It’s easy to assume securing finances for your exciting new game project is prohibitively complex. But as numerous experts tell Will Freeman, there’s plenty you can do to find your way through the funding maze
While we absolutely live and work in the era of accessible game technology, for most professional projects, simply reaching an audience means spending more than a penny or two.
Securing cash can be bewildering, intimidating and time consuming, of course. So how do you pick and secure the method of funding that best matches your game and studio?
To understand how best to approach securing funding, it’s first important to know how the relationship between the games industry and the hands at the purse strings has evolved. The medium has perhaps been defined by diversification more than any other trend in recent years, as gaming’s audience, platform spread, studio models and subject matters have all continued to expand in their make-up. And it’s a change that is going well for games.
“There are so many directions the industry is moving in,” asserts an optimistic Jaspal Sohal, head of games and digital at UK not-for-profit creative industries support body Creative England, which facilitates various funding opportunities for games makers.
“Then, when you then start to look at the numbers both in terms of audience and market value – often exceeding other entertainment sectors – suddenly everyone from policy makers to investors and creatives are getting excited about what the games industry represents.”
And the power of that diversity doesn’t just mean more money in a single pot. Things may be more complicated as a result, but, through necessity, those interested in funding games have had to reflect the industry’s knack for variety, meaning more options for games makers.
A RUN FOR ITS MONEY
“Firstly, games and studios being so much more diverse now has meant that there are more diverse options for funding,” confirms developer and consultant Ella Romanos, who has experience of the full remit of making games through to supporting developers applying for funding.
“Ten years ago, budgets were high, barriers to entry were high – [due to] closed platforms – and risk was high.”
Now, of course, the aforementioned diversity is everywhere, from budget size to the make-up of the game-playing demographic.
“This provides much more opportunity for different funders to enter the market, and to take different amounts of risk,” adds Romanos. “This change has also meant that developers can stay in control more. With smaller budgets and open platforms, they can get their games to market without relying on anyone else.”
Whilst that doesn’t mean those developers don’t need funding and support in other areas, such as marketing, they are today, offers Romanos, in a better position to negotiate. That in turn opens the doors to huge variety of options in terms of how third-parties become involved with the development of a game.
“This has meant that funders have also evolved to suit this new need – some provide funding only, some provide marketing only, some get involved from day one, some only get involved once the game is almost at market,” she says.
With options, though, comes choice, and when it can feel like you’re betting your game and business on the funding model you pick, making the decision is rarely easy.
DEVS CAN BE CHOOSERS
Fortunately, the solution to the dizzying array of choice is a simple one, even if it must be balanced against the cost of time to market and the potential for a project to sit in limbo.
“The best approach is to do your research thoroughly into the options that are available to you,” advises UKIE CEO Jo Twist. “Carefully think about where you want your business to be in six months, two years, five years’ time, and look at the funding method that will get you there.”
Your business model, states Twist, can also inform what options your team may pursue.
“Small and micro start-up studios will benefit not only from the financial assistance of the new [UK, public] Games Fund, for example, but also from the mentoring and business skills that will be invaluable to a young company,” she adds.
In the UK at least, funding offerings exist for all studio sizes, with everyone from new micro studios to established triple-As eligible to apply for video games tax relief, if they pass the required ‘cultural test’. Some 90 games have already received interim or final certification as of June this year, and, says Twist, benefits to the wider industry are already being seen, with studios able to hire more staff as a result of the funding, and to secure loans against confirmed tax credits.
“This model is common in the film industry and we are seeing more companies now focusing on this kind of financing for games businesses,” Twist says. “Always look at the R&D tax credits if you are doing anything technically that you think could benefit from that relief – but get advice if you intend to get your video games tax relief too – you can’t claim on the same costs.”
Romanos also echoes Twist’s suggestion of taking time to carefully narrow down the field of funding options.
“Whilst there are a lot of funding options out there, they mostly have quite specific remits, and therefore by understanding those you can quite quickly narrow down to a small set of options that are suitable for you at any point in time,” she states. “The challenge is in gathering enough information to understand each fund or type of fund enough to do that.”
FOLLOW THE CROWD?
There’s remains another option, though. And while it’s transgressed from headline hogging sensation to a more quietly established platform, crowdfunding remains a tempting option.
“Crowdfunding is definitely still a viable and relevant option for games companies, especially in doing that early signal test for potential audiences,” says Twist. “Just this year, Playtonic’s Yooka-Laylee reached its crowdfunding target of £175,000 in 40 minutes and has gone on to raise over £2m from over 73,000 donors.”
And crowdfunding is no longer limited to Kickstarter, with the approach enjoying it’s own diversification. Now platforms use crowdfunding to support loans and provide equity-based investment. Again, crowdfunding is a place with no shortage of variety.
It may sound so simple to as to be absurd, but taking the right approach to funding also means understanding what you want to fund, and there are many stories of developers missing an opportunity as they solely focus on their game.
“The game is just the start and I still think a lot of developers overlook this,” confirms Creative England’s Sohal. Often, in his experience, developers leaving behind a staff role at an established outfit to go it alone can begin to think with a little too much focus on just their game.
“There is an entirely unique skill set they need to acquire and that’s all about managing the business plan and delivery model,” Sohal says. “It’s surprising to me how many veteran developers still take the view of ‘we’ll release it and see what happens’.
“I can tell you what will happen right now – nobody will know about it and nobody will care. Managing the non-development aspect of a game requires as much attention as the technical and creative aspects and it’s often overlooked.”
And if you’re looking for private investment from VCs, angels and the like, the message is even more stark.
“We invest in companies, not games,” affirms Paul Heydon, partner at London Venture Partners, a seed fund focusing on the games sector. “We look to back the best founders with big ambition. We bring many years of experience, long-standing relationships and a track record of success unmatched by any other team in Europe.”
And Heydon has some advice born in the very heart of that experience.
“Really think through why you believe you will be successful, and what are the reasons you might not be; how are you dealing with those?,” he said.
That should give you plenty to go on, if as you read this, you’re considering your route to funding success. But if you’re longing for more, over the page you’ll find dozens of tips from every space in the games industry, offering a bounty of insights into approaching the funding maze, and making your way through to the exit, hopefully with studio ready to grow.