Ten Independent Development Myths Debunked

Contents

Game Start-up Myths More Myths Debunked

Just think of it: your own game company. You'll have total creative freedom; you won't have to deal with any interference from 'the suits'; you'll get to keep all the profits from your work… It seems like another game start-up is announced every week. The lure is obvious, but a harsh reality awaits those who decide to take on the challenge starting their own development studio.

Two years ago, a group of ten of us decided to leave Activision together. The atmosphere was ripe for spin-offs: at LucasArts, Jedi Knight team members were leaving to form Nihilistic; at Blizzard, Starcraft team members were leaving to form Fugitive. Right in our own backyard, some good friends were spinning off to form Pandemic Studios.

Our team had worked together on the MechWarrior series, and we hoped to leverage that track record to secure an external deal. There were various motives behind our decision to leave, but foremost in everyone's mind was a yearning for creative freedom, and a desire for greater financial reward.

We knew of a company down in Mesquite, Texas, that seemed to have it all figured out. While we had been struggling to make good games in a corporate environment, they were making exactly the games they wanted, on their own terms. While we were getting project bonuses in the thousands, they were receiving hundreds of thousands, even millions, of dollars in royalties. External development seemed like a clear path to freedom and riches.

Myth #1: It's Easy To Get A Publishing Deal

We set out to find ourselves a publishing deal. Our first stop was across the hall, to talk to the studio head at Activision. He was open to the idea of doing an external deal with us, but encouraged us to talk to other publishers to gain some perspective. Filled with visions of our own self-worth, we headed to E3 to find the best deal we could.

Many publishers wouldn't even meet with us. A team with no prepared product pitch, and no technology to demonstrate? The receptionist at EA's booth completely turned us away. Eidos' representative was 'all booked up.' Those publishers that would talk to us indicated that a much longer conversation would be necessary before discussing deal terms.

Many publishers wouldn't even meet with us. A team with no prepared product pitch, and no technology to demonstrate?

We subsequently learned that it could take three to nine months to get from an initial conversation to a deal. Most discussions simply don't pan out at all. Countless pitch documents need to be created. Meeting after meeting after meeting takes place. Demos get hurriedly pulled together. Budgets are done and redone. If things progress far enough, lawyers get involved. If a dead-end is reached, the whole process must be restarted with another publisher.

Ultimately, we did our first deal with Activision. Having spent a number of years there, Activision was a known entity for us, and the terms were competitive. Starting from scratch with another publisher would undoubtedly have taken longer, and as it was, the deal took three months to close.

Myth #2: It's Easy to Set Up A Company

On top of the complexity of negotiating a publishing deal, there is a tremendous amount of work that goes into setting up a company. We weren't completely unprepared for this, but we still underestimated how long it would take, and how much it would cost. A corporate structure has to be selected and filed with the state. Office space has to be found, leased, and built-out. A myriad of insurance, tax forms, trademark applications, and employment documents have to be submitted. Payroll and benefits must be arranged. Loads of equipment needs to be purchased and installed.

It's easy to take this entire infrastructure for granted when working inside a big company, but it's no small trick to set it up yourself. Particularly when the first project milestone is due at the same time. A publisher isn't going to pay you just to set up a company - they are paying for results. This administrative overhead never completely goes away either: there will always be bills to mail, computers to fix, taxes to file, and books to balance.

Myth #3: You Can Keep Your Intellectual Property

We assumed that if we started our own company, we would automatically own all of our creative ideas and technology. Unfortunately, most publishers force new teams to relinquish their intellectual property rights. As a new developer, if the publisher says 'take it or leave it', you may be forced to give up intellectual property ownership in order to secure the deal.

This means that you will have to start from scratch if you work with another publisher. The time that it takes to build new ideas and technology will translate directly into additional cost, making other publishers think twice about signing you. While you're busy starting over, the previous publisher will be free to exploit your work, perhaps even releasing sequels and add-ons without your involvement.

Myth #4: Your Burn-Rate Will Be Covered

Publishers defer as much money as possible to the end of the schedule. This gives them more leverage on the big milestones like beta and code release, and saves money if they decide to cancel before completion. Given the slim profit margin that is typical of a first-time deal, this can force a developer to work at or below subsistence cash flow. The deficit is only recovered at the end of the project, hopefully with some amount of profit.

Should the project run late or get cancelled, the publisher has little or no obligation to provide for outstanding costs. The developer stands to lose any money that was floated. It seems foolish to agree to such an arrangement, but as with intellectual property rights, developers are often forced to sign imperfect deals in the interest of getting established.

________________________________________________________

More Myths Debunked