CO1301: Games Concepts Dr Nick Mitchell (Room CM 226) Material originally prepared by Laurent Noel & Gareth Bellaby Lecture 5 Sales Contracts - A Primer plus Design & Development Summary (Revision)

On the Shelf…  A typical game will 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! 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 = £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 £300,00071,000100,000£122,000£1,400,000£978,000 £500,000119,00050,000£0£700,000£200,000 £1,000,000238,00060,000£0£840,000£-160,000 £1,000,000238,000500,000£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  18 months of team working – like a film  Publisher provides funding  Developer must satisfy publisher  Royalties (+bonuses?) if game sells well  Roles – Programmers – Artists – Designers – Management, Testers, Musicians etc.

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.