8 steps to a successful studio
Friday, 6th July 2007 at 1:41 pm
Dan Rogers of Interactive Studio Management lists the eight business laws every independent developer should abide by…
A television sports commentator was recently discussing a professional coach’s unusual system of winning. Rather than studying the games his team had won, this highly successful team coach tried to better understand the games his team had lost. His reasoning was that if you could prevent your team from losing, by default you could cause them to win.
It’s not bad advice for video game developers either, especially considering the risks of developing games these days. Below are a few of the snares that have caught developers in the past. Like a successful team coach, understanding yesterday’s failures may help you to win tomorrow.
Invest in people
Entrepreneurs establish development studios for a variety of reasons, but often it is because they value independence and the chance to achieve greater financial rewards. As a result, these highly motivated individuals are often reluctant to add personnel, even when they know they need help. Admittedly, cash flow is vital to any small business, but these days game development is a highly complex, integrated business, especially considering next-gen platforms. To develop a successful title you need experts throughout the company. So don’t wait until it’s too late to add knowledgeable people, and when you do, value their contributions and reward them proportionately.
The costs of running a studio can be accurately and reliably forecasted, so take the time to understand your costs, including burdened overhead, targeted profit margin, and contingencies. Don’t be tempted to underbid a project because you are afraid of losing work. It is better to walk away from an opportunity that doesn’t make financial sense than it is to take the job and lose money. Also, keep in mind that studios making sound financial decisions are more attractive to publishers. The aroma of stability and structure gives publishers more confidence that the money they are investing is in good hands.
Don’t let publishers speculate with your resources
It is not uncommon for individuals working in a publishing organization to ask you to develop concepts, art, and pitch materials, hoping to convince their management that they have a good idea. While it is important to be a flexible, reasonable business partner, you are under no obligation to give publishers work for free. Avoid risky bootstrapping situations if you can, even when you are told that the publisher is investing their time as well.
On the other hand, sometimes it is necessary to work on concepts in order to win a lucrative project. In these situations, make sure that the publisher’s executive management has already approved the plan. Even then, don’t spend too much time or money. The better plan is to ask the publisher to pay your expenses before you begin. If they say no at least you’ll have a better idea of what is real and what is not.
Also, remember that the more time and money you invest in a project before you are paid, the less leverage you will have when it comes time to negotiate the contract.
The video game business is highly volatile, and even stable publishers experience frequent staffing and financial changes. When a publishing partner talks about building a long-term relationship, remember that without solid assurances of future work you are under no obligation to place your financial future in their hands. Also, remind yourself that the person asking you for a monogamous publishing relation probably won’t be the one telling you that your project has been cancelled or that the publisher is unable to pay you because of financial difficulties. The more you amortise your risks across multiple projects and publishers, the more stable your business will be. And because publishers are motivated to take valuable resources away from their competitors, an added benefit is that you become a more tempting acquisition target.
Don’t make the mistake of telling a publisher that you can do anything, hoping that they will be impressed with your studio’s flexibility. Publishers rarely look for developers who can do anything. What they want are developers who are able do specific things. Generalise and publishers will have difficulty matching you with a specific project. Specialise and you will find that publishers respect your work more, and the easier it will be to build a successful reputation. The more successful your reputation, the more in demand you will be, and interestingly enough, the more opportunities you will have in areas where you are not considered an expert.
Remember what business you are in and don’t get sidetracked with ideas that take you away from your core competencies. The industry is risky enough without adding the complexities of tangential opportunities. At the same time, don’t be afraid to respond to emerging industry trends. Be it is a new platform or genre, you need to keep ahead of the curve – just don’t stray too far from home. Too many before you have done so and become hopelessly lost.
Invest in technology
Publishers look for technology leaders because it is one of the most difficult and risk-prone areas of the industry. As a result, you should continually sharpen and upgrade your tech, even when licensing from a third party. Developers who fall behind technologically rarely recover, so invest in your engine and tools. They are some of the most potent weapons in your competitive arsenal.
Unfortunately, from a publisher’s perspective, you are only as good as the last game you developed. Choose your projects with care and finish them well, as if your business life depends on it, because in many respects it does.
Whether you are developing multi-million dollar next-gen games or downloadable content, the more you understand of your failures, and the failures of others before you, the greater your chance of success. English literary scholar and Chronicles of Narnia author C.S. Lewis once wrote, ‘Failures are finger posts on the road to achievement’. That’s good advice for all of us.
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