Is the Opportunity Right For You.

The Mistake Videogame Developers make when evaluating Opportunities.

We’ve been working with Videogame Developers that have been having a hard time getting to the next level. These are talented and experienced Developers that have been in the industry for 10+ years, and are staffed with industry veterans. Their work is high-quality and they are stable, profitable businesses.

However, they feel they haven’t made progress in the last couple years. They have been the same size, generated the same revenue, worked on the same opportunities (they are W4H shops), and in essence are the same studio they were 2 to 3 years ago — they have plateaued. So what’s going on?

After a deep dive into these studios, we found a common mistake; they’re not comparing the inbound/outbound opportunities to the Goals & Ambitions of the studio. For the most part, every project sourced is accepted as a valid opportunity and there is a push to close the deal asap. They don’t take a step back and ask if the project is a good fit and will help them get to the next level. It’s a shot in the dark if the opportunity is going to prove fruitful for the business (they are operating as if they are in survival mode when they’re not). In order to break away from this, there needs to be a Qualification Process that is directly tied to where the studio wants to go.

If the project doesn’t meet the Criteria the studio needs to stay faithful to it’s vision, the recommendation would be to negotiate the opportunity to align accordingly. If this can’t be met — we advise walking away — it’s no longer a fit for the company. Sometimes saying “No” is hard, especially when it equates to revenue and/or when work is hard to come by. But staying true to the long term Dream is essential to getting there. Walking away is a powerful statement, and from a psychology perspective, can have the added benefit of the Potential Partner being more interested in working with the studio.

We’ve seen this many times over the years from clients and non-clients alike. Either the studio has not articulated their Goals or Vision (why are you in business and what is the end goal), does not have a Plan of Action to achieve these Goals/Vision (what you’re going to do in order to reach your Goals/Vision), or is not staying faithful to getting there (not following the Roadmap or Necessary Steps to get there). All three steps (know it, have a plan around it, and stay faithful to it) are essential to evolving as a studio. In the case of the Developers we’ve worked with, they don’t have a sound Strategy and Action Plan in place to get to their end goal.

We’ve seen a lot of studios that accept any project that comes through the door or are sourced through outbound efforts. From our experience talking and working with these studios, it’s due to lack of clarity. Clarity around what the Vision is, clarity around the steps to get there, clarity around how to stay true to the objective. We’ve helped these studios gain clarity around their destination, and scoped out the journey to get there.

Let’s dive into some quick examples of how to gain Clarity around the Objectives you put forward for the studio.

Let’s say the Challenge is stagnant revenue that has been the same for the last 3–4 years and the studio takes on any project of any size. If a W4H Studio’s Main Goal is to generate revenue in excess of USD $5M annually (you’ve been at the USD $2.5M the last 4 years), the requirements for working on a project could look like:

• Every project needs to be above USD $1,000,000 in Development Dollars (you receive a million dollars or more to develop the project).
• Every project you work on has to have at least a 15% Backend Split (for every copy sold when it hits market, you receive a portion of the overall sales). You could take it a step further, and pair the Backend Royalty with a Market Viability Evaluation Process. Making sure the projects you’re working on have Market Viability and the potential for sales is high. In this case, you would create a Market Viability Evaluation Process to make sure you’re leveraging the backend split to it’s full potential. The backend split won’t mean much if you’re working on games that skew to a limited audience.
• There needs to be a contingency clause in the contract that stipulates if the relationship and project are successful, a sequel or second project will be Greenlit at the same budget with the same terms or better (or the terms are contingent on the commercial and critical success of the game when it hits market).
• You only work with well recognized brands and companies that have a worldwide audience. Large, established companies can help you increase Brand Awareness, and receive larger budgets that have higher potential on the backend.

And of course, if the project does not meet your requirements and the Potential Partner is not willing to work with your necessary conditions, you simply say no and walk away. Don’t let fear trap you into working on projects that are not in the best interests of your company.

Let’s say the Challenge is you’re a Developer that creates internal IP, and then looks for a Publishing Partner to bring the game to market. You worked with a Publisher in the past (the only one interested) but they didn’t provide upfront funding, they invested a shoestring budget into Marketing, and only published the game in certain territories. The game was unsuccessful. Your Goal is to find the right Publishing Partner this time that will do the game justice (you want to have the best chance at releasing a successful product). Your requirements could look like:

• The Publisher provides a development advance for the game. There should be a minimum upfront payment for Development or for the Rights to Publish your game. The advance can be to finish development, for Territory rights of the game, or to upgrade your game to the next level (increase scope, flesh out features, add more content, etc). A Development Advance is necessary and non-negotiable.
• The Publisher has to have a track record of releasing successful third-party products to market. It can be a condition the Publisher has released similar products to market (genre, scope, budget). There are many indie Publishers in the market today that don’t have successful track records so this will mitigate the risk. Go a step further and connect / communicate with the Developer(s) that have released similar products and used the Publisher you’re vetting.
• There has to be a minimum marketing spend from the Publisher. Do your research and find out how much money the game needs to be effectively marketed. There are many Publishers out there that will try to minimize Marketing Spend or rely on Organic Marketing — make sure they commit to a dollar amount that will do your game justice.
• The backend split has to be 50/50 or better (provided you have a playable of the game). This will largely depend where you’re at in development; if you’re at the concept stage, it will be very hard to reach a 50/50 split but if your game is almost complete, there’s no reason it shouldn’t be 50/50 or better. Subject to many variables that go into what you’re looking for and the services the Publisher will provide.
• The Publisher needs to have a Worldwide presence or be willing to work with other Publishers (to effectively release the game in all pertinent territories).

And if the Publisher won’t work with you to satisfy your wants after considerable effort, you simply say no and walk away.