need to switch gears. Instead of creating single versions of games containing everything, they need to build games modularly and then sell access to those modules in combinations that suit individual players.

Those would be games that needed to be modded in order to be played, and those mods would only be available from the developer, maybe from a Game Master at their Web site. "Talk to him, and he'll set you up," that sort of thing.

Can you imagine the kinds of conversations a player might have with a Game Master or the kinds of modifications a Game Master might decide to apply at his discretion? A game like that would remain an enigma to players and would be one pirates wouldn't really be able to play without paying.
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March 4th, 2008, 00:10
Originally Posted by aries100 View Post
I'll just chime in here with a comment on piracy (not a recommendation, though).

I found this bit of news when searching the internet yesterday: (I think I first saw it on Kotaku? )
This study is better than nothing, but not that relevant for full price games because it´s dealing with casual games without retail sales.



Today games are much more expensive to develop than 10 years ago. They need to sell much more units to break even.
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March 4th, 2008, 00:16
Originally Posted by Squeek View Post
Building in seemingly-random crashes as a means for fighting piracy was a terrible, terrible idea. Why would a developer ever want to discourage anyone who's playing their game? It's in a developers best interest to keep everyone who's involved in any way with their game happy (even pirates).
+1
But it´s quite probable that it wasn´t Iron Lore´s decision.

That's why RPG developers need to switch gears. Instead of creating single versions of games containing everything, they need to build games modularly and then sell access to those modules in combinations that suit individual players.

Those would be games that needed to be modded in order to be played, and those mods would only be available from the developer, maybe from a Game Master at their Web site. "Talk to him, and he'll set you up," that sort of thing.
That´s too abstract for me. Do you want to sell Gothic without combat system? Can you give a concrete example? Issues like different retail SKUs, pricing strategy (full price -> budget -> add-on -> gold edition), or patches are not clear for me.
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March 4th, 2008, 01:12
Originally Posted by Gorath View Post
That´s too abstract for me. Do you want to sell Gothic without combat system? Can you give a concrete example?
The most concrete examples might be all the mods that have already been made for a game like Morrowind. But those mods were limited by the capabilities of a modding tool, and Morrowind was already a complete game.

Other concrete examples are often in developer interviews where they discuss ideas they considered but rejected. Ask yourself why some of those ideas had to be rejected. Right now games are developed for a single version, so a lot of them had to be rejected. Because if there can only be a single version, then some choices will always boil down to one.

Combat is actually a pretty good example. How many alternative combat systems are there in a typical RPG? None. That's because combat is one of those choices that always boil down to one.

That doesn't mean those combat systems don't ever get altered. In fact, they often do. But it's fans who alter them. Some fans make the mods, and then other fans evaluate, download and install them. It's all done by fans.

It would work a lot better if the designers of the original game developed those variations and decided which ones to apply (in partial collaboration with the player). The fact that it would also work to obviate piracy is actually just a benefit (but what a huge benefit).
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March 4th, 2008, 01:38
Often choices are made because the alternatives are mutually exclusive or, more importantly, because the budget is limited, which implies that 'yes' to A automatically means 'no' to B.
You can hardly develop two alternatives for something as important as a combat system because you need to be inside of a category or marketing and distribution kill you. They need to know what to tell the consumer and they need a convincing answer when the Walmart purchaser asks them "Never heard of your game. What´s it similar to?"
The other problem is money. Let´s say a combat system plus animations and balancing are cheap these days and go for 100.000$. You´ve already spent them once. Where do you find them a 2nd time and what do you cut out for it?
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March 4th, 2008, 02:11
Better, more sophisticated single-player RPGs could compete with MMOs for customers who are willing to pay a whole lot more for RPGs that are worth it. Developers should reconsider how they could more-creatively develop and mod their games and how those improved games might be marketed.

I've gone into more detail about this point of view in other threads and would really just be repeating myself here (and I'm pressed for time, atm).
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March 4th, 2008, 03:48
Originally Posted by GhanBuriGhan View Post
Steel_Wind, I sounds like you know what you are talking about. It still amazes me, though. TQ turned a profit, no? Despite 90% piracy it turned a profit.
Well - maybe it did - maybe it didn't. I really don't know - but I presume it did - though I am sure it was not a huge money maker.

Thing is, you need to appreciate how the business of game development works.

With a studio that cannot self-fund its game, the dev contracts with a publisher to get their gig through non-refundable advances against royalties. A large chunk of the total contract money for the title is paid on contract signing (from 20-35%, depending on the deal and the amount of the total contract). As much as 40% is held back until the game goes gold. The balance is paid over time as the game meets milestones in its development.

Burn through too much of that money too quickly, and as the bank account is dwindling, the pressure to meet the next milestone becomes intense. Longer hours and crunching two-thirds through the title , especially in new studios, is a frequent problem.

Then - after all of that, you've shipped your product. On a 5 million dollar budget title, you might have $500k left over in profit after you have paid the staff and the rest of your overhead. (Sometimes it is more in percentage terms and sometimes it is less). For a new studio, you can bet they did not have a whole lot left over as their startup costs for overhead were significant and productivity on new hires and new teams is always lower.

Now - you don't get royalties until your game recoups all development manufacturing and marketing costs and earns out. On a million unit selling title, assuming that 65% of that was sold at full markup, your royalty rate is going to be relatively modest as a new studio. Call it seven dollars to make the math easy, okay?

On full price, 650k copies x 7 dollars = $4,550,000.00 Woohoo! You just made 4.5 million dollars in royalties! Porsche time for the owners, right?

Wrong. They have not made a cent yet. The title has not yet recouped its development cost+ marketing+ mftring costs. In fact, even at a full $7.00 a copy across the whole million copies sold, the royalties will amount to 7 million to be applied against total cost of recoupment.

I'm telling you - that won't cover the costs of development, mfrtring and marketing. You'll be about even on a five million dollar if you are lucky. Probably still behind, actually.

Now, obviously, the position of the developer changes greatly if the royalty rate is higher than, say, $7.00. For a major studio, it might be a lot more than that. But for a starting studio? $7.00 would be pretty low - but not impossibly low. Call it $10.00, and it is looking close. But you won't get the full $10 on the title if the publisher had to sell the title at a discount to ship those number of copies. When those copies sold and for how much matters a lot.

Suddenly, 300,000 more copies at full price is the difference between making $2,000,000.00-3,000,000.00 in royalties and making nothing.

Generally, all startups (and TQ was Iron Lore Entertainment's first title) plan extremely conservatively and do not plan on earning a cent from royalties (at least – they shouldn’t). Even if you do theoretically earn royalties, publishers can futz with the numbers, under-report, apply to your recoupment costs as a charge back a ton of hint books never sold. There are racking fees distributors and publishers eat that are charged by major retailers. (And here's a hint - some unethical publishers will charge that fee against more than one title, double,triple or quadruple recovering the charge and as you don't audit the *other* titles they are charging it to - you can't easily discover that. The Bastards.).

So yes, it can get real ugly. Plus, those royalties come in late, paid quarterly from the prior quarter's sales so you will be as much as 6 months behind your ship date before the royalty payments even being to get applied to be paid against recoupment.

And - if you overshot your dev time and were in burn, you may have had to finance your payroll yourself temporarily - so even when you get your "profit" from "going gold" that may well have vanished to pay down your line of credit.

And then there are publishers who rip you off and don't pay when they are supposed to. God help you if you are still in bed with that a troubled publisher that is employing creative accounting while working on a sequel for them and depending on that publisher’s ongoing milestone payments on the sequel to keep you afloat. (This is where a significant number of developers do find themselves, btw.) What are you going to do, start a lawsuit over the royalties the publisher is ripping you off on and pay for a forensic audit? With what? Using the milestones the publisher now threatens it won't pay or the royalties they didn't pay? Litigation is expensive, bad for business and cash flow is everything when your main assets are your employees. Lawyers and accountants cost a lot and you are at the mercy of the people who are ripping you off. Your maneuvering room is tight - and you are going to get into litigation with the guys whose money is going to pay staff and keep the lights on? Not a happy choice. (You now appreciate the vulnerability BioWare faced when they got into an ugly dispute with Interplay in 2001 over royalties from BG1 and BG2 whilst BioWare was developing NWN using milestone payments from Interplay).

A few more things become obvious here: your royalty rate can matter a lot. But startup devs have to take contracts with poor royalties.

The next most obvious thing which should emerge form all of this is that this cycle feeds on - and depends upon itself to be sustaining over the long haul. In order to keep a studio afloat on publishers’ advances and milestones payments - you absolutely MUST be starting development on a new title before the last title ships. If you don't have that new signing bonus payment to fund your operations waiting for you when you ship - you are screwed. You have a staff of 60-120 people and nothing to pay them with. Ideally, you want a dev staff high enough to be able to work on three titles at once, so one is always being released per year. But it’s a tough slog to get to that size.
If you don’t have a new contract coming online when the old one ends, it’s lights out. This - more than anything else - was what put Iron Lore out of business.

The last thing you might be curious about is how a developer escapes from this cycle of dependency on living off of advances against royalties. Two things:

1 - Get a hit - and use the royalties from that hit early on in your dev career (combined with the now uber_reputation to bargain for a higher royalty) so you can make increasing amounts of money from your titles; and,
2 - Use that increasing amount of money to self-fund. When you are in a position as a developer to be able to fund your own development - or at least a goodly portion of it - your royalty you command skyrockets and the amount the publisher deducts before its own costs are recouped and you earn out drops like a rock. That's when you can start to make some serious coin and move towards full self-funded titles. You can then pick and choose your own destiny and keep the vast majority of profits from a title to yourself.

Of course, when you self-fund, you take the risk as well. Bet large on a Triple A title that corkscrews into the ground with poor sales – or that goes over-budget and does not release when expected - and you may never recover.

From the publishers’ perspective - most games lose money - or barely break even. (Developers want as much as they can as a non-refundable advance against royalties that they will never see.) For every hit - there are 2 or 3 that lose money and a few that do moderately well. Too many duds for a publisher and they go under. The annals of computer gaming has a weighty list of publishers that have gone under despite churning out some hits. (Mircroprose, I'm looking at you.)

When piracy can turn a moderate 500k-700k unit success into a 150k-250k unit loser - you look to move your titles to platforms where there are a lot less 150-250k losers and a lot more 500k-700k moderate successes. That's why the PC game dev money has dried up. It's not the million sellers that has the publishers scared - it's the 150k sellers. And there are a lot more of them in PC land then there is in console land. That's the effect of piracy on the hobby’s health.

Add to that vastly larger profits when you get a 5 or 8 million selling console hit - you see why PC Gaming is in dire straits.
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March 4th, 2008, 04:30
Steel Wind, aren't there other investors who might be willing to jump into the mix?
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March 4th, 2008, 05:05
Originally Posted by Squeek View Post
Steel Wind, aren't there other investors who might be willing to jump into the mix?
On a one-off basis? From time to time? Sure. NWN2 was funded not mainly by Atari, but by a consortium of backers. Watch your copyright screen carefully there on load up.

As general financiers, outside lenders principally participate in game development financing through bonding companies.

Bonding companies act to ensure payments and product completion for a percentage. Extremely common. I didn't get into their role in the above explanation. That would be the more common source of "outside" general investment money in the business. To be sure, bonding companies are a specialized form of financial go-between and indemnifiers whose role is to act as a 3rd party to see the principal parties to the development contract comply with their obligations. (Like much in the games business, the practice was borrowed from legal paradigms first employed in movie production. It's sort of a weird cross between bail bondsman and general insurance).

But that sort of bonding-mutated-to-funding source is not usually available for known sequels with a known-to-be-valuable market value. (And is not risked outside of it, so NWN2 was a very odd bird, brought about by Atari's unusual financial circumstances ). The expertise it takes to fund game development and make money off of it over the long haul is rather uniquely a skill possessed by publishers and/or developers in the game business. Those who prefer to play the field more generally are involved in bonding.

Venture capitalists have their role too of course. There are a lot of them you don't hear about who invest in developers - and some you do hear about. Elevation Partners, John Riccitello's group of investors that included Bono from U2, bought BioWare and Pandemic and contributed all of the money for both those studios' ongoing efforts over two years or so. Mass Effect, Dragon Age, the Bio MMO, Sonic DS plus a few more Pandemic titles were all funded internally by Elevation Partners with very robust budgets. ("Bono's money", as it was affectionately described.)

MMO's, btw, take a lot of money to do right. To see what happens when you don't have enough money to do it right and have to release early, try to remember what D&D Online was like on release. Turbine self-funded D&D Online with a budged of about 5 million according to rumour. They didn't have nearly enough dough available to do it right, imo. It tanked.
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Last edited by Steel_Wind; March 4th, 2008 at 05:12.
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March 4th, 2008, 05:20
Originally Posted by Squeek View Post
Steel Wind, aren't there other investors who might be willing to jump into the mix?
Why would they when the people who know what they're doing are getting out? Thats a recipie for loosing your shirt.
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