CO1301: Games epts 2015 Lecture 4 Sales Contracts - A Primer plus Design & Development Summary (Revision) Dr Nick Mitchell (Room CM 226) email: npmitchell@uclan.ac.uk Material originally prepared by Laurent Noel & Gareth Bellaby

On the Shelf… The developer The publisher The retailer / distributor A “AAA” console game might retail at around £35+ Who gets this money? The developer The publisher The retailer / distributor The government We will look at how this money is divided up. We will also look at the contracts involved. NICK’S PRICE £34.99!

Game Sales – Who gets What? This is a simplistic breakdown of a typical game sale. Two points are immediately clear: The retailer takes the largest slice of the money. The game developer takes the smallest slice (the red slice). Next, we will look in more detail at this breakdown.

Tax and Retail In the UK, since January 2011, 20% of the game price is paid to the government in Value Added Tax. This amount is ignored in the remaining calculations. So the effective price of the game is £28. Many other territories have a similar tax. The game publisher will negotiate a contract with the retailers (and distributors) to divide up the remaining money. Here, we have assumed a 50:50 split, which is fairly typical. However, there is a wide range of possibilities.

Developer Royalties So in this example, the publisher will receive £14.00 after tax and retail costs. Now the game developer will be paid some of this money as royalties for writing the game. The royalty (if paid as a percentage of revenue) can range from 15% to 50%. It depends mainly on the developer’s track record. In this example the developer is paid 30% royalties. This is 30% x 14.00 = £4.20 for each game sold.

Advance Royalties Developers often get money from the publishers before the game is sold. These are ‘advance royalties’. When the game goes on sale, the developer gets no royalties until the publisher has recouped this money. So developers get no royalties until a certain number of sales is reached. Advance royalty example: Developer is paid £500,000 in advance. Developer should receive £4.20 per unit. So there will be no royalties until there are 500,000 / 4.2 = 119,048 sales. We will call this the ‘break-even’ point.

Advance Royalties 2 The majority of games do not reach the break-even point. However, advance royalties are rarely paid back to the publisher, even if: The game doesn’t reach the break-even point (the publisher doesn’t recover the advance royalties). The game is cancelled (‘canned’) by the publisher. This insulates developers from the unpredictability of the games market. Publishers publish a large number of games to protect themselves. The minority of games that do break-even will pay for those that don’t.

Sales Examples Sample sales figures using our example: Advance Royalties Break-even Sales Actual Sales Further Royalties Publisher Gross Income Publisher Net Income £300,000 71,000 100,000 £122,000 £1,400,000 £978,000 £500,000 119,000 50,000 £0 £700,000 £200,000 £1,000,000 238,000 60,000 £840,000 £-160,000 500,000 £1,100,000 £7,000,000 £5,055,000 Note that the publisher only has a negative income when the sales fall far short of the ‘break-even’ point for the developer.

Implications for Employees The figures in the previous table are before costs. They do not tell us if the developer or publisher are making a profit. In general, developers do make a profit if they exceed their break-even points. If you are paid bonuses as an employee, you can only realistically expect them to be large if the ‘break-even’ point is far exceeded. But check your contract and with also with management, don’t assume. To get an estimate of the advance royalties: Total staff salaries for the project x 2

Implications for Job-hunting Games development companies are stable environments so long as they have publisher contracts. They are not directly affected by having low sales figures, although it will make future contracts harder to come by. Look for games companies with several games in progress. Be careful with very small companies. Try to join at the beginning of a new project rather than at the end of an existing one.

The Games Industry Reality Check: Game Development != Game Playing! Games are developed and designed by a team. Hard work – but the rewards are there. But… Rewarding, exciting, varied, relaxed, and all about games…

Design & Development Summary

Game Design Designs go through several stages: Proposal/Pitch to Game Design Document First drafts must capture interest Detail is not important Excitement, intrigue, and marketing is… Later designs must be comprehensive Otherwise expect unforeseen problems But don’t forget the fun

Game Development Roles – Programmers – Artists – Designers – Management, Testers, Musicians etc. 18 months of team working – like a film Publisher provides funding Developer must satisfy publisher Royalties (+bonuses?) if game sells well

Programming Games are large and complex programs Programming Tasks: 3D Engine Game logic Tools and technology Also, physics, networking etc. Consider programming at design time Code reuse is good, but so is innovation Strike a balance Expect trouble when you first reach program testing…

Artwork 3D artwork is half-sculpture, half-architectural drawing It is highly skilled, don’t expect to be able to do much yourself But do try to understand the processes It will make you more productive in a team Programming, art and design meet during: Game design Level creation Testing

TL-Engine A simple, but realistic environment For Assignment 1 you should know about: Initialisation and the game loop Loading and creating models Controlling models and cameras Coming next: Parenting and nodes Coming soon: Basic collision detection / resolution

Learning and Teaching Lectures give you key information. Practicals allow you to apply the information. Play allows you to see what happens if...

Or to put it another way... Lectures are easy to forget. Practicals let you learn. Keep playing (= experimenting) and you will master programming.