Monthly Archives: March 2007
The publisher shall pay the developer… eventually
Let’s assume that you have managed to negotiate a deal where the publisher doesn’t recoup advances (as mentioned here) or maybe you have self-funded development and will be earning a royalty from unit one. It might seem that all is looking rosy is the cash-flow garden. Sadly there is a weed in the flower bed which may spoil things just a little. It’s the clause which defines when exactly you receive your money.
“The publisher shall, within 30 days of the end of each Accounting Period, deliver to the developer a statement showing in reasonable detail the calculation of and the total of the Net Receipts earned during the preceding Accounting Period and on receipt of an invoice shall pay to the Developer its accrued Royalties in respect of such Net Receipts.”
1. Publishers don’t pay royalties on a continuous basis. Instead they pay at set points throughout the year (the Accounting Periods mentioned in the clause). While many will define their accounting periods to be Quarterly (end of March, June, September and December) I have seen some contracts which define them as half yearly.If your game launches on 5th January the end of the accounting period will be March 31st.
2. The publisher has 30 days from the end of the accounting period to produce a royalty statement (I have seen some try for 45 or even 60 days). Unfortunately, even when the statement does arrive 4 months after the launch of your game there won’t be a cheque in the envelop.
3. “on receipt of an invoice…” - You will need to submit an invoice before the publisher will pay you. Most companies require 30, 60 or (if you let them) even 90 day payment terms.
From launch to payment in……
So if we ignore the week it takes for you to post the invoice, and go with 30 days payment terms and Quarterly accounting periods you will finally get your royalties five months after your game launched. With longer payment terms and six monthly accounting periods its even longer.
Conclusion
Following on from Raelifin’s comment I wanted to make clear that the above clause isn’t unreasonable, provided that you negotiate the exact terms. I certainly wouldn’t accept accounting periods longer than 3 months (Quarterly) or payment terms longer than 30 days. – the key point is to be aware of the impact it will have on your cash-flow.
Stupid reason #2 – “I have just been sacked”
A sudden change of circumstances isn’t a good reason to start a business (unless you have spent the previous few months planning to do so). Being made redundant can be a stressful event and for that reason isn’t ideal for planning a company. There is a lot of planning and research that should be undertaken before pressing the launch button on any new business venture and computer game development is no different. This research should be done in your spare time, while earning a salary (but not in your employer’s time), because once you press the launch button you will start burning your own money and you will need every penny of that to get from zero to break-even as a start-up.
Of course there are exceptions to every rule 
Sometimes redundancy can be the spur that makes you finally do something you have been thinking about for a long time – just make sure that this is the reason for pressing the red button and that you are not doing so just because you don’t know what else to do.
Do you speak publisher?
If you want to be a successful computer game developer you need to be bi-lingual. As a developer your native tongue is most likely Creative but when doing business with computer and video game publishers you also need to speak Business. The problem for many computer game developers is that the two languages appears to be the same and, as a result, developers often misinterpret what a publisher is actually saying. In Business the words “yes”, “I really like your idea”, and “I am awaiting feedback from marketing” seldom mean what most game developers think they do.
For a clear and concise explanation of why I will quote from Guy Kawasaki’s excellent business related blog How to Change the World
The Top Ten Lies of Venture Capitalists
Venture capitalists are simple people: we’ve either decided to invest, and we are convincing ourselves that our gut is right (aka, “due diligenceâ€) or there’s not a chance in hell. While we may be simple, we’re not necessarily forthcoming, so if you think it’s hard to get a “yes†out of venture capitalist, you should try to get a conclusive “no.â€
This is because there’s no upside to communicating a negative decision. Entrepreneurs will simply hate us sooner–instead the game is to string along entrepreneurs in case something miraculous happens to make them look better.
Computer and video game publishers are investors and they work on the same basis as any other investor. It isn’t in their interest to say “no” because a year from now who knows what miracle may occur. So, when a publisher says “I really like your idea” they actually mean “I’ll wait and see” – usually followed by a deathly silence. They don’t return your calls or emails and when they do there is never any meaningful information. In short they are stalling to see if your game will develop to a stage where they might consider it for publication. Unfortunately far too many game developers hear the words “I really like your idea” but fail to hear the deafening silence that follows. They wait and wait in the hope that the publisher really does want to publish their game and in so doing they are wasting time and money.
If a publisher really wants to publish your game they will return your calls, reply to your emails and send you a contract. They make money by publishing games and if they aren’t taking active steps towards the publication of your game then they aren’t really interested and you should move on.
India Outsourcing post-mortem
Rakkar has posted a blog entry here with some useful advise on how not to outsource.
To get my programmers, I posted on a general job site, naukri.com.
Lesson one – research: To find game developers go to game dev related sites and ask for recommendations for sites where good outsources can be found (or any particular outsources companies/staff that people would recommend). Don’t post for specialists in a general job site.
I also had no idea what Indian programmers were worth at the time. I got prices ranging from $250 a month to $5000 a month,
Lesson two – research more: again a failure to research leaves you at a disadvantage.
I ultimately hired 4 guys at, on average, $1500 a month. One disappeared on the day he was supposed to start work. One was fired after wasting 3 days just trying to compile the game and had to get help even opening and copying files. Another supposedly worked for two days, then disappeared, and told me he took another job else a week later. The last was the best qualified of the bunch: my former graphics programmer – a diamond in the rough comparatively speaking. He claimed to be a former lead programmer at nVidia, claimed 6 years of experience, could speak well, and could answer most of my general interview questions.
Yet at the same time, his graphics knowledge wasn’t what I was expecting…..
Lesson three – Dump bad people fast: Rakkar did a good job sacking a useless applicant after three days, but….
Lesson four – research even more: The four applicants made a lot of claims that would have been very easy to check. This should have been done as a matter of course but the fourth applicants seeming lack of graphic knowledge should have acted as an additional (final) alarm bell.
Conclusion
Outsourcing can save money but only if done correctly – and even then there is often a high management overhead. I know of several developers who have had good experiences outsourcing to India but they all say the same things….
- Research the process first before diving in.
- Investigate the company/person before doing business. Look at past work and seek references.
- Produce a detailed specification for the work to measure against.
- Manage/review the work on a regular basis, give detailed feedback and if its not going well (after corrections have been attempted) terminate.
- If something doesn’t seem right it almost certainly isn’t.
- Ultimately you get what you pay for.
Stupid reason #1 – “My boss is stupid”
The supposed stupidity of others is never a good reason to start a business.
I get quite a few start-up developers contacting me for advise. When asked why they are setting up their own business one of the (many) reasons quoted is often “the management of the team we work for are stupid. We know that we can do better.” There are several reasons why this is a bad reason to start a business… here are just some of them:
1. Development staff are seldom privy to the management decision making process and only see the results. A management team that cancels a game you think will be great and makes the team redundant isn’t stupid, if the current publisher has informed them that they are cancelling the project and no alternative publisher can be found. Carrying a team that aren’t earning money is the fastest way to kill an entire company so if management don’t act quickly to reduce costs everyone will be out of a job. Unless you are privy to all the facts it is stupid to pass judgement on a decision.
2. Just because someone else is stupid, it doesn’t automatically mean you are smart. Or to put it another way; just because someone else doesn’t understand the business, it doesn’t mean that you do. Game development is a creative endeavour and it requires particular skills to succeed. Those skills are not the same ones that are needed to succeed in business. If you expect a publisher (or any other investor) to give you money then you need to understand business side of game development.
3. Your stupid boss isn’t the only person you need to be smarter than. There are a lot of other companies out there that you have to compete with.
Conclusion
Don’t start a game development studio because your current boss is stupid. You need to have (several) great ideas for games and a solid plan as to how you will profit from them. If you don’t have a solid grasp of the business of game development you can be sure that someone smarter than you will be profiting from all your hard work.