[In this in-depth analysis written for Gamasutra, freelance designer and Core Talent Games founder Tim Carter explains the concept of entertainment pre-sales, and proposes the game industry adopt it.]
There are basically two ways to finance a game: get a publishing deal or self-finance.
There are nearly 40 ways to finance a film. Why do we continue to insist there is nothing that games have to learn from film?
Let"s look at one key finance practice that exists in film (and television) but has yet to take root in games: pre-sales.
What Is A Pre-Sale?
You might think a pre-sale means to go onto the Internet, tell your customer base what game you are making, and then ask for them to purchase copies of it in advance.
That’s not a pre-sale in the traditional sense, at least not in film and television. And it is not what is referred to in this article.
A pre-sale is the purchase of the rights to a project for a certain territory and duration, prior to the project being made.
Who sells and who buys? In film, a producer sells (roughly equal to a game industry studio) and a distributor or studio buys (roughly equal to a game industry publisher).
Because a pre-sale is a purchase order, it can serve as collateral. The producer can “bank it” – borrow money and use this to execute on production of the film. There are often departments in major banks that specialize in lending this money, based on these purchase orders.
There are also completion bond guarantors, companies that specialize in insuring productions so that if something goes wrong, the costs are covered.
Pre-selling is a flexible but complex system that insulates core creators from the risks required to make a new film, which can make it possible to finance innovative titles. The game industry has nothing like it, and so the risk in creating an innovative new game title is almost always put on the shoulders of a developer.
What Makes A Pre-Sale Possible?
There are a few things that make pre-sales possible in film. If we pay attention to these, and try to implement them in our industry, we should be able to do pre-sales of games as well. These elements are:
- Sales data
- Production standards
- The blueprint
Combined, these factors could mean that 1.) a developer would be able to sell a project before it is even prototyped, and 2.) a distributor would be able to place a purchase order for a project that exists only on paper –- even where production can be in the tens of millions -– and still know there is a solid chance the production will succeed (in a technical sense). And if it doesn't, the investment will be recovered.
In film and television, a pre-sale is possible in part because a distributor has a sense of how many units he is likely able to sell of a given title. He can make a fairly predictable “low-ball” estimate of this. Obviously everyone wants the project to be a hit, and go off the scales, but most don’t. A pre-sale is based on a likely estimate of the recoup of the project.
The distributor has this sense because he has sold so many projects in the past that he has a large database of case records to look at. He can essentially average the units sold in similar genres with similar calibers of talent and figure out how much a project will move. This database and long experience helps makes the pre-sale possible.
In the game space, certainly publishers and distributors -– even digital distributors like Steam –- can make these estimates now with some degree of predictability. They have several years and thousands of case studies to look at. If there is a willingness to pursue this route, a purchase order or pre-sale begins to be possible, provided the other ingredients are there.
The next element that makes pre-sales possible is the predictability of production. We aren’t speaking of whether or not a film achieves the mysterious qualitative “X” that means it will become great art. Rather, we’re speaking of whether or not there are standardized processes and suppliers that can be put together with a screenplay and, with a fair degree of predictability, lead to a reasonably high-quality film. If the film missed its aesthetic mark, at least you have a “well-made” piece of cinema that can be sold -– at least you have something.
In the game space we're facing the commoditization of production. Ten years ago if you were going to do a game, you would seriously devote a lot of time to making a new engine. Other engines had limited features made for different games; they were not being peddled as much as middleware; the documentation and support resources were often lacking; there weren’t large numbers of personnel trained in their use. Today, have engines such as Unity, Gamebryo, Torque and Unreal, engines with solid documentation and large pools of talent familiar in their use.
The same can be said about less tangible processes like asset creation, design, and project management methodologies.
Everything is becoming standardized, and thus able to be commoditized, in the game industry. This makes the process predictable, meaning the remaining central variable -– Is this design vision fun or not? -– can be tackled without all the other variables getting in the way. If a design does or does not work, at least you know you can monetize the actual game that is going to contain it: you can get it out there to sell units. This helps make a game pre-sale possible.
Even given the above, it is still possible that a film can go totally off the rails, and all the money put into it end up as a mass of useless footage. Therefore, completion guarantors exist. These are parties who insure production of a film that has not yet been made. The ability of completion guarantors to do their job depends in large part on the commoditization of talent and production elements in the film industry -- the clarity of the key risk factors when it comes to making a film.
By examining these elements, a completion guarantor can quantify the risk and thus insure a production. Naturally this makes it possible for a distributor to gamble the many millions it puts in when it agrees to buy a film that does not yet exist.
As an example of how the film industry looks at risk, you might follow this link, which details Telefilm Canada’s policy on completion protection with a specific decision flow chart to identify the risk-level in a production, actual criteria for defining risk levels, and other conditions and information.
Why can’t core risk factors in games also be analyzed in a systematic way? I’m certain many publishers have done this already. If the completion bond guarantors were to move into the game space and work with game producers, they could accurately assess risk for new game projects as well. This would help make the pre-sale of a game project possible.
After several decades of experience, the film and television industries have come to realize that the screenplay is a fundamentally essential element of any new project.
There is some myth in the game industry that holds that in the film industry a screenplay is a rigid blueprint for a film, that once it is written it contains all answers for making the film. Nothing is further from the truth. In a screenplay, three words can cost millions of dollars, involve a hundred people, and be interpreted in a thousand different ways. The screenplay is very much a living document that requires interpretation.
But the screenplay is solid enough in film that the parties that be respect it and will even purchase it, and it will become the focal point of planning for a film. It is commonly said in film and television that a bad film can be made from a good script, but a good film can’t be made from a bad script.
Thus, the screenplay makes a pre-sale possible. It is, essentially, a communication tool around which many core creators circle, core creators who add their creative stamp to the film that ultimately arises out of this printed blueprint. But as a communication tool, it is a central intent that makes it possible to attach a variety of external elements.
As a designer, I fervently believe the same can be said about games. Too little focus is placed on the design as a core blueprint. Reasons for this abound, and many game designs are badly written.
Game designs written by programmers might be terrible because programmers write in a way that machines can understand, placing every microscopic verb or noun lest the machine get confused. Game designs, on the other hand, need to be read by human beings. Presenting a bloated, unreadable 500 page document that explains every possible detail but does not shape the experience to teach and excite a human reader may be counter-productive.
Game designs written by artists might be terrible because they are too mushy and intangible, too conceptual and intent-driven, without defining specific execution in the form of concrete design decisions and game mechanics.
A balance must be found.
The game industry’s roots are in print. We can go back to H.G. Wells' instructions for toy soldier war games. Charles S. Roberts produced, in the 1950s, the first modern war games, printing and selling them via a mail order company under the name of Avalon Hill, forwarding concepts upon which many computer strategy and simulation games rest even today. In the 1970s, Dungeons & Dragons -– a set of rulebooks –- appeared and introduced the concepts of roleplaying upon which titles like World of Warcraft firmly rest.
Every board game in existence has a set of printed instructions and a printed graphic virtual space. These examples already demonstrate the financial worth of printed game designs. TSR alone has sold millions of dollars of printed gaming materials. These documents have worth.
Electronic games, conceptually, rest on the bedrock of this pioneering. (The computer graphics are surrogates for the printed graphics, although the computer does obviously make much larger verbal systems possible.) However, while the design element of games in the electronic space is still a communications-based one, it is largely informal. It is ad-hoc, often reduced to people simply talking and taking the “programmer’s shortcut” of going straight to code without documenting their design decisions.
A game design document is an intent-based communication tool. It is a living document at the front end of a game. That the final outcome it points to needs to be adjusted based on the many small decisions made during actual game development does not mean that it cannot form the central hub around which a deal can be made at the early stage. Film has already proven this over and over. This is why hands-on directing, not writing, is considered the primary task of filmmaking. Yet screenplays are still bought and sold, sought after and worked over. Patiently.
If we begin to treat the game design document as a salable literary property, it could open up a new market. This will require a lot of work and standardization, but it can make the pre-selling of games possible.
So we have covered the quantitative elements of risk, the basic question of “Can we get this thing in the can or not?” What about the qualitative risk, the “We got it made, does anybody want to see it?” question? A pre-sold script might be turned into film that looks pretty good, but is otherwise terrible. Even though it is produced to a high standard, it might bomb. How does a distributor in film address this last most intangible part of risk?
This is where we cross the line from rational to irrational. We start to think of things as if they were magic, like star power. Things that the rational, technical- and often scientifically-minded developers of games tend to dismiss as frivolous.
But are they?
To be honest, this magic forms a lot of the attraction of investors to the film industry. And it makes sense. If you wanted to make money on a ledger, you’d be better off investing in something like toothpaste or potash. Investing in people who are going to make a piece of entertainment initially out of thin air and claim that the masses will flock to it like droves? Any old-school banker would think you’d have to have your head examined.
Well, this is entertainment. Ultimately, it’s about magic. And, here distributors take a page from the centuries-old practice of art patronage. They bet on names. Creators. People. Because the content of what they make cannot be explained scientifically. (Art that is created in a systematic, pseudo-scientific way is deemed formulaic.)
So if the source of magic and mystery in a piece of entertainment can’t really be owned -– if it defies scientific definition -– then what is the most tangible, grasp-onto-able thing that can be defined?
That would be the key creator, the core talent.
This has been important throughout history, even in as collaborative an art form as film. Think of sports or politics. Leaders are identified, and when they walk in the room, or out onto the field, they have an aura, a magic.
We need to embrace this. It’s the sizzle, not the steak.
Distributors listen to this in film. This is why people with sufficient cachet -– people who merely attach their name to a project -– can get it greenlit and pre-sold. As far as risk assessment goes, this reality must help to mitigate the danger: after all, stars aren't stars by accident; they do their own risk-assessment. If a star attaches his or her name to a project, even a project being shot in the dead of winter in a period genre using lots of special effects, helmed by an unknown director, and with children and animals to boot (read: a high risk production) -– the star must believe the risk is worth the while, and others will listen to that assessment.
But most of what a star brings is their credential as a recognized leader at what they do: his aura is going to rub off on the film because he is (hopefully) going to give a great performance. That’s the magic.
And there is something else here. It sounds stupid, but investors in films want to rub shoulders with these people. They want to be a part of Art (with a capital "A") getting made. They want to attend the wrap party, the premiere, and the awards ceremony when the film turns out to be not only a financial hit, but a success -– an influence on culture.
So what do game developers need to do to develop this sizzle?
First, they need to follow suit with the rest of Western civilization in acknowledging the core value of individual creators. Recognizing studios or teams doesn’t cut it. Critics will search through a creator’s life to find out what was happening when he or she wrote this book or painted that painting or directed this film; even when that creator is, like Shakespeare, a member of a team.
When game developers act in a scientific manner ("we," not "I"), it undermines their own worth as creators of culture and entertainment. The atom of culture is the individual creator.
Game designers need to promote themselves as creators. They need to get agents to represent themselves. They need to have award ceremonies that celebrate them as individual creators. They need to be allowed to take off a year to think over their next project. They need to be able to have five or six projects in the works -– projects that vary wildly in subject matter -- because they follow an unpredictable muse. They need to be valued because they contain a magic spark.
This too will make pre-selling possible in the game industry.