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Old 12-13-2010, 05:18 PM   #1
Red Cloud
Posts: n/a
Will Ouerlight get royalties?

Hey folks,

As it has been asked in several threads, I thought I should explain the situation (and, there's a lesson for any would be developers in it too).

For anyone that can't be bothered reading what follows, the quick answer, is NO.

Firstly, Ubisoft funded Outerlight to develop BGT (they did not buy Outerlight). The original deal was for around 4.5 million dollars, and if they had stuck to that deal, BGT would have probably been a fantastic game (or should I say, even more fantastic! ).

As an aside, they also promised marketing (ho ho), and that OL would retain the IP, both of which promises were broken.

So, after Outerlight had delivered everything that Ubisoft had asked for in pre-production, Ubisoft (in their infinite wisdom) decided the game was no longer going to retail (boxed copies), and that the budget should be cut to 2 million dollars, less than half the original budget. Their logic was...and get this...nobody buys multiplayer only games...ha ha ha. I guess they had never seen Counterstrike, or Team Fortress, or Left for Dead, or...

The immediate consequence of this was that OL had to lay off some staff, and we had to pitch a new version of the game which could be delivered for the new budget. Ironically, had they given us the 2 million & let us get on with making the game, we could have still delivered 8 maps, and the rest of the content. However, they always wanted to re-work every aspect of the game, over and over, which meant a great deal of inefficiency, and meant that we could only deliver 3 maps.

Back to the royalties. The money they gave Outerlight to develop the game (which ended up being 2.5m as we managed to squeeze more blood from the stone later in development) was an advance on royalties, which means that while it sounds like Ubisoft are paying for the game to be made, in actual fact they are lending OL the money, and OL have to pay for ALL the development costs from their royalty share.

OL's royalty share is around 20%, which means that once everyone else involved takes their cut, OL gets roughly 90 cents per copy sold. However, this money has to pay off the development costs, so until roughly 2.7 million copies are sold, Outerlight will get NOTHING.

Given the game is highly unlikely to sell over 2.7 million copies, the reality is that OL are unlikely to ever see any royalties.

The nature of these deals are amamzingly bad for developers, you'd think that perhaps all the money recouped from the game would be used to pay off the costs, and then any profit would be split, but no, the developer has to pay from their 20%.

This is why, if you look back over the history of games, publishers have got bigger, and developers have gone out of business. This model also means that publishers get bigger financial reserves, and thus keep control of the deals with developers (as they hold all the cash), while developers rarely end up with enough money to ditch publishers & go it alone.

This also answers the question, "why do developers even sign these deals?", well, with only a few big publishers, what choice do they have? If they want to make games, they have to work with publishers.

Please also note, had Ubisoft charged a reasonable amount for the game, like $20, then ok we'd sell less copies due to the higher price, but we'd get roughly $3 per copy sold, and so would have to sell 835k copies before seeing a royalty. Still unlikely, but more likely than 2.7 million copies!

Compare this to the deal if you can fund your own game and distribute it on steam. If you do that, you get 70% of the price on Steam, so if it was $20 we'd get $14 per copy, and the break even would be 140k copies (assuming we spent 2m making the game). If, like The Ship, we spent less, more like 1m, then the break even is a very achievable 70k copies.

As I have said elsewhere, the flaw with this model is the need for funding to make the game. Given that historically developers tend to go bust, banks, investors, and governments are not keen to fund games. This is very short sighted, as while the old situation (publisher funding) meant developers rarely made money, digital distribution has created a real opportunity for developers to see the returns from their hard work & creativity.

The current situation is really pretty appalling for developers, and I hope it changes sometime soon, although I am not holding my breath. I think the only reason developers continue to make games is the passion that we and gamers have for games, and the publishers are happy to exploit that passion.

As a footnote, I would not have minded Ubi cutting the budget if they had been in financial trouble. However, when we signed to them they'd made a profit of 240 million euros, and just recently they announced they are spending 62 million euros on "restructuring". Now, I don't know what restructuring involves, but I wonder how many developers out there can afford to waste 62 million on moving desks & chairs around...I suspect the answer is...none.

Maybe I should be proud and think that 2 million of the re-structuring money is money they promised to us, so I guess I am paying for someones new walnut desk & gold plated chair! I hope we at least get a "donated by brutalising Outerlight" plaque on it...

Being balanced, I should say that Ubisoft did fund the game, and so I should be grateful for the games existance (he said through gritted teeth).

From the point of view of you, the gamers, I wouldn't worry about the royalties, all that matters is whether you enjoy the game.
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