In recent years, game budgets and team sizes have grown to the point where it's difficult for a new studio to gain a foothold in the industry. A team may be incredibly passionate and creative, but it is competing against the huge budgets of large developers and publishers. Consequently, some teams are turning to agents to help market their game to publishers. Developers often believe that employing an agent will let them focus on making the best game possible. In reality however, many hazards still exist.

From early 2001 to early 2003, I worked at a small start-up game development studio. Our team (comprising just four people) spent those two years developing technology and a game demo, while simultaneously talking with agents and trying to build contacts in the industry. We were self-funded and working on the game full time. We were well aware of the difficulties we faced as we tried to get our foot in the door with publishers, so we looked for an agent to pitch our game to publishers.

The experience corrected several misconceptions that we had about the role that agents play. If you're considering using an agent, the following list of misconceptions that were corrected for us might help you decide whether to use an agent. If you ultimately decide to use one, hopefully these lessons will help you get the most out of your relationship with that individual.

Misconceptions

1. The agent will focus on the business, so we can focus on development. Independent development studios are usually made up of a bunch of programmers and/or artists who have a passion for making games, and often they think they can make games better than the rest of the industry. But this passion is often single-minded in its focus in the beginning. It's not until later that the team realizes that to be successful, you not only make that great game, you also have to do a great job selling it to a publisher. When that is finally realized, developers often assume that an excellent demo can land an agent, who in turn will find a publisher. In theory, that will relieve the developer from having to do the work of pitching the game to a publisher.

But it's not quite that simple. An agent won't agree to represent a developer unless he truly believes in the team. Therefore, to get an agent, a developer has to complete many of the same tasks and produce much of the same material that would be required had the developer just pitched the publisher directly. That material includes team bios and/or resumes, a game treatment, projected budget information, potentially a business plan and a project schedule, and above all else, a mind-blowing demo.

Agents usually have great negotiating skills -- probably better than yours. That's why they got into that aspect of the business. But if you want to succeed, your negotiating skills have to be at least passable -- at a minimum, you need to negotiate a contract with your agent. It's also a good idea to have a solid understanding of the major issues that publishing contracts contain; there are some responsibilities inherent to running a game studio that you shouldn't outsource.

These duties and skills are not inconsequential, but it's important to realize that this is what an agent provides in return for 5-10% of your entire deal. If you set your expectations for the agent's work accordingly, you'll have a more productive relationship with that individual.

2. We'll get a bigger deal if we have an agent negotiate the contract. Agent or no agent, publishers won't pay top dollar to a team without an established reputation for developing games (especially on time and on budget). Publishers are incredibly risk averse, and look for every possible means of reducing their risk. If a publisher is willing to bet on an untested team, the company will probably restrict the budget and require a shorter production schedule (probably under 18 months). An agent won't magically convince a publisher that these risks don't exist - even if your demo and the agent's pitch blow them away, these risks still exist.

Note also that you're competing against other development studios around the globe, some of which have much lower production expenses. Tacking on the agent's fee makes your game that much more expensive and that much less competitive. For instance, if your total estimated budget is between $1-$1.5 million, an agent's fee (at 10%) would be between $100,000-$150,000. If the publisher can get a similar game developed by a team in another country for $100,000-$150,000 less, they may go that route instead.

3. An agent will take care of the legal hassles. Figuring out all the potential loopholes in a contract can be a pain, often enough to make you want to avoid the hassle. It's nice to believe that the agent will handle the details of your publishing contract for you. But even if you trust your agent to get you the best possible contract, there's still no substitute for having a lawyer look at it. And lest you forget, before you even get to that point, you need to sign a contract with the agent, and you'll probably also want a lawyer to look over that, too.

Agents (the good ones, anyway) deal with the publisher when disputes come up in the developer-publisher agreement. They should also check up on the publisher's accounting data to make sure both of you are getting paid the correct amount. But that doesn't relieve you of legal problems you might have with your agent. There are lots of ways a developer-agent contract could be structured that might negatively affect you, and you need to be aware of them. For example, agents often want publisher payments made directly to them, from which they will take their percentage and then distribute the remainder to you. You may not want this as a small company, as situations often arise where a payment delay of even a few days can cause a cash-flow problem. If payments do go through your agent, your contract must allow you access to the agent's accounting data to verify that the correct amounts were paid. If payments go directly to you, the agent will undoubtedly want the same provision. And this example would serve as just one paragraph in a several-page contract.

The bottom line is that you should have a lawyer in addition to an agent. If you're strapped for funds, make friends with a lawyer and try to get some free legal advice. The advice of a lawyer is indispensable.

4. An agent has contacts that a developer doesn't. The main benefit to the agent's contacts is time savings - it's faster to get your demo in front of a publisher if the agent has an established relationship with someone at that company. The agent knows who to talk to and what that person wants to hear, based on the types of games the publisher is seeking, and how much risk the publisher willing to take on a team it hasn't worked with before.

However, the number of game agents is still relatively small, and many agents have just a handful of well-placed contacts at publishing companies. The number of contacts often depends on their length of time working in the industry, and working specifically as an agent. There are only a small number of agencies that have contacts that will make a substantial difference in getting noticed by a publisher.

In addition, no matter how close the relationship between the publisher and agent, a publisher will never take an agent's word alone about a game and its development team. The publisher will want all the same material (game treatment, budget information, project schedule, and so on) that the agent initially required, and they'll base their decision on that information, plus additional research, and of course their own business needs.

Note that sometimes a publisher will react negatively to getting pitched by an agent. Publishers understand that the final price has the agent's fee tacked on, which means that about 10% of their development funds are not going towards the game's development. While that can be a negative factor for a publisher, it's not a deathblow, either; they'll still go through the same process to determine whether or not your game makes sense for them to publish.

Here is some important advice about making industry contacts: don't let the agent be a crutch for you in this area. There is no substitute for having your own network of contacts. Our industry may be growing, but it's still small enough to be affect by the "who you know" principle -- knowing the right person at the right time can make your life much easier. To expand your network, go to local IGDA chapter meetings. Most cities have organizations for budding entrepreneurs, and specifically technology-related entrepreneurial associations, where you might be able to meet potential investors, lawyers who work with venture capitalists and start-ups, and other people starting a business and going through similar problems (even if they're in a totally different industry). You never know who might want to invest in a game company, or know someone who could help you. Sure, it's a long shot, but if you're trying to get started in this industry, you're obviously not deterred by long shots.

5. An agent might be able to help us find contract game development work. This concept seems straightforward: while your company is working on its demo and technology, you can contract out your company's programming and art skills. You hear about game development work getting outsourced all the time, so your agent should be able to find some projects for you, right?

Unfortunately, the realities of outsourcing projects do not favor the use of agents. The first reason this is true has to do with the nature of these projects. When a publisher needs a contractor, it's usually because the work is too expensive to do in-house, or because a contractor can do it faster and with less risk involved. Because publishers want to reduce their risk in these situations, they rarely outsource projects to teams they haven't worked with before. And if they've worked with a team before, chances are that contacts have been made between the publisher and developer. There's less need for an agent in that sort of situation.

But let's assume that a publisher, one with which you successfully worked before, had more work to outsource. If that company approached (or was approached by) your agent, it's likely that the publisher would balk at having to pay your agent's fee. Why? Well, if the publisher is outsourcing the work, it's probably because it's cost-sensitive on this project. If that wasn't the case, the publisher would just do the work itself.

6. We're rock stars, so we need an agent. This misconception that agents are necessary is primarily based on our emotions. I think it's safe to say that as an independent developer considering an agent, your primary goal is making a game and establishing your company, not the warm fuzzies you get through acceptance by others.

There's no denying games are still marginalized as an entertainment medium. Every developer, at some level, would like to feel the sort of recognition given to bands, actors, even authors. Having an agent lends some subtle credibility to the work a developer does.

But our industry is still a far cry from a medium like writing, in which an agent is required before publishers will look at someone's work. Game publishers like to see that the team is dedicated to making all aspects of their company succeed. In the same way an indie can gain a publisher's respect by developing an engine from scratch, I believe that teams sometimes impress publishers with their business awareness when they pitch themselves.

7. It's easier to get a publisher with an agent. Several points I stated earlier may give a developer the notion that it's easier to get published by using an agent. While it's not necessarily more difficult, using an agent does not necessarily simplify the process of acquiring a game contract.

There are plenty of reasons why you might want an agent, but these are similar to reasons why you might want to outsource any other aspect of your game development. You could outsource the development of your game's audio engine in order to get it done faster, but it's likely that your team will also have to understand it since they will have to work with it. In the simplest terms, you're trading money (the agent's fee) for time. You save time because the agent has the industry contacts and experience pitching to publishers that you'd otherwise have to spend time acquiring.

Some agents might try to impress upon you the notion that they want to be your partner in establishing your company in the industry. While they may certainly be rewarded for helping you, they are not invested in your success in the same way you are. They serve multiple clients (who may have games that compete with yours), and until they devote significant time to getting you a publisher, they have not shown that they are dedicated to your success.

There Are No Shortcuts

If you're an independent developer struggling in today's game industry, knowing the business well enough to get your game published, combined with an awesome demo, is your only chance of survival. There are no shortcuts. An agent can save you time, but you still must be intimately familiar with the business aspects of the industry -- which of course takes time.

Agents will usually give you good feedback about what you're missing from your pitch or your demo, since they've seen many before. If you have the business savvy and a mind-blowing demo, but you want to conserve your resources and have someone else pitch your game to many publishers in a short period of time, consider using an agent. But the business-related knowledge and skills you'll forego by using an agent are a downside, as is the agent's fee.

Beset on all sides by costs and difficulties in getting a truly creative product to market, it's nice for a developer to think that somehow an agent will solve many of these challenges. Unfortunately, that's not always the case. To succeed, a developer must rely on his creativity and flexibility. Are you willing to do anything in order to get your game published, including learning business skills you'll need to survive? That's the sort of attitude that's required to become competitive in this industry when you have few resources at your disposal.

There's no question that agents have increased in popularity in the last few years. But that doesn't mean that they're a requirement to get published. Until regulations are codified to govern the activities of game agents (as is the case in Hollywood) and/or until publishers will only talk to agents, consider these common misconceptions before you decide whether to employ an agent.