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Ten Independent Development Myths Debunked
Myth #5: It's No Big Deal To Be Late Software development is notoriously difficult to schedule. I have never worked on a project that wasn't at least a month late. As an external developer, failure to deliver work on a pre-agreed date constitutes breach of the publishing agreement. Regardless of whether you've missed an interim milestone, or missed the final release date, the publisher is legally empowered to pursue a remedy. There is always some amount of latitude before slippage is an issue, but you can bet that there will be no payment during that period. It's not uncommon for an external developer to miss payroll while a schedule is being caught up. If the slip is unrecoverable, that money may be lost altogether. When it becomes apparent that a project is going to miss its date by a period of months, the publisher will either choose to cancel the project, or will aggressively renegotiate the terms of the deal. In the former case, the developer is suddenly left high and dry with no source of income. In the latter case, the developer stands to lose a significant portion of their royalty. Myth #6: You'll Have Creative Freedom When a publisher is footing the bill, you can bet they are going to reserve the right to make all final creative decisions. As an external developer, you don't get payment for your milestone payment unless the publisher is happy. The publisher's studio management and marketing department are still your bosses, even though you're working for your own company. In our case, we were forced to go through massive directional changes mid-project, due to a shift in our publisher's product strategy. Whole sections of the game were thrown out, predicating months of reprogramming and new asset creation. When the only alternative is project cancellation, it doesn't matter what was in the original product spec: if you fail to be responsive, all of your work to that point will have been for naught. Myth #7: Projects Rarely Get Cancelled So much
time and effort goes into starting a project, it seems inconceivable
that a publisher would decide not to see it through to completion. In
fact, publishers reserve the right to cancel a project at any time,
for any reason. Sometimes cancellation occurs because a project is late
or mediocre, bringing its profitability in to question. In other cases,
finances, politics, or market conditions spell the death of a project.
Some publishers are rumored to approve more projects than they plan
to finish, just so they can choose from among their favorites.
After two years of work, and only a few months away from project completion, our publisher called an ominous meeting. The project we were working on was a sequel, and it seems that the preceding game had undersold expectations. Although we were on schedule, and preliminary feedback on our game was positive, the marketing department felt that completing the game was not worthwhile. Effective immediately, our project was cancelled. Myth #8: Most Games Earn Royalties Even if we had been allowed to finish, we would have had to sell multiple hundreds of thousands of copies in order to see anything on the back-end. A typical PC project that costs one and a half million dollars to make, and half a million dollars to market, has to sell in excess of three hundred thousand units before it generates royalty. Surprisingly few games attain such success. There are additional costs beyond development and marketing that further reduce the chances of royalty. For instance, publishers typically deduct the money paid to retailer to secure shelf-space. Publishers also hold back a percentage to cover returns and price reductions. This money may or may not find its way to the developer's pocket later on. If your game is one of the select few to sell enough units, there can still be problems in bookkeeping. Payments might get inadvertently allocated to other projects, fail to get recorded, or be deferred due to extended credit terms. These errors are difficult to detect, and can reduce or altogether eliminate developer royalty. Myth #9: Your Publishing Contract Is Worth The Paper It's Printed On Ultimately, the publisher has boundless financial resources compared to the developer. If it ever came down to a fight, odds are that the developer will be on the losing end, regardless of the strength of their legal argument. While the publisher has a staff of lawyers on hand, the developer is paying by the hour, out of their own pocket. As soon as the publisher cuts off funding, the developer has limited means to continue the fight. If a publisher violates a contract, the developer can do little more than ask fervently for the situation to be rectified. Late payments, missed payments, and unfulfilled contractual obligations are hard to challenge when there is no money in the bank. Occasionally a developer will use personal finances to go after their publisher, but this is unusual, and can make the developer a pariah with other publishers. More often, when things go nuclear between a publisher and a developer, the developer is forced to fold or capitulate. Myth #10: After The First Project, You Can Relax So you finally make it through the minefield of external project development and get something on the shelves. Perhaps the project was released before you felt it was ready, in order to meet the deadline. If so, your new company is at risk of getting a bad reputation on its first game. Perhaps you originally signed a multi-project deal. If so, you are probably locked in to terms that are no better than for your first project. Perhaps you already signed away your intellectual property rights, and have nothing to leverage for your next deal. Whatever the case, now that your first project finished, you have zero cash flow. You need to sign another deal before the money runs out, or you won't be able to pay your people. Some of your staff will probably leave anyway, because they've got better offers, because they're burnt out, or because they're sick of working together. You yourself will probably be ready for a long vacation. No matter: it's time to put on a smile, write a new project pitch, and start negotiating your second project, post haste. It's a Harsh Business I've dwelled at length on the negative aspects of being an independent developer, but what about that team in Texas that seemed to have it all worked out? Indeed there is more than one success story among independent developers, and there are some spectacular ones at that. Names like id Software continue to be inspirations to us all. If you are lucky enough to create a successful project, you'll have the leverage you need to do things on your own terms. Freedom and financial reward can actually be achieved. Just don't assume that starting your own company is the only step to get there. An on-going dream of success, and a natural desire to finish what we started, kept my team from dissolving after our project was cancelled. Activision graciously gave us the right to use our technology, as a gesture for having done the best we could in a bad situation, and we recently signed a deal with a new publisher (this one took nine months to close). We're still not writing our own ticket, but maybe, just maybe, this will be the game that lets us do that in the future. There's a lot of glamour surrounding the idea of starting a game company. Tales of huge royalties and liberating creative environments are luring more and more people to start their own studio. The reality is that game development is an extremely harsh business -- anyone tempted to start a new game company should think long and hard before they take the plunge.
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