The developer start-up process

Game development is an art. However, as soon as you set out to earn a living from it, it becomes a business – a very competitive business. Unless you are independently wealthy or have a sizeable revenue stream from another source, forming a development studio that will survive the rigours of the current market requires some careful planning before you write a line of code.

Every business incurs start-up costs and every company must achieve certain goals before they can start to earn enough money to cover their costs. Game development studios are no exception. Before launching a new development venture it is important that you understand what you need to do, how long it is likely to take and what it will cost.

The standard developer start-up model is designed to secure a publisher funded contract. In order to secure such a deal you will need to produce a high quality prototype and supporting paperwork (listed in greater detail in the article Preparing a product pitch). However, this is not all that you need to do. You also have to form your company, take care of all the legal and financial issues involved, find the people you plan to “sell” the game too (the publishers) and go through the process of pitching your game. How long does this all take? Anywhere from six month to a year – during which time you need to fund the above work and pay your own living expenses.

Detailed breakdown
i. Form your company
Prior to actually starting your company you need to:
Carefully check your legal situation re your current contract,
Research start-up funding, technology grants etc. in your area – These vary dramatically from place to place and can greatly increase the money you have,
Find an accountant,
Find two lawyers – one for normal legal work and one specialist Game industry/IP lawyer (see our legal listings),
Decide on company structure now to avoid problems later,
If forming company with partners decide now what happens to shares, money and IP of one partner decides to leave,
Identify your “customers” (the publishers). If you intend to get money from a publisher you need to know what it will take to get it, which companies will be interested in what you are selling and who you will need to talk to).

Actually registering a company costs very little but planning the form your company will take and where you are going to get money can take much longer. It is surprising how long it can take to track down the right person at a particular company or find and apply for a particular grant.

ii. Get the team together and start on the prototype.
You need to design the game. Not just in order to make development easier but also because the publisher will want to know what they are getting when you get the phase iii. This could take from one to three month for a first draft, depending on the size and style of game,
You need the people to make the prototype? If you don’t already have them then add 3 months to find/recruit them,
Do you have the equipment? Add cost and purchase time,
Do you need/have an office?
The time needed to develop a prototype will vary depending on your game and what, if any, existing technology you have. To understand what a publisher looks for in a prototype (see the article Creating a game demo).

iii. Pitching to publisher.
This will take less time if you have already identified which companies you will approach and the correct people within those companies. None the less you still need to make contact, send submissions and schedule meetings with a number of individuals who have a large number of other meetings/submissions/business trips to get through. Realistically it will probably take two months to make the initial submissions to all the publishers in your target group.

iv The wait.
This is the part that many start-ups fail to budget for. The larger the publisher the longer they take to process a pitch. They have more submissions to wade through, more developers to visit, more meetings to attend and more overseas offices to copy in on submissions they are interested in. It could take a month just to get initial feedback but it may take up to three before you get an indication that they actually wish to proceed. You will need to continue to pay your team, run your office, work on your game and pay your own living expenses during this time.

v. Contract negotiations
Even if they do decide to proceed that doesn’t mean the process is over. You need to get a contract and go through the negotiation process with your experienced (expensive) game industry lawyer. – Money saved here can cost many times more in months to come. The lawyer may be expensive but is a necessary expense. The negotiation process can take from 1-3 months and can cost up to $10,000 in legal fees. That is fine provided that you get the deal and the publishers money (you did include legal fees in your budget didn’t you?) But if you fail to agree terms you still have the lawyers bills to pay.

Many start-up developers assume that getting their demo/prototype done is the end of the process and that money will start flowing immediately after that. In fact the submission and negotiation stages that follow can take anything from three months to six months. Save all the money you can prior to commencing your venture. Research every grant you can find and rake in every penny you can get. Then plan carefully how you are going to spend it to maximise your chances of surviving through the process and signing a deal.