Game Publishing Costs: What Every Developer Needs To Know

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In addition to my role as managing director for Ayzenberg London, I’ve also been involved with the business and product development at A.List Games. I’m the individual responsible for finding talented developers to work with, evaluating those developers and their games before I conduct my due diligence on their teams. After championing those projects, those games then go through Ayzenberg’s greenlight process. Once greenlit, I mentor those developments through the development process, ensuring that they’re able to create the best team possible with the appropriate budget of finances and time.

Before assuming a larger role at Ayzenberg’s London base of operations, I’d been working with A.List Games since November 2020, beginning my role as the director of product development. In May 2021, I adopted the business aspect of my job and have been enjoying the challenges ever since.

Prior to A.List Games, I founded and grew an independent studio of 20 individuals—Pure Bang Games. After having engaged with game development and publishing in one form or another for over a decade, I’ve recognized several issues related to the costs associated with publishing. As a follow-up to my colleague Steve Fowler’s game marketing guide, here I’m sharing the costs developers and publishers should budget for and why neglecting certain costs could spell disaster for a project. 

Publishers, whether on the boutique side or the AAA side, have a set of services that they provide—nothing more, nothing less. A.List Games, on the other hand, is a bespoke publisher who also tailors what they do to their partners’ needs. This dynamic allows for developers to do what they do best and leave everything else, including any issues or holes in the process, to the A.List Games team. Developers looking to be featured are advised to start building relationships before the development process. Luckily, A.List Games has the network to make that a possibility.


Development

The first cost publishers should take into consideration is the cost of development. Simply put, this equates to the initial outlay necessary to pay developers, which typically comes in the form of an advance on royalties. To developers, it’s like a contractual work-for-hire arrangement.

One crucial area of development costs that many developers fail to note is overhead—computers, software, rent and other requirements associated with staying in business. 

Developers should also decide whether the game is going to be in early access or if there is a soft launch period. If so, the budget must include a window of time where the developers won’t be earning revenue. A few extra months of income built into their budget would solve this problem despite some publishers arguing against it. Nevertheless, publishers who choose to be fair to their partners by helping them stay in business agree to this type of request.

There are also instances where people underestimate how long it takes to polish a game. The issue with this is that the most difficult part of developing a game comes at the last 20 percent. While most believe that figuring out the game, getting the core functionality going and other up-front tasks are the most difficult, it’s actually after all of these are in place that you have to ask, “Is it fun and how can we make it more fun?” For this reason, I always suggest developers add 20 percent to their schedules.


Internal Costs

Of the internal costs, from business development and labor to quality assurance and project management, production is the true traffic controller. Depending on the scale of the project, there might be social producers, executive producers or a director of production that manages the entire production department. Regardless of the number of producers, production is often unseen and undervalued. 

As the glue that holds everything together, production is the department that reviews milestones, reviews and approves bills, interfaces with accounting, communicates with all other departments and ensures that marketing and development are on the same schedule. It also conducts game evaluations, ensures quality control and communicates with first parties like Microsoft, Sony or Steam.

Of all internal costs, labor tends to cost the most, followed by marketing. In some instances, for example with top-performing mobile titles, marketing costs surpass development costs. Generally, the rule of thumb is that at a minimum marketing will comprise 10 percent of what development costs are. With popular games, marketing costs could reach as high as 50 percent of development costs while with hits, marketing can even surpass development costs.

One other area of internal costs worth mentioning is the quality assurance (QA) team. For companies with a pipeline of games, the QA department can be fully utilized around the clock. Without a consistent pipeline of games, those in the QA department become functionality testers, which gives the developers another group of people testing their game. This ends up becoming an added cost for publishers.

In this scenario, the QA team conducts functionality tests, though sometimes their task can comprise narrative testing to ensure that elements of gameplay and the story are consistent with and true to the brand.

Another area of internal costs is project management—a hybrid role between project manager and designer. The project manager is typically focused on KPIs, specifically, revenue. Many companies I’ve worked with skimp on this cost given that it’s relatively new and thus there aren’t many people who are experienced with it. For example, the pool of people who have even five years of experience managing a live ops fame is still relatively small.

So, a project manager who can look at the game in the beginning and offer design guidance and come back to nudge it in the right direction toward the end is key. 

Due diligence and evaluations are two indispensable internal costs that are sometimes overlooked. At times, a publisher may sign a deal with the studio head without ever having spoken to anyone else at the studio. The issue with this is that one can never be too careful. Every publisher must be aware of and confident in the team behind the studio head. For this purpose, a due diligence team is imperative. Despite the cost, risk mitigation can’t be stressed enough.

Another internal cost that companies tend to neglect that they shouldn’t is usability and focus testing. Early usability testing is advised, even if the testers are “ninjas,” i.e., family members, friends or individuals not necessarily associated with game development. 

Having these testers play the game while the developer watches them take notes is invaluable. Receiving their comments to make improvements to the user experience is important once the game is in open beta. This cost could fall into the third-party cost category unless the usability testers are in-house.

The last internal costs worth mentioning are legal costs and business development, which include first-party relations and licensing.


Third-Party Costs

Depending on whether a developer is doing retail or going on console, age rating requirements may be necessary and may be different for differing regions. For example, what would be rated for a 10-year-old in the U.S. may not pass in Australia or the UK China is a perfect example of how geopolitics play into age ratings. China has rules against certain types of games such as gacha games, and aspects such as zombies and the display of blood of any color. Consequently, maintaining an awareness of which regions a game will be sold is necessary for efficiency and avoiding legal issues down the line.

It should be noted, however, that age ratings are only important if you plan on doing retail or console, given that mobile and PC don’t require age ratings in the same way. The trick with mobile and PC ratings is that they’re only concerned with what is on the disc, not what the player sees in the game. There have been instances where moderators or hackers made changes to anatomically correct characters to remove their clothing, effectively going against the age rating of the game. Developers must keep a close eye on these sorts of occurrences.

One third-party cost that companies can’t fail to consider is customer service – who is handling the returns, who is engaging with angry customers, who is answering questions about how to do…

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