Tales of the Rampant Coyote

Adventures in Indie Gaming!

Let’s Not Eliminate the Game Publishers Just Yet…

Posted by Rampant Coyote on April 18, 2013

You’d think, as a guy who has been a self-proclaimed “indie evangelist” for years before indie games were cool (wait, we can’t be cool!), that I’d be an enthusiastic chorus for an article entitled, “Why Publishers Stand Between Us and Better Games.”

Maybe a few years ago I would have been. And I generally don’t disagree with the the overall perspective, and I appreciate his enthusiasm, but I guess I’m a little cautious on his analysis, which suggests that publishers are the problem and that indie (esp. Kickstarter and other crowdfunding options) is the cure.

Risk Aversion

I’m all for indie and bypassing the publishers. And I agree that the big money in the games industry is choking off creativity. I disagree that it’s the desire for profit that’s killing the creativity.  Really, that’s a dumb point. I think the profit motive is the source of a ton of creativity. Sure, many game designers do what they do – and experiment – for the sake of the art more than cash. I mean, if I was in it for the money, I sure wouldn’t be making niche old-school style RPGs. I think if I “charge myself” minimum wage, Frayed Knights: The Skull of S’makh-Daon will never be profitable. But of course, I’d like to do better than that, and this desire is the source of a lot of the improvements in the sequel.  Necessity is the mother of invention.

I don’t think the problem is the desire for gain, it’s the fear of loss. It’s a well-known phenomenon called “loss aversion.” If I give you $100, and then say there’s a 50% chance that I’ll take it away from you, you will react much more strongly than if I simply tell you there’s a 50% chance of me giving you $100.  In either case, the mathematics are exactly the same – there’s a 50% chance that you’ll be $100 richer. But emotionally, you’ll take a lot stronger measures to avoid losing the bonus $100 than to secure the gain of $100. That’s irrational behavior, but it’s how humans are wired.

So when you’ve got games with budgets in the mid-eight figures (in U.S. dollars), there’s a crapload of money on the line.  So as a publisher, you are gonna need to sell a couple million copies of a AAA game in the first week just to avoid losing money. While you certainly want to sell more than that – 8 million or more if you can pull it off – you will take every effort to avoid doing anything that could put that initial 2 million copies sold at risk. If there’s an option that is equally likely to decrease sales or increase sales by the same amount, it will probably be refused due to this psychological effect.

But this is probably not the biggest factor. It really comes down to the fact that AAA titles ride the ragged edge of budget vs. potential. Two million sales at full price just to break even is a lot. A fifty million dollar budget is a lot riding on success or failure of a project. And this probably doesn’t account for the money dumped into other projects that were cut before they saw the light of day, or the other projects that – in the end – couldn’t break even. In the AAA world, the winner (of the month) takes home all the marbles, so that level of competition keeps driving the price point up.  So the publishers desperately need a good mega-hit or two every year just to stay in business. It’s a vicious cycle, and it’s hardly unique the the games biz. You could say it’s simply a fact of life as this kind of business matures, and the publishers represent one approach that has evolved to adapt to it.

As the battle between the titans rises into ever thinning atmosphere, they leave more room at the lower tiers for alternative approaches.  Like crowdfunding, self-funding indies, etc. This is the area that excites me, and yes – it’s the area where greater experimentation can be taken, because the risk-to-reward ratio isn’t quite as high.

It’s a fallacy to believe that all the innovation is happening on the indie side, or that AAA can’t take risks (they do by their very creation!). It’s not, they do, and while the innovations on the AAA side may get a little buried in otherwise low-risk conventional gameplay, there are cool new ideas coming out of AAA all the time, too.

Publishers are Good For Indies

But I have a suspicion that part of the reason this is such fertile ground is because we’ve got these giant publishers slugging it out in the distance. We indies reap indirect rewards from this. We get to take advantage of new technologies developed specifically to support the “bigshots” in the industry. The market grows in part because of their titanic marketing campaigns. Many of us received part of our training in game development from ‘paying our dues’ in the games industry. And as much as we put a premium on innovation, none of us like reinventing the wheel, and we borrow freely from what has been extensively (and expensively) researched, developed, and promoted at the high-end.

And there are direct benefits as well. If an equitable arrangement can be reached, I’m all for publishers using their mighty marketing and distribution resources to make money off of the indies. Why not? If it’s a win-win for both sides, we’re golden! It doesn’t invalidate the “indie” label if publishers come in after-the-fact to play the traditional role of simply marketing and distributing a title. The real problem is that big publishers tend to have an enormous advantage in negotiations, and have proven quite willing to use this to roll developers in the past. While it worked to their short-term advantage, I believe it caused a hostile environment in the longer term, and I expect that’s where a lot of the schadenfreude comes from as the big publishers currently struggle.

So I’m not really into the “down with publishers!” thing. Their stranglehold over the industry that they enjoyed through most of the 1990s and the early 2000s is largely over, and I’d like to see it stay that way. Sure, most of my gaming time nowadays is spent playing either indie titles or old-school classics, but I still enjoy the occasional good ol’ straight-up AAA romp that rides the formula to perfection.

Filed Under: Biz - Comments: 11 Comments to Read

  • Gareth Fouche said,

    Well said.

  • Craig Stern said,

    Good points. But then I read this ( http://kotaku.com/we-need-better-video-game-publishers-472880781 ), and I’m glad I’m not the developer who has to actually deal with these publishers.

  • Rampant Coyote said,

    Hadn’t seen that one. Will check it out…

  • McTeddy said,

    While I agree with the core idea of not eliminating publishers… I do think the system is broken and needs to change.

    In my video game experience, the publishers weren’t controlling risk… but controlling the market. The contracts were written in a way that makes it nearly impossible for the developer’s to grow. It was designed so that the developers would always need to come crawling back for the scraps a publisher would offer.

    They’d pull our shipping dates forward and force changes that didn’t fit the design… yet when things go wrong we take the fall. Even worse… if things go right they get rich and we just get another job to do with whatever they feel like offering.

    That said, It may have just been that my bosses sucked. In my board game work I need to negotiate my own contracts and I do. The initial contracts have never been acceptable and I’ve had to stand up and ask for better terms. Publishers have been happy to find a fair ground (Although still in their favor 🙂 ) but I needed to work for it.

    I can’t help but wonder if that might be part of the problem. Sending back I contract for something that I want and need is terrifying and demanding more took guts that I didn’t know I had.

    How many developers actually negotiate fiercely? It’s easy for me to blame the publishers… but if developers don’t demand fair terms it is there own fault. Why would anyone sign a bad contract unless they were afraid to walk away?

  • Rampant Coyote said,

    I read the Kotaku link, and it jibes pretty well with my more limited experience dealing w/ publishers – which was not too often dealing directly with them, but mainly dealing with the fallout and hearing secondhand how things had gone (or were supposed to go).

    That’s in some ways my corollary to this – that indies may be good for publishing side of the industry… in the long run. They publishers will hate it in the short term, because it’s going to force them to clean up their act.

    Note that I say good for the publishing side of the industry – not good for individual publishers, or any particular individual working for a publisher right now. Sort of in the way that competition is good for business, but it may be bad for *A* business. I hope we’re in an evolve-or-go-extinct situation here, and publishers who refuse to end the party and get serious will go the way of the dodo. Good. They deserve it.

    The thing is, there are a lot of reasons we need publishers. But we need them to serve us – the developers and the consumers – not to be Overlords of the Industry.

  • Xenovore said,

    I read that Kotaku article as well, which just reaffirmed my view of publishers. Most are pretty much the devil incarnate, “Sure, I’ll help you out, but yeah, I’m gonna need your soul.”

    So I agree that “the system is broken and needs to change.” Too many people, developers and gamers alike, are getting screwed these days…

  • Darklord said,

    Interesting as always. 🙂

  • Anon said,

    Here’s more on the evil side of business:


    Core of the article:
    “OK, let me get this straight. You want us to develop a licensed game for you? A game where we see no royalties? Where we have no ownership or rights to future works or derivative works? You want us to sign a contract that allows you, the publisher, to terminate the project at any time? You want us to spend our own money to partially fund the team during development? OK, so you want no minimize your risk. I get that. But, you want to put that risk on the developer? Wow!”

    Of course he doesn’t mention the publisher’s name but does it really matter? For many publishers contract negotiations are simply a power game and the small dev teams are usually in the weaker position.

    Now, if the game wouldn’t be a licensed game but a total independent creation of the devs the situation would be a bit different. But a licensed game is ultimately the responsibility of the licensee (the publisher) and not the workers that get the order to do the ground work. That’s exactly why there are executive producers that work with the devs.

  • Xenovore said,

    @Anon: It’s not just licensed IP where royalties are excluded, and/or the project can be canceled at any time. I’m certain there are plenty of instances where that happens even with developers’ own IP.

  • Anon said,

    I believe that, too, but the exclusion of royalties isn’t really the problem here. You know that in advance, after all and the payment could be good without them (at least in theory ;-)).

    I also have no problem with a publisher having the rights to cancel a project – as long as he compensates the devs for the time spend on it.

    But this is exactly where the problem in this case is: If the publisher decides to scrap the project with a contract like this any money spent on it beyond the publisher’s up-front payment is gone, too.

    In other words: The publisher shifts nearly the complete (financial) risk to the developers.
    As the devs very likely have no rights on what they worked on they can’t even go to another publisher (or self-publish it), especially with a licensed game…

    So if the marketing department of Big Game Corp. decides that CRPGs are not selling well and any money being spend on it (marketing money, that is) is money thrown out of the window some executive may decide to scrap your project to cut losses. By doing this he vaporizes the money the devs invested into the game…

    Of course, this is just one scenario.

    Another would be that you as an indie dev create your own game entirely on your own funds and then try to find a publisher. In this case the whole risk lies with the devs – but the difference is that it’s not a game the publisher ordered in the first place.

  • Rampant Coyote said,

    Anon – yeah, this is a common process that is designed to reduce risk on the publisher’s side, but in practice it shifts the burden on the developers. Xenovore and I have both been on the receiving end of this one.

    The problem is that the milestone payments are not equal, and the bulk of the payments are delivered for the final milestones… yet in theory they are *ALSO* supposed to literally function as no more, no less than exactly the operating budget of the developer for that project.

    So how does that work, exactly? How is is an “advance” if all you are really doing is reimbursing costs (and then, only partially, for the early milestones)? This leads to it being an “open lie” where the publisher is supposed to be paying no more than the exact cost of development, but the developer is not-so-secretly expected to pad the budget estimates (without LOOKING like they are padding estimates…. you know, budget casual).

    And the end result is that it’s completely in the publisher’s best interest to cancel the project as early as possible – often as soon as there is a personnel shift and some new guy on the review board feels the need to make his mark.

    Thus, my being an indie evangelist. Leave that crap up to the big boys. Meanwhile, the rest of us can just make games. (Easier said than done, but at least it’s a lot more viable today…)