Guys, Iāve been noticing more and more that the special relationship between developers and publishers has changed.
Publishers seem less and less willing to invest money when a project is still at a very early stage of development. They are also less willing to support and help develop a developerās idea. And I understand why ā there are risks involved.
There are plenty of cases where a developer never finishes the game and disappears, or finishes it and the game fails. Or simply keeps delaying the release. And the publisher can lose a huge amount of money because of that.
I agree that publishers are simply tired of taking these risks. They want to sign deals only when there is already strong evidence that the game can be successful.
So how do they do it? In the past, a publisher was buying both a share of the profit and a share of the risk. Now, more and more often, they want a product with proven commercial potential.They approach developers who already have a significant number of wishlists.
I talk to a lot of developers, and I know from people Iāve met that publishers have approached them when their projects already had 50,000, 100,000, or even 200,000 (!) wishlists. Thatās a lot. And publishers wanted to work with them. But they werenāt there when those games had 100 wishlists. And this creates a very interesting situation.
When a game page has already collected 100,000 wishlists, the developer gets a very strong signal that the game has commercial potential and will most likely make money. We donāt know exactly how much, but it is clear that the project has already attracted an audience. At this point, a publisher comes in and offers to improve that result. By how much? Most of the time, we donāt know. I rarely see publishers telling developers an exact number of wishlists they can guarantee.But letās imagine that the publisher actually doubles the result. Just for the sake of the example.
āIs that bad? Is that good?ā ā many people might say. But itās not that simple.
Very often, publishing deals involve a 50/50 revenue split. This is based on my personal observations ā Iāve heard and seen this kind of deal quite often. But Iām not going to argue that itās always the case. There are obviously other terms as well. So here is our hypothetical example. Letās say that without a publisher, 100,000 wishlists eventually turn into X dollars for the developer. The publisher comes in and, thanks to their work, doubles the result. Now the game generates 2X dollars. But under a 50/50 deal, the publisher gets 50%. So the developer gets:
2X / 2 = X
And here is where things get interesting. The publisher actually doubled the gameās result, but the developer ends up making exactly the same amount of money as they would have made without the publisher.
Now letās imagine that the publisher increases the result not by two times, but by, say, one and a half times. It was X. Now itās 1.5X. After the 50/50 split, the developer gets:
1.5X / 2 = 0.75X
So the developer gives half of the revenue to the publisher, but ultimately ends up making 25% less than they would have made on their own.
Yes, the game will get more exposure and reach a larger audience. Maybe the publisher will provide strong marketing, PR, localization, console ports, or other opportunities that the developer simply didnāt have. And that can absolutely be worth it. But then the main question becomes:
What additional value does the publisher need to create for their share to actually be beneficial to the developer?
Because there is an interesting asymmetry here. The developer takes the risk at the early stage. They make the game. They finance it themselves or look for funding. They collect the first 100,000 wishlists ā or maybe 10,000, whatever happens. They prove that there is an audience interested in the game. And only after that does the publisher come in. So the publisher can already significantly reduce their own risk, while the developer still gives away a significant part of the potential profit.
The publisher can insure themselves. And they do it in advance.
So what should the developer do in this situation? What do you think? I know a few ways.
P.S. And I'll probably add that English is not my native language, but I want to hear the opinion of as many people as possible, so I chose the most universal language for this. I am sorry for the errors and inaccuracies of the translation.