Why direct-download game distribution > publishers

[Kaftan Barlast]

I think this is something really worth reading in connection with the discussion we had before on Online distribution systems versus the traditional model of Publisher>Distributor>Retailer

 

We all know STEAM sucks, but its the way of getting games directly from the devs to consumers that is interesting. And hopefully, there will be better, more effective and less intrusive services in the near future, possibly run as cooperations between developers.

 

Here McCarthy explains the benefits of online dist. versus going via publishers etc.

 

 

CODEX: Why Steam? Why Michael, why? Will the game be available as a boxed version in stores as well or are you only planning for a Steam download at this stage?

 

Why Steam... the reason Steam is so fantastic, is because the game can be developed and distributed without any publisher involvement. Laidback will get to keep the IP, which means that the idea and world the game takes place in will still be ours. Laidback can make a great title, put it up there and people can download it for less than they'd pay in the stores. On top of that, Laid Back will only need to sell a very small number of copies to recoup its cost and keep the company going.

 

To help everyone better understand, I will explain Publisher funding vs. Developer return process. I'm going to simplify it a lot, but this is more or less how it works.... and it's really quite amazing...

 

After they agree to fund your game for 6 million, you begin production. They give you 500k a month upon receiving, reviewing, and approving your milestone. They are basically checking every month to make sure the game is actually being made and going in a good direction Fair enough. To keep things easy, let's say the game ships on time and they've given you a clean 6 million bucks.

 

Ready?.... You get 10% of the royalties of the game! So like if the game sells 1 million units at Electronics Boutique for 50 bucks a piece, you get 5 million dollars coming back at you right?!??!

 

WRONG

 

EB bought the game for 40 dollars and sells it for 50. Now the publisher takes away their expenses of producing the full color manual and the pretty box and such which we'll say is 10 bucks (usually more like 7, but let's keep the math easy). So now we are down to 30 bucks, and you get 10% of that... 3 bucks.... but WAIT!!! Your 3 dollars doesn't go into your pocket, your 3 bucks goes to pay back the publisher what you borrowed to make the game. They did give you 6 million dollars. So before the developer see's a check in the mail, you would have to sell 2 million units!!!!! So the developer before the developer gets a check, the publisher gets 30 million dollars coming in.

 

Crazy huh?

 

So why choose Steam? I have chosen Steam because if you buy Valves engine to make your game with, you get to keep 100% of what you sell on Steam. That's right 100%. So using our math from above, if I can sell the game on Steam for 30 bucks and cost 6 million to make, I'll be seeing a check after the game sells 200k units instead of 2 million. AND the check I get for the units I sell will be 10 times more than it would be from a publisher AND after all this wonderfulness, you guys all get the game for 30 bucks instead of 50....

 

It's an all around winner.

 

 

Link to full interview

Edited May 8, 2006 by Kaftan Barlast

[kirottu]

I somehow find it hard to believe that publisher get that much and developers get that little.

[Tigranes]

2 million units before profit would mean we'd only have about 5 game companies on the planet left... also, dev salaries / maintenance isnt mentioned either. Still, it's not false, just exaggerated.

 

It would be pretty accurate if you applied it to music labeslt ho.

[Fenghuang]

I don't get the game for thirty dollars, I don't get to play it at all.

 

Lousy dialup.

[Musopticon?]

I try to buy games for 30 moolah too.

 

Damned selective firewall.

[Hassat Hunter]

So, if this is all true, WHY do we still pay $50,- for downloading? Especially for a game (Half-Life 2) that WILL sell 2 million copies...

 

Now who are the greedy punks? Devs or Valve?

 

Besides that the article fails to mention Valve does wan't a share of the cut... VALVE greed FTW... Ferrari's for every employee!

 

EDIT: Valve better spends the $2,- billion they earned into making the best game ever... "

 

EDIT2: Just clicked the link and figured out it was a TROIKA dev. Explains why it makes no sense...

Edited May 8, 2006 by Hassat Hunter

[Kaftan Barlast]

I somehow find it hard to believe that publisher get that much and developers get that little.

<{POST_SNAPBACK}>

 

Some people might be able to get better deals but thats what we're told to expect. The happy days of developers making millions out of hit games is over. Its exactly the same in the music bussiness, the actual creators of the product get the smallest piece of the cake.

 

 

 

So, if this is all true, WHY do we still pay $50,- for downloading? Especially for a game (Half-Life 2) that WILL sell 2 million copies...

 

Now who are the greedy punks? Devs or Valve?

 

Besides that the article fails to mention Valve does wan't a share of the cut... VALVE greed FTW... Ferrari's for every employee!

<{POST_SNAPBACK}>

 

The last game I bought through Steam was Red Orchestra which cost me $29, the retail version costs around $40

 

 

The article clearly states that Valve supplies STEAM distribution for free if you make a game with the SOURCE engine. So its a fixed sum, not a percentage of every game sold. Still, its probably a great deal of money and thats another reason why STEAM sucks. The ideal is a dev cooperation where distribution is supplied at self-cost or perhaps even free of charge if it could be ad-driven.

Edited May 8, 2006 by Kaftan Barlast

[metadigital]

I somehow find it hard to believe that publisher get that much and developers get that little.

<{POST_SNAPBACK}>

Kirottu, meet hard business reality.

Hard business reality, meet kirottu.

[Hassat Hunter]

Steam download 20 bucks dollar. Retail (with box, manual, disk AND not a download of a few hours) 15 euro's.

 

http://forums.obsidianent.com/index.php?sh...ndpost&p=615087

If you need more info...

 

Please explain the fact that retail is cheaper than steam even if those greedy greedy store AND dev are of the game

[alanschu]

So, if this is all true, WHY do we still pay $50,- for downloading? Especially for a game (Half-Life 2) that WILL sell 2 million copies...

 

Supply and Demand? I'd rather feed Developer Greed (as they are the ones that make the games) than publisher greed anyways.

 

Why exactly do you pimp PC gaming because developers get a "larger cut" of the profits?

 

EDIT: Valve better spends the $2,- billion they earned into making the best game ever...  "

<{POST_SNAPBACK}>

 

Valve funded the development of Half-Life 2 entirely out of their own pocket.

Edited May 10, 2006 by alanschu

[Judge Hades]

So, how do we sell off DD games we don't want or have beaten to death? How do we buy used DD games?

[Kaftan Barlast]

So, how do we sell off DD games we don't want or have beaten to death?  How do we buy used DD games?

<{POST_SNAPBACK}>

 

 

You cant. In fact, if you read the license agreement of most games today. It states you are forbidden to lend or sell your game on.

 

 

That means even more money for the devs, since you have to buy the game to play it.. well, unless youre a pirate but Im sure noone here would ever dream of pirating anything "

 

 

But to compensate for this, I would have some sort of "frequent flier" system on the DD service so that you got one game for free for ever 5 bought or some such.

[metadigital]

Yeah, as I posted elsewhere, the current (broken) model is insufficient to handle DD (properly). But, as the Developers would hold their IP copyright, rather than have to forfeit to Publishers (as part of the agreement to borrow money to create it), they can do what they want: even be a broker in the process. By that I mean they could establish innovative pricing structures: maybe those people who pre-order obtain a discount but pay "retail", then those who wait can get a slightly reduced price (equating to a second-hand purchase) and frequent-flier-miles for the early-purchasers mean that they get more product for their early dollar purchase (early money pays off debt quicker, which is more valuable for the developers, so it is encouranged with some of the savings returned to those who help facilitate them).

 

 

Meh. Late and I've had a big day: off to sleepy bo-bos. I can clarify later.

[themadhatter114]

2 million units before profit would mean we'd only have about 5 game companies on the planet left... also, dev salaries / maintenance isnt mentioned either. Still, it's not false, just exaggerated.

 

It would be pretty accurate if you applied it to music labeslt ho.

<{POST_SNAPBACK}>

 

No, that wouldn't mean anything. It simply means that most developers wouldn't be making a profit. They still get their paychecks. That comes out of the initial $6 million. They just don't have more resources to continue on another game until they get more money from another publisher.

 

Of course, this all depends on how much clout a developer has. A company with a strong fanbase, guaranteed sales, a solid reputation, good connections, and perhaps some of their own publishing capabilities, are doing publishers a favor by signing with them. Publishers invest money to make money, and they are taking risks with their money, so they have every right to dictate terms based on the amount of money they are investing and their relative risk. If you want some clout, produce hit games under publisher guidelines and build a reputation to where publishers have to compete for the rights to publish your games. It's a workable model, and publishers are just trying to make money, as are the developers. If developers have a better model for distributing their games so that they maximize their profits, hooray for them, but there's no need to paint publishers as bad guys when they are providing a necessary service at great financial risk.

 

It's the same thing with movie directors and music labels. Labels front big money to get exclusive rights to an artist and for the rights to distribute their music. Popular artists have more clout, unknowns have little. First contracts usually suck, and if an artist is just a flash in the pan with no long-term earning power, they don't deserve the huge bucks. Same with movie stars and directors. Hell, same thing with most industries. Look at the salaries of athletes. Of coaches. Look at the profits of the owners. People provide services, the market determines their pay based on current production and potential.

 

If directors, actors, musicians, athletes, coaches, and developers aren't happy with the conditions they are offered, they have three choices: get a lawyer to negotiate a better contract, come up with a more efficient way of providing the service, or go to hell and find another line of work.

Edited May 11, 2006 by themadhatter114

[Craigboy2]

I think this is something really worth reading in connection with the discussion we had before on Online distribution systems versus the traditional model of Publisher>Distributor>Retailer

 

We all know STEAM sucks, but its the way of getting games directly from the devs to consumers that is interesting. And hopefully, there will be better, more effective and less intrusive services in the near future, possibly run as cooperations between developers.

 

Here McCarthy explains the benefits of online dist. versus going via publishers etc.

 

 

CODEX: Why Steam? Why Michael, why? Will the game be available as a boxed version in stores as well or are you only planning for a Steam download at this stage?

 

Why Steam... the reason Steam is so fantastic, is because the game can be developed and distributed without any publisher involvement. Laidback will get to keep the IP, which means that the idea and world the game takes place in will still be ours. Laidback can make a great title, put it up there and people can download it for less than they'd pay in the stores. On top of that, Laid Back will only need to sell a very small number of copies to recoup its cost and keep the company going.

 

To help everyone better understand, I will explain Publisher funding vs. Developer return process. I'm going to simplify it a lot, but this is more or less how it works.... and it's really quite amazing...

 

After they agree to fund your game for 6 million, you begin production. They give you 500k a month upon receiving, reviewing, and approving your milestone. They are basically checking every month to make sure the game is actually being made and going in a good direction Fair enough. To keep things easy, let's say the game ships on time and they've given you a clean 6 million bucks.

 

Ready?.... You get 10% of the royalties of the game! So like if the game sells 1 million units at Electronics Boutique for 50 bucks a piece, you get 5 million dollars coming back at you right?!??!

 

WRONG

 

EB bought the game for 40 dollars and sells it for 50. Now the publisher takes away their expenses of producing the full color manual and the pretty box and such which we'll say is 10 bucks (usually more like 7, but let's keep the math easy). So now we are down to 30 bucks, and you get 10% of that... 3 bucks.... but WAIT!!! Your 3 dollars doesn't go into your pocket, your 3 bucks goes to pay back the publisher what you borrowed to make the game. They did give you 6 million dollars. So before the developer see's a check in the mail, you would have to sell 2 million units!!!!! So the developer before the developer gets a check, the publisher gets 30 million dollars coming in.

 

Crazy huh?

 

So why choose Steam? I have chosen Steam because if you buy Valves engine to make your game with, you get to keep 100% of what you sell on Steam. That's right 100%. So using our math from above, if I can sell the game on Steam for 30 bucks and cost 6 million to make, I'll be seeing a check after the game sells 200k units instead of 2 million. AND the check I get for the units I sell will be 10 times more than it would be from a publisher AND after all this wonderfulness, you guys all get the game for 30 bucks instead of 50....

 

It's an all around winner.

 

 

Link to full interview

<{POST_SNAPBACK}>

Well if they will let me burn the game onto a CD/DVD than I'lll use it. I like having something tangible.

[Craigboy2]

So, if this is all true, WHY do we still pay $50,- for downloading? Especially for a game (Half-Life 2) that WILL sell 2 million copies...

 

Supply and Demand? I'd rather feed Developer Greed (as they are the ones that make the games) than publisher greed anyways.

 

Why exactly do you pimp PC gaming because developers get a "larger cut" of the profits?

 

EDIT: Valve better spends the $2,- billion they earned into making the best game ever...  "

<{POST_SNAPBACK}>

 

Valve funded the development of Half-Life 2 entirely out of their own pocket.

<{POST_SNAPBACK}>

I thought that was the ex-Microsoft member, not Valve the company itself.

[alanschu]

No, Valve (which was partly founded by Gabe Newell, who used to work for Microsoft before they created Valve back in the late 90s) self funded the game.

[Volourn]

"as the Developers would hold their IP copyright, rather than have to forfeit to Publishers"

 

Eh. Develoepes who deal with publishers can still own their own IP. Afterall, BIO owns the JE, ME, and DA IPs. In fact, that's why they are able to make JE PC. So, this a flimsy exuse on why DD is so much better.

 

Let me see now. Common misconceptions about why DD is so much better:

 

1. It gives the devs oppurtunity to own their own games. Irrelevant as this can happen even in a pub-dev relationship.

 

2. Games are cheaper. not really true, give or take.

 

 

The only difference is that devs get a higher percentage of the money. Of course, this doesn't benefit us customers AT ALL since we lose out on actually owning said game since we're 100% reliant on the devs and the silly internet which can be unstable unlike owning a game where you buy it and its yours. Period. I, as a customer, am not here to support either publisher or dev 'greed' (nothingw rong with wnating to earn money so greed int his case isn't neccesaarily bad). I, as a customer, am here to support my selfishness in getting a game I *want* to buy with as much quality as one can... 'til thinsg change that means publishers win 'cause developers simply can't do that yet... with few exceptions..

Edited May 18, 2006 by Volourn

[Judge Hades]

What Volourn said.

[alanschu]

Eh. Develoepes who deal with publishers can still own their own IP. Afterall, BIO owns the JE, ME, and DA IPs. In fact, that's why they are able to make JE PC. So, this a flimsy exuse on why DD is so much better.

 

Most developers don't have the influence that Bioware has.

[Volourn]

That's because you have to earn it. No to mention the tendency (including BIO until recently) have the habit of making licensed IP games also lessens the chance of a dev owning the IP of their games.

 

Afterall, no one can expect Obsidian to own the IPs to either KOTOR2 or NWN2 for the obvious reasons. Now, this game they are developing for Sega they might depending how the agreement was signed.

[alanschu]

But, if they didn't need to rely on "slam dunks" with other IPs just to get some operating capital...

Edited May 19, 2006 by alanschu

[Atreides]

The way I see it DD looks indie to me. Maybe it's the song and dance (ie fancy production) producers provide give the impression that something less than that isn't mainstream.

 

The problems that I personally have with DD is the impression of indie (low budget?) games, distribution (not everyone's going to be able to download it, or people want paper manuals or whatever) and piracy. Is it easier to pirate DD games?

 

The main lure for me is that developers have more freedom on kind of games that they make because they don't need to justify it to producers.

[Spider]

Is it easier to pirate DD games?

 

Not really, my guess is that it's probably harder even.

 

The main lure for me is that developers have more freedom on kind of games that they make because they don't need to justify it to producers.

<{POST_SNAPBACK}>

 

And this is something I am not even sure will happen. High quality games (quality in this case means production values) still costs millions to make and those millions will have to come from somewhere. DD is great for indie developers, because they get a way to distribute their games cheaply and efficiently, but a company trying to make a game like NWN2 will still have to rely on publisher funding.

 

The other major winners are developers like Valve or Bioware that have been succesful enough in the past to be able to fund their own games.

[metadigital]

Basically DD is a mechanism for developers to extract themselves from the poverty trap of the "loan-shark publisher" scenario, where the developers take the role of the indentured slave trying to earn enough to purchase their freedom (to finance their own publishing).

 

If we use a four-year-old brick maker for an analogy, DD won't necessarily make the bricks any better, but the brickmakers will be of a minimum age, have minimum wages and health plan; they will be happier and healthier: which should make for better games in the long run.

 

 

I personally object to the militant usury demonstrated by some publishers.