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"Miller Time" - The Business of Designing Games

by Scott Miller

Note: This is not really an "article", but rather an archiving on the now defunct Miller Time column. It was a short lived column, with only the following three making it live:

 

Convergence, or There and Back Again

Just wanted to start off by saying thanks to Jason Della Rocca for including me on a glorious panel of peers he moderated at SIGGRAPH last week. It's not every day I get to meet industry legends like Raph Koster, Lorne Lanning, Warren Spector and Will Wright.

This month, the prolific and always thoughtful forum poster, Raphael van Lierop, asks several questions relating to cross-industry licensing:


Q: While perusing the news at GameSpot, I noticed announcements of two big-budget movie productions of games: Return to Castle Wolfenstein, and Aliens vs. Predator. This raises a few interesting questions. How will this impact the development of game scripts, as intellectual property (IP) holders increasingly demand their games support movie tie-ins an vice versa?


A: I think you're right in thinking that more games are being developed with a movie follow-up in mind, and vice versa. We've done this ourselves and will continue to make games that are purposely designed to make the jump to the big screen. Hollywood has a lot of eyes on the game industry now, and good properties naturally attract interest. E3, for example, is now visited by dozens of movie people looking for properties to pick up, and this is how one of the projects we were involved with, Max Payne, was spotted.

The bottom line is that the same hooks that make an IP an attractive movie candidate are often the same hooks that help make a game successful, such as having a unique, strong character-focused story, and having a strong story. There's a lot of cross-over between the game and movie industry because in both cases we're telling stories through characters, dialogue, events, and settings.

Not all games can be designed with the idea of eventually taking the IP to the big screen (Tetris!), but story- and character-oriented games are obvious candidates.


Q: How far back can you trace the trading of ideas between movie, to game, to movie, to game, to movie? What does this say about the State of the Art?


A: I'm not a historian on the subject, but it seems like Tron was the first movie to be inspired by the game industry. And then the movie Tron inspired at least two arcade games that I remember, and a Tron computer game is currently in development by Monolith Productions (who also make No One Lives Forever which is a spin on the James Bond style spy movie).

I think the message here, again, is that movies and games can have a lot in common, and can give and take from each other. Also, it's not like this hasn't been happening forever between movies and novels and comics. The game industry is finally joining the party in a big way.


Q: If movies continue to draw inspiration from games, and games from movies, where will the original content come from?


A: I don't see lack of original content as too big a problem. The game industry will always have original games and the movie industry original movies, and the hits from each industry will have a good chance of crossing over to other entertainment industries.

As a side comment, I generally do not think it's a good idea for the game industry to look to popular outside licenses, with a few exceptions: kids licenses (Disney, Sesame Street, Harry Potter, etc.), sports licenses (Tony Hawk, Official NFL/NBA/MLB, Tiger Woods, etc.) and a very, very few mega-licenses (Star Wars, Star Trek, Batman, Spider-Man, etc.). Let me explain...

Most licenses based on movies or books do not have a mega-large fanbase like Star Wars. So, when a game comes out based on the Blair Witch Project, Heavy Metal, Men in Black, or Wheel of Time, then unless those games are super-stellar awesome (and that's almost never the case with a licensed game), then the game will only appeal to that sub-section of the fanbase that also plays computer or video games. So, right away you've taken a good-sized section of the fanbase out of the potential market segment who will even consider buying the game. So, the bottom line effect is that you have greatly shrunken the segment of game playing consumers who will consider buying your licensed game to a number less than the total fanbase for the license. Non-fans of the license are very unlikely to buy a game based on it, because it just doesn't interest them.

So, in most cases, a license doesn't expand the potential customer base, but instead LIMITS it. This is why most licensed games do more poorly than original games (those games borne in the games industry itself). In fact, a recent survey over the last three years shows that 80% of the top ten charts has been dominated by original games. Why would this be if a license adds to a game's appeal?!

The fact is that licensed games represent only one-fifth of our industry's most successful games, because licensed games carry with them an invisible ball-and-chain that makes it very difficult for them to reach the top. Looking at the most recent PC sales list I have access to, I see only three licensed games in the top 20, at positions #4 (Neverwinter Nights-and many buyers of this game do not know it's associated withe the D&D license, I bet), #17 (Harry Potter), and #18 (Star Wars: Jedi Knight 2). The rest of the list includes original games like The Sims, GTA3, Warcraft 3, Zoo Tycoon, and Dungeon Siege.

Most of the industry's biggest franchises are non-licensed games, like Zelda, Tomb Raider, DOOM, Half-Life, GTA3, Final Fantasy, Resident Evil, Unreal, Duke Nukem, Everquest, Warcraft, Diablo, C&C, Age of Empires, Metal Gear Solid, The Sims, Gran Turismo, Mario Bros., Crash Bandicoot, Sonic, Halo, Pokemon, and a fistful of fighting games.

So, if licensed games fair so poorly verses original games, why do industry publishers look so often to make licensed games? Sorry, but I do not have the answer to that question...

 

Writers Block & Biz Terms 101

Already time for Q&A number two! The first question is from Wynne McLaughlin.

Q: Fascinating first column. I come from a background in film and television and recently began scripting cinematics and in-game dialog for the game industry. In film, the "high concept" idea is paramount. There are many producers, directors, cinematographers, etc. who come together as a team to get a quality project off the ground, but the initial concept or "pitch" is highly valued since it can, inevitably, create a successful franchise that will continue to make money for years to come. Obviously the IP issue has recently become important and profitable to developers. Historically, creative writers haven't taken part in the initial creation of game concepts unless they were also programmers. Do you think the recent developments could change this?

A: It should. And slowly I think it will. But, the industry is still too young and mostly unappreciative of the importance of a strong underlying story and characters. Instead, games are mostly based on a new technological advancement or twist, a license from another entertainment industry (e.g. movies, books, comics), or just taking a familiar form of gameplay and disguising it within a new setting or half-baked story. You do not see many games started with a strong story as the first building block.

My belief is that a story and gameplay concept needs four to six months of work before any game content is made. This is where you create unique and interesting characters, and give the game a powerful, compelling story. This is also when you define the unique gameplay hooks that set the game apart from the pack. If more developers could take the time to pre-produce their games like this, we'd see far less copy-cats and clones. But, most developers are not given the option to do this because publishers don't yet see the value of spending this kind of time and money on pre-production. So most developers are not given this chance. Publishers should get a clue from the movie industry ;-)


The next question is for Kedhrin Gonzalez, who has a problem typical of newcomers.

Q: I was wondering if you could help with some information on game development? I don't understand most of the business terminology in the game development field. I see these threads talking about business but I am having trouble understanding it.


A: Here's a quick rundown of some common business terms and terms used in publishing agreements:


Of course, there are dozens more of these terms, but they start to get more complicated, and many require an attorney to explain properly. Never sign an agreement without having a good attorney review it first. You'll always regret it if you ignore this advice. Trust me, I know.

 

The Importance of Intellectual Property

As this is the first column, no actual questions have been submitted. So, I'll use one that came up quite often during my visit to E3.

Q: How important is it for developers to own their own intellectual property in today's game industry?

A: There are many important problems facing development studios, like finding publishing deals, getting good royalty rates, and the overall massive task of designing a successful game, but there's one issue that is too often overlooked: Maintaining ownership of your original intellectual property (IP). The bottom line for developers is that it's almost impossible to become a top-tier studio unless you can create, own and control an original IP, or brand.

And, one of the greatest problems facing developers today is that publishers do not want you to own IPs. That's because they want full control of the IP, and they want to benefit from the value that adheres to a successful IP.

A few months ago I took an informal poll among 12 or so knowledgeable, random developer friends, and they all, in my estimation, dramatically undervalued several of the industry's top IPs, like Grand Theft Auto, Doom, Tomb Raider, and Half-Life. All four of these, for example, are $100 million plus IPs, if sold, but the developers I talked to rarely gave these IPs a value above $10 to $20 million, and sometimes much lower!

But this may have just changed. During E3 this year, Take-Two Interactive announced that they had purchased the Max Payne brand and all associated IP rights from both Remedy Entertainment and 3D Realms. All told the price was approx. $45 million. And after the news was announced on the first day of E3, I ended up talking to a number of stunned developers who simply had no idea that an IP could be sold separately -- without the development studio as part of the package -- for that kind of moolah.

The short story is that Remedy, the primary developer, and 3D Realms, acting as producer and design consultant, made a single game, and because we owned the IP we were able to strike gold by selling it. And this is on top of getting an 8-figure royalty from the sales of the game before we sold the IP.

Now, I am not saying this to show off. Rather, I am using our case as an example of why owning your IP is so important. This deal should send a message to game developers worldwide: Do not give up ownership of your IP if you can possibly avoid it. It's even worth giving in on other deal points -- maybe take a lower royalty -- if you can use that as a trade to keep your IP rights.

I've heard other developers tell me that publishers will suggest that they must own the IP because it mitigates their risk. This is complete BS. How does owning an IP make the creation of a game less risky for the publisher?! It doesn't. The truth is that if the game is successful, the publisher wants to own the IP so that they, not you, can get the full benefit of the ballooning value. Here's the question I'd return to the publisher who wants to own an IP that you're creating: "Okay, tell ya what, whoever pays for the game should own the IP, sound fair?" And here's why this works in the developer's favor: Even if the publisher is paying the developer advances, the developer, in the end, pays for the game because those advances are recouped from the developer's royalty stream after the game is released. Only if the publisher is actually paying the cost of development do they have a legitimate case for owning the IP. Advances are merely a loan that the publisher requires you to repay.

Still, even armed with the proper negotiating knowledge, publishers still have the upper hand because they can simply refuse to make a deal to publish your game until you give in on the IP ownership. But, the main point is to not give up you IP rights without a fight, you might be giving away the pot of gold at the end of the rainbow.

Finally, there's a nice bonus to owning a successful IP, and that's that publishers will treat you with more respect. I hear horror stories all the time from developers who get milestone payments late and are treated like slaves. But you'll never hear these horror stories from a developer that owns a successful IP. Funny how that works out.

 

Related Resources/Links

 

Author Bio

Scott began his journey in 1975 creating computer games on a Wang 2000, often staying at high school past midnight soaking the green glow of a text-only CRT, making blips move around the screen. Now he co-owns one of the most successful independent PC studios, Apogee Software Ltd. (a.k.a. 3D Realms Entertainment), creator of Duke Nukem and co-creator of Max Payne. Apogee also pioneered the multi-episode method of selling shareware games, in 1987. In 1998, he co-founded Gathering of Developers, a publisher that was to change the relationship between developers and publishers, and along with that he wrote The Developers Ten Commandments.

Please visit his company page for a much more detailed bio.

 

The opinions expressed in this article do not necessarily represent the IGDA.