The previous decade brought us the mega-publishers, like Activision and EA. But it’s a new decade now. A new world even. In other media, starting with the written word and music, the mega-publishing model has started destabilising. There are serious questions over why publishers continue to hold onto all the costs and risks themselves, becoming increasingly inflexible and anachronistic places for games, and the pressure to change is emerging.
Will game mega-publishing continue to have a role in the 2010s or will it be side-lined? What might that role be?
What Mega-Publishing Is
The publisher used to be the organisation that funded third party developers’ work and then generated profit from it. Mega-publishing is different in that it vertically integrates the development as well as the publishing activities. Nowadays, most publishers maintain their own development farms, and many of these farms are studios that were acquired over the years.
The simple fact is that in order to create a Call of Duty: Black Ops, you need a ton of cash. You need it to employ the people who will make the game. You also need promotional activity to seed the market and build up anticipation. You need to be able to spread a game of that scale as far as humanly possible to have a chance of generating a great return on investment. All these activities are pricey.
It long ago became far too risky for publishers to trust the most crucial part of their model (is the game good?) to external developers. Publishers used to spread their bets across 30 or 40 games a year, costing $1m each, so the risks were easily managed. Nowadays, when they only have enough resources for a handful of big (> $20m) bets each year, only a fool would trust that to an external party.
The resulting system is reasonably similar to the old Hollywood studio system. The idea is to gather as many of the aspects of the business under one roof to reduce risk and increase profitability. Every part of the game-making chain, from the initial idea through to the QA of a gold master release, is a salary that the publisher pays and an aspect of the process that they manage. Developers are simply hired and released as employees, or retained if the franchise that they worked on becomes successful.
The game publisher provides the money, talent, financial and legal skills required to navigate the complicated world of retailing to the public, and that model has worked very well for many years. It is not particularly stable for any one company, but as a model overall it works as long as players want to play games.
Weaknesses Of Mega-Publishing
As we move into the 2010s, however, mega-publishing is starting to look awfully expensive. A lot of competitive pressures are circling around game publishing that never existed before, and the mega-publishers are showing the prime problems inherent in maintaining large organisations. Like the studio system, questions are being asked as to whether it’s really so smart to maintain giant development campuses, or whether their business should really depend so heavily on lumbering platforms and the lottery of Christmas-based economics.
Among the weaknesses of mega-publishing are:
Walled-Garden Thinking: Publishers may consider themselves safe from the online space because they operate inside walled gardens like the Xbox 360. While the internet and the iPhone may indeed be the wild frontier, there will always be a market for console games, so the logic of sticking with what you know seems to make sound sense. Not so much.
One of the evolutions snapping at the heels of the console market in particular is that of app stores. There are partial solutions to the app store idea on console platforms, such as DSiWare, but no publisher has come close to doing what the Apple app store does yet. The console stores are over-managed and trying to find value for individual games rather than the Apple approach of letting developers set their own pricing and leaving it to the customer to sort it out.
That innovation will eventually come, however, and then the number of competitors in those markets is going to explode. Prices will drop, the need to innovate will grow quickly, and the players will love it. Publishers, on the other hand, will hate it because they won’t be able to easily dominate it. And yet the console platforms will have to take their app stores very seriously or risk being left behind.
Ideation: In game publishing the majority of work is either developed in-house or commissioned, and it tends to be the case that the ideas that drive that work are internally generated. Original ideas only come from the outside if their creator has a very long track record or if the game is already a proven success in some other format.
A reliance on internally-driven ideation is the major weakness of mega-publishing. Any large organisation will tend to be poorer at ideation than a smaller one because of the political and institutionalised nature of its culture. Factors such as whether ideas fit into the overall brand of the company over-ride the championing of the exciting and the interesting, and that leads mega-publishers down the path of no-brainers.
In most industries, startups are almost always better at ideation than large organisations, and games are no different. There are many indies creating great games every day that the mega-publisher culture simply rejects as too zany. In the process, they miss out on the next big thing.
Flexibility: In any organisation with thousands of staff working toward a common goal it is almost impossible to avoid turning the business of making into a process, but that also sacrifices flexibility. It means that the company gets mentally stuck in doing things a certain way, and thinking that their business can only function in that way. They become less in tune with the market.
For example, aside from EA and Disney’s acquisitions, very few of the existing mega-publishers have managed to do anything at all in the social games space, even though it has existed for more than three years. Most of them have stayed away from the whole social space and stare uncomprehendingly at it. It’s a similar story on the iPhone, where most of the big efforts by established publishers have been inconsequential, and will no doubt also be so on the iPad.
Mega-publishers are very bad at reacting to new markets and taking real chances. Like any big company, they become afraid and instead spend a lot of time prevaricating over what they might do, rather than actually trying. They are terrified of what might happen if things go wrong, and get all wrapped up in imaginary concerns rather than leading the charge.
Automation: Functions that publishers have traditionally performed are becoming automated. App stores are an example of platforms increasingly side-stepping publishers, and going straight to the source for new games. Another is cloud hosting. With innovations like these, and many more, the bespoke advantages that publishers used to offer suddenly become a whole lot less compelling.
The publishing universe typically charged a lion’s share of the revenue from a game to generate its profit, but in the automated universe there is simply no justification for doing so. Automation of what were once bespoke functions undermines the power of the publisher quite severely because it opens the doors to more competition from newer heads that think in fresh and exciting directions.
Pretty cool if you’re an ngmoco. Not so much if you’re an old school publisher like Take Two however.
After The Studio System
You might assume that going freelance is the model that game publishing should follow, but I’m not convinced. Hollywood eventually dropped the studio system in the 50s owing to a number of factors, including legal pressure, and moved over into a financier-backer model instead. Rather than having movies developed by stable studios, the industry became almost 100% freelance. With games, however, there are a number of reasons to suggest that such commoditisation of expertise will never happen.
Firstly, the primary reason why the freelance model works is that the film industry is highly centralised. There are only a few cities around the world where film companies operate, and that is largely because the people that work in the industry live in those cities. It is vastly more convenient for a producer to audition actors, hire crew and meet with financiers if everyone lives in the same town.
Game developers are not geographically so close. Unlike films, game development takes a long time and requires significant office space. That often makes the case for an out-of-town rather than in-town location. While there certainly are advantages for game developers to cluster, as there are in other technical industries, historically they have not – and that is not likely to change in the near future.
Secondly, games have a high degree of hidden knowledge around them, unlike films. With films the engine of production is always the same (cameras, editing equipment, sound, SFX), so everything is pretty interchangeable. With the exception of the main stars, everyone on a film is replaceable and no job is that hard to replicate should something go awry.
Games, on the other hand, are based on technology engines. A lot of what makes those engines work resides in the minds of the engineers who developed them, and it takes a long time for new engineers to get up to speed with existing code-bases. There are few, if any, standards, and even software reuse and middleware only partially solve that problem. It is still ultimately an industry that develops bespoke rather than off-the-shelf because bespoke gets better results.
This difficulty is the reason why freelance programming has never really taken off, and it means that every project needs people to bed in, a high degree of organisation, and a strategy to cover the research and development gaps that will emerge. Freelance work in games only exists with the visual and audio departments as a result, as they produce the parts of the game most amenable to turning into commodities.
Finally, the game market is much more franchise-driven, like comics, than project-driven like film. Continuity of successful franchises over dozens of releases is the goal of all publishers. They want Marios, FIFA Soccers and Gran Turismos because that kind of continuity really does sell. What they don’t want is single-shot releases.
Continuity needs sets of hands that work on the franchise for years, and sometimes decades, because a continuous franchise is so much more than just a game that players play. It becomes a part of players’ lives in a special way, and they want to sense that signature hand of the creatives in each game. It is very difficult to move a franchise around from studio to studio, or team to team, without something ineffable being lost along the way.
The Single Franchise Publisher
The desired relationship that the publisher wants with the player is one of continuous engagement. Like a TV series, what they want is to be able to set up a team and then have them knock new releases out of the park in the franchise for as long as possible. It’s unusual to achieve do that with a freelance or per-project team.
What the TV industry often does is form production companies that stay together for a long time and handle one continuous single franchise. That is, I think, the sort of model that a lot of game publishing will ultimately adopt.
I see it working like this:
There is only a difficult future for the vertically integrated mega-publisher unless it also owns a platform. The gains from that model do not outweigh the overheads, and the lack of flexibility that it induces means companies operating in that model are slowly relegating themselves into the past. They are just too inflexible to respond to the changes in the market, and too culturally restrictive to permit the sort of ideation that they need to thrive.
At the same time, the companies that we know of today as mega-publishers are not going to implode. Instead, I think there is a happy middle ground. I call this model the single-franchise publisher.
In this model, each franchise is its own independent entity, publishing multiple games from the same game world onto many platforms, and even behaving as its own platform. If you were such a company you might have a massive multiplayer universe based on a steampunk setting (for example) and then develop console games, board games, card games and spin-off TV series from that one universe. The universe is the franchise, but you create many games from it.
The ideal is to forget developing completely stand-alone games. While many developers have done this over the years, it rarely works out. Some studios manage it, like Popcap, but the bulk of them end up creating one good game, a couple of middling ones, and then going out of business. Even passionate indie developers like Introversion have found the stand-alone model of operating hard going because it means they are going out to bat with a new game and new marketing story every single time. The lack of continuity between games means that there is often no marketing story to bind the fans and the company together.
The single-franchise approach, where the engagement with a world never stops, is the foundation of a marketing story that a publisher can build on. It builds fans rather than projects, and yet it doesn’t require an over-arcing campus structure as we have with the current mega-publisher model either. In some senses, the model is similar to that pursued by board game and roleplaying game publishers.
The relationship between a single-franchise entity and today’s mega-publishers would be one of patronage and backing, like the Hollywood TV system, but without the dominating ownership of the current system. The mega-publisher therefore becomes something of an umbrella entity for a number of single-franchise operations, reducing their internal staff overhead and becoming more like the industry bank of old rather than a one-stop shop. Vertical integration is simply too hard and too expensive for most companies to handle, and in the next decade I think we’re going to see more mega-publishers trying to get away from its clutches.
Single-franchise publishing offers arguably the best way to get there.
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"Unlike films, game development takes a long time and requires significant office space."
"With films the engine of production is always the same (cameras, editing equipment, sound, SFX), so everything is pretty interchangeable."
How can you say such blatantly false statements - clearly revealing you have no idea how films are made - and keep a straight face?
Posted by: GRGM | 14 February 2011 at 04:39 PM
I'm not sure I follow your meaning?
Film production tends to have small pre-production/head count periods which might take a long time, but when they move onto location they become big staff number operations. After production wraps and the majority of editing, scoring etc happens, they become relatively small scale again. The bulk of the employment money is spent in the middle.
(Animated films are probably different, and no doubt very SFX films too)
Games are very different. Staff sizes tend to be more stable, but working over much more extended periods. Teams typically only increase in size, so the pressure for permanent office space is much higher.
Posted by: Tadhg | 14 February 2011 at 04:48 PM
Movie preproduction often solves the errors of being creatively nimble as well. Unlike with publishers, who work in-house on overthinking what the next Mario plot is, movie studios buy hundreds and hundreds of scripts, then shop all the ideas around to producers/directors to see who likes what. In other words, movies get to approach preproduction as a cheap gobbling process. Afterward, if the idea is too risky to fully finance then the film can stay limber instead (ala the Coen Brothers--they keep their production costs low so as to get easy greenlights)
Posted by: Oscar Baechler | 15 February 2011 at 12:34 AM