What Games Are: Games And Money Are Still Weird

Editor’s note: Tadhg Kelly is a veteran game designer and creator of leading game design blog What Games Are and manages developer relations at OUYA. You can follow him on Twitter here.

Suppose you have a passion-project game, an interactive story you want to tell or something similar. You want to develop it for iOS. You want it to be “console quality” by which you mean rich in graphics and sound and with a lengthy amount of gameplay. You want it to be cool. Given how everything has liberalized in the gaming market over the last few years, and how many million devices there are out there that play games you would think that it would be much easier to get a project off the ground than it used to be.

You’d be wrong. It’s still something of a minor miracle that games like that manage to get made at all, even with the availability of cheaper tools and better distribution. It’s still often a story about how a team worked evenings and weekend for two or three years just to get a demo version of their game made so that they could go to Kickstarter, or speak to a publisher.

Getting an original game started is just not a straightforward process.

Disconnected Ambitions

Games and money have long had a weird relationship. Many studios have found financing but lost the rights to their work. Many are the studios who found themselves working as de facto service departments for larger entities. Many many are the studios who have been told over the years that there simply isn’t any of that kind of money to be had for the kind of game that they want to make, and they should focus on something else.

Sometime there have been viable publishing layers, other times not. The AAA console-game market, for example, used to feature third-party development deals between studios, publishers and platforms. Nowadays most of the publishers simply do the development in-house, leading to a closed culture.

Sometimes financing has mandated creative control, or even commissioned projects. In the web portal business, for instance, many platform holders dictated what games they wanted to fill certain slots and farmed them out cheaply. They had very little interest in creativity and often the scale of what they paid made little or no sense for medium-sized studios.

At other times the floodgates have opened. 10 years ago the notion that venture capital would invest in games was laughable. Then Zynga and Playfish happened and piles upon piles of VC money flooded into the social game sector. Something similar seemed to be happening in social casino until relatively recently, and still does with high end deals like for Supercell. But still few would invest in making a graphical adventure game, say. Those are still thought of as weird.

A lot of the reason why comes down to creators and financiers having very different priorities. Any financier wants to “invest” in the truest sense of the word. It’s not the attraction of an individual game or celebrity designer that makes up their mind, but franchise or exit potential.

They see investment in a game as a long-term thing, a way to build up something that will last 10 or 20 years and make billions in the process. The game itself becomes a kind of market of play, sometimes actually so, and in that model the developer is a kind of play-provider. Fundamentally the idea from the financier’s perspective is to keep players playing and extracting value forever.

Whereas many game makers don’t care about that. They want to be successful, but in the eyes of the community and the press. They want to be getting the plaudits and the game-of-the-year awards. And they don’t want to get trapped into making sequels to that one game they invented one time. They basically have artist mentalities, and their more story-driven games especially are intended to be consumed more like books. Once done, the game maker wants the player to move on to his next project.

And that’s why passion projects are such a difficult sell. Investors tend not to want to fund them because they’re just lottery tickets. Investors prefer platforms and platform-like propositions that have prospects. Games where revenue and long-tail opportunities abound, or services that support games. In a sense artistic ambition is nice, but the opportunity may not make sense for them.

Patrons

Various parties have recently attempted to square the games-vs-money weirdness. In the wake of the end of third party publishing at scale, various boutique publishers have arisen in mobile and other markets (for example: Tilting Point). Their mission tends to be to provide financing for developers while at the same time maintaining their creative rights, although exactly how viable that proves over the long term is unknown.

Others (such as Standfast Interactive) have attempted to use a mezzanine financing model, or to provide a semi-freelance publishing-as-a-service model. In that model the financier uses systems similar to the bond system found in the movie industry to ensure completion and provide a sense of security for investor and game maker alike. None of those schemes have really taken off though because they tend to be complex and the relationships that they set up can be adversarial.

In all honesty the problem tends to be that most such schemes require that a game maker has at least a conversational knowledge of how finance works, which they often don’t. Although they are both in technology businesses, game makers aren’t usually startup-founder types and commonly know nothing about what convertible debt is, or how financing options can be beneficial or no.

They tend to need financing to be much simpler. Many indie developers, for example, prefer to work in ad hoc arrangements where team members all get paid simple revenue shares because that makes sense to them. They don’t really expect to be successful at scale and often don’t understand what exactly scale would bring other than headaches.

Fundamentally the developer just wants a check to fund making their damned game, and to not get screwed. They want patrons and supporters rather than investors as such. Patronage with a significant possible upside, but more importantly no hassle. For most financiers that’s just not an inviting proposition.

Crowd As Patron

That’s why crowd funding is so much more attractive to many game makers than any kind of professional financing. It gets the middlemen out of the way, leaving the maker to focus on just the product and the audience. And with little chance of getting screwed over.

Yet does crowdfunding really offer the scale that many passion projects need? For a game like Republique $555k has been enough to fund an initial episode, perhaps two, yet its developer still needs a lot of people to buy season passes to fund its completion. For a game like 1979, $300k wasn’t enough given the graphical ambitions for the game, and even despite a lot of press attention urging readers to back the game about the Iranian revolution there wasn’t enough support.

The difficult truth is that while there are many game makers out there for whom passion-filled story-led games are the future, the crowd may simply not be big enough. Their ambitions to go all big-console-style still need considerable financing, yet at the same time the market for that money is just as awkward and strained as ever. Here’s hoping that it starts to resolve itself in 2014.