[In this opinion piece, 2D Boy producer Ron Carmel (World of Goo), co-creator of the multiple IGF award-winning PC and Wii title, talks about the ups and downs of managing a relationship with a publisher with an independent game - from sales estimates through guarantees.]
For this essay, I use the word "publisher" in quotes because the meanings and connotations it has for different people vary almost as greatly as those of the word "relationship".
From the little I know, getting a game published could feel like a great success, like selling your baby to slavery, like validation of a vision, a compromise, a realization of a dream, a fist fight, and I could go on, but I won't, because I'm starting to sound melodramatic.
I think of publishing as getting the game from the development environment onto players' screens (and, of course, collecting some money along the way). In the last few months we've been talking to a lot of people at various companies about the best way to do that for World of Goo, and in the process I've developed a bit of a personal world view around it.
What A Publisher Can Help You With
There are many valuable contributions a publisher can make towards the success of a game, but nothing is for free, so we're focusing on getting help in the areas we really need it and trying to do everything else ourselves, even if a publisher could do it a little better. This is our baby, and we want to keep it that way.
The two things a publisher is uniquely qualified to contribute in this case are:
- Getting the game onto retail shelves - we can do digital ourselves, but don't have the money, the connections, or the expertise to get to retail on our own.
- Putting some publicity bucks behind it - again, we have neither expertise nor the money.
The question then becomes how the publisher is compensated for their contribution. How much would they need to contribute? What's the expected return on investment? It's a calculation that publishers can and do make and I think it's essential to consider that and even talk about it directly during negotiations. Their spreadsheet has to balance in order for an agreement to work.
But What's A Good Deal?
So what's the equivalent calculation that we small developers can make? How do we figure out if the deal is right for us? This is a complex question because it's not purely a math problem.
It might be hard to not take it personally when someone offers you much less than you think your game is worth. Maybe you're tight on cash and need as much as possible as quickly as possible. Maybe things didn't turn out the way you'd hoped and you're just trying to get what you can and move on.
But assuming that things are going OK and you aren't working with any major constraints, I think the math can be even simpler for a developer than for a publisher.
When a publisher takes a game to retail they need to estimate how many units the game will sell. They need to decide how many units to manufacture based on this number, so this number must exist at some point.
If you've given them a playable demo that is representative of the final experience, they should be able to give you an idea of what this number is. It doesn't guarantee that the number will be accurate, but for now we don't really care about accuracy, we care about how well the publisher thinks this game will sell.
Considering Sales Estimates
So let's say, for example, that a publisher tells you they expect your game to sell five million copies and offer you a buck for every copy sold (I'm not going to get into royalty rates here). That's a lot of money, but there's no guarantee that the game will sell that many units.
It could be a bad estimate, the timing of the launch might turn out to be all wrong, or it could even be an "optimistic estimate" intended to get you excited about signing the contract.
If you sign with a publisher, it often means you can't sign with any other publisher, so there's an opportunity cost here, a risk. How do we make sure we're not being sold pipe dreams?
One way is with a guarantee. A non-recoupable advance on royalties that the publisher would easily cover if their sales projections are even remotely accurate. If they project five million units at one buck a piece for you, that's five million they expect you to make.
Well, if that's the case then paying you a 2.5 million dollar advance (using some payment schedule) should not be an issue, especially considering the total amount of money flying around this game (five million units times whatever the per-unit wholesale price is).
The math on the publisher's side should still work out just fine. With an advance for a self-funded game, the publisher says "yes, we're confident of our projections, we recognize the value you've created, and the risk you're taking by signing with us".
By the time the game is nearing completion, a self-funded developer has already taken on almost 100% of the development risk and (hopefully) created a lot of value in the process.
For a publisher to share in this value they need to make their own contribution and assume some risk as well. It's up to you, the developer, to ask for that and make it happen.
If you have a good product and you don't need money to finish development, you have leverage. Don't be shy about using it.