The Game and Paths to Market

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The Game and Paths to Market Business Planning Fall 2018 Housekeeping • Changing Assignment 4 to optional / extra credit • Possibly just one more class session remaining for in class extra credit presentations Business Planning Mission: Core purpose, values To help focus studio and business over time Business Model • Traditional game, Free to Play, Subscription ‒ Consider different project structure (slim down scope, identify game extensions via DLC, IAP, updates) • Develop game, determine business model later ‒ Self publishing, publisher • Work for hire / contract work Business Focus • Think about areas where you can excel ‒ May be art, tech tasks, audio, test, localization, other • Kinds of games, platforms, scale, timelines • Consider diversification ‒ Project contracts along with passion projects • Staffing ‒ Solo, small dedicated team, distributed/contractors, office/no office ‒ Team terms – cash, rev shares, deferred compensation, bonus structures Business Focus • Game focus ‒ Style of game – genre, mechanic, creative lead / style ‒ Platform(s) – e.g. mobile, specific console • Flexibility ‒ “Pivot” Platform Planning Key Platform Considerations Platform “fit” for game project Platform environment • Style of game • State of platform • Audience • Competitive environment • Base size • Distribution channels • Multi-platform plan Key Platform Considerations Additional factors • First party support • Exclusivity • Multi-platform plan Exclusivity Console first parties periodically offer incentives for windows of exclusivity on their platforms • This refers to console platform exclusives – typically PlayStation, Xbox ‒ Not desktop, mobile platforms ‒ With timed exclusive, other console platforms can come after specified window • Incentives can include funding contributions as well as co-marketing commitments • Developers can assess pros and cons of exclusivity in exchange for narrower availability First Party Programs PlayStation Pub fund • You are the publisher and own the game’s IP rights • Incentive based program intended to support platform-defining content on PS3, PS4, PS VR and PS Vita systems • Guaranteed royalties upon release of the Game in exchange for limited platform exclusivity • Additional Co-Marketing support on PlayStation channels • Factor in restrictions too https://www.playstation.com/en-us/develop/ Platform Launch Window Strategy Pros Cons Early mover advantage Risk – particularly if it’s new platform – that it may never get traction Visibility through association with new system Challenges in selecting viable platform Fewer competitors Small installed base in early period of platform Early adopters (usually less price sensitive) need content Higher likelihood of co-promotion with platform holder – spotlights on great content that show off system Pioneers are often the ones with arrows in their backs https://www.gdcvault.com/play/1024609/-Job-Simulator-Postmortem-VR https://www.magicleap.com/grant-program Mass Platforms • Desktop, Mobile • Approaching ubiquity • While sizable installed bases, not all owners play games Multiplatform Strategies Simultaneous Multi-Platform Plan Staggered Platform Plan Maximize potential audience for launch campaign Co-marketing/other benefits through exclusivity Varying prices per platform considerations Optimizing game for each platform Limited resources Can be more challenging generating interest for later platform releases (perceived as after market “ports”) If staggered release plan, consider varying features for later platforms – levels, features, etc “Pivot” Additional Considerations • Original IP, Licenses, Series ‒ Along with entertainment licenses, license can include brands (e.g. car brands for a racing game) • Tech ‒ Build your own vs off-the-shelf ‒ Multi-platform Additional Considerations • Business operations ‒ QA, localizations, administration, financial management (payroll, taxes, banking, business systems) • Forming company ‒ Sole proprietorship, partnership, corporation/LLC • Cash flow ‒ Factor in distribution channel participation fees and lag time between sales and payments (up to 60 days) Initial costs • Incorporation: $500 (Varies by location, does not include attorney fee) Equipment (per workstation) • at least $800 per PC • $150 per monitor (you need 2 monitors per person) • $20 per mouse • $20 per keyboard • $100 per desk • $80 per chair • roughly $1800 in software licenses • Total: $3120 per person Plus • $1,000 or more for a company laptop • $200 for a printer/scanner • $80 for business cards • $3000 for miscellaneous stuff (paper, ink, router, tools, air conditioner, gaming peripherals, etc) http://www.polygon.com/2014/7/31/5949433/the-cost-of-a-game-studio Ongoing costs • Rent/electricity: $776 per month • Cellphone/internet access: $180 per month • Bank fees: $20-40 per month • Insurance: $250 per month • Salaries: about $3250 per employee per month Other costs • Participation at PAX East: About $8,000 total • Legal fees: About $3,000 per year • Accountant fees: About $3,000 per year • Music: About $150 per song, prices vary greatly • Sound effects: $10 per sound effect, prices vary greatly • Marketing/PR outsourcing: $1000 and upwards per campaign • Travel expenses (not counting PAX): About $2000 per trip, depends on location and timing • Started by Guillaume Bocher-Vidal, Quebec in 2011 • First position: Activision, QA (20 years old) • Start up ‒ $20K personal savings ‒ $16K Kickstarter ($2K cost) ‒ Team’s own PC equipment ‒ Bank loan ‒ 5 guys, 86 square foot office space in founder’s apartment ‒ Years 1 through 3: ~$80K total cost ($35K debt) ‒ Then, publishing agreement for second game (Bandai Namco) http://www.polygon.com/2014/7/31/5949433/the-cost-of-a-game-studio http://www.ninedotsstudio.com/ • Year three ‒ Game two ‒ 7 person team ‒ Office ‒ $40K/month burn rate ‒ Secured rights from publisher for second game ‒ Funding of $750M from Canada Media Fund Experimental Stream Program • Five year anniversary ‒ First game free ‒ One week 50% off promo ‒ “We'll be here for years to come.” • Year Seven - August 2018 update ‒ Signed with publisher Koch media for upcoming game Outward https://blog.thimbleweedpark.com/budget1 Business Plan • Particularly relevant for investor/partner pitches, and for guiding business in general ‒ Business plan for studio/business, beyond single game • Map out goals, objectives, fundamentals ‒ Product plan(s), timelines, including post launch/post game 1 ‒ Market assessment ‒ Financials – expenses, income, budget needs https://www.rocketlawyer.com/form/business-plan.rl Pro Forma ROI Income – Cost of Income Cost of Income Funding • Self Funding / Bootstrap ‒ Including loans, savings • Private investors / Angel investors / game funds / incubators / VC • Crowdfunding • Partners / publishers • Other ‒ Competitions ‒ Grants http://www.develop-online.net/analysis/how-to-fund-your-game/0214272 http://www.develop-online.net/analysis/73-game-funding-tips/0214332 Funding 73 Tips • Assess actual/potentially hidden costs of different funding options ‒ Preparing financial statements (accountant), fulfilling physical rewards for crowdfunding, your team’s time in pursuing different avenues, etc • Determine conditions of fund source and impact on project flexibility ‒ Approvals needed for feature changes, milestones/meetings, matching, etc • Consider if game project is aligned with funding source specs • Investigate possible funding from emerging technologies • Carefully evaluate cost/payback terms of funding ‒ Rev shares, terms, IP ownership • Impact of prototypes http://www.develop-online.net/analysis/73-game-funding-tips/0214332.
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