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Riot Games: Devs Can Get 'Terrible End' Of Publisher Deals
by Staff [PC, Console/PC]
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October 28, 2009
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Riot Games, creators of the DOTA-inspired free-to-play game League of Legends, said in a new Gamasutra feature interview how it feels publisher-developer deals aren't always in the dev's best interest.
Riot Games founder Marc Merrill said there are other sources of funding that developers should look into outside of a traditional publishing deal -- as Riot has done in raising $8 million in venture capital for League Of Legends in its most recent funding round.
"As part of going direct to consumers and owning a larger portion of the value chain, the economic equation can be vastly different than the traditional publisher developer model," he said.
"Yes, publishers generally fund development, but the developers get a terrible end of the deal [in online contexts]. Developers really create all the value. Publishing is arguably a commodity where they say, 'Hey, I can market this game or do operations or customer service,' yet the splits from a revenue perspective don't necessarily match that."
Merrill continued, "A lot of the developers that have created hit franchises but that don't own the IP, they don't necessarily do really well. That's something that helps drive developers to want to find additional ways of seeking funding and additional models that capture a larger percentage of the value chain."
"If the only value publishers are adding to online games is funding, it's probably not worth giving up the lion's share of everything -- whether it's tech, tools, or IP -- and having them recoup all their costs and take that massive percentage of net or of gross. In good scenarios, it's just not worth it."
Riot Games lead designer Shawn Carnes concurred. "Speaking as a designer, having been on sort of both sides of the fence -- working in a development house that's funded by the publisher and working in this [independent] environment -- I have to admit I really prefer doing my design work in this environment," he said.
Carnes added, "I've seen far too many times, for better or for worse, the publisher exert pressure on the developer affecting both iteration and innovation when it comes to design. Here, because we have our own bankroll basically, we're able to execute what we feel is best for the product ourselves. If we're successful, that's great. If we fail, then it's our fault. "
For more on Riot Games' League of Legends: Clash of Fates, the studio's thoughts on the free-to-play model, community-centric development and other topics, read the full Gamasutra feature interview, published today.
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What I was attempting to say was that in the ONLINE world, there is increasingly a situation where the traditional publisher isn't providing as much value as they historically have (and do) in the offline market due to the changes in distribution.
The traditional offline publisher / developer deal, "is a terrible deal" in the ONLINE world, where distribution goes from manufacturing, warehousing and sales to the click of a button, where there isn't finite shelfspace, and where community and establishing a direct relationship with the end user is as important as marketing.
@Stone, it has nothing to do with nice, or the evils of capitalism (which it isn't), it has to do with leverage. Box retail deals suck because most devs don't have the capital to fund the game PLUS the distribution, and without distribution it doesn't matter how great your game is, it's not gonna sell. Publishers know that, and they leverage the heck out of it. The question we ask internally is "Would we rather have great retail placement, fair royalty, and publisher backing while selling or giving up IP, or little placement, better royalty, and no publisher backing by retaining IP?” Even if your eventual goal is to own your own IP, you should be smart in how you get there, and it's preferred to retain corporate independence and give up IP in the short term, as opposed to jeopardize corporate independence and retain IP.
It can work both ways, just throwing in my opinion. Having options improves the playing field for all developers when they go to market with a project or strategy, so kudos to Riot.
Also, developers are free to make their own game, if they have the resources to do so. They then can try to find a publisher to sell the game.
But the article's point is taken...developing a publisher's IP, and having to deal with the publisher's whims, can be a thankless experience.