Pull up a good seat and listen a spell, for a tale of IP there is to tell.
What follows is part one of a two-part series of columns (part two comes next week) written in Develop magazine by William Latham, CEO of Games Audit, a project management and audit operation for the games industry and finance companies. Last week I read Latham's column in the August issue and immediately contacted him asking for permission to reprint, which he kindly granted, along with permission from Develop's editor, Owain Bennallack. For developers who may not be aware of Develop magazine, it's the UK's top publication for game developers, and IMO the best such publication in the world.
On with the tale...
Modern game development
Desperate developers are selling the crown jewels, warns William Latham...
Intellectual property is an interesting one to ponder. When it's right,
it absolutely hits the mark, as with Eidos's Thief and Hitman games.
When it fails, it fails like a lead carrot, such as in the case of
Malice and many others.
Given that there are only a certain number of brands that have the
appropriate 'star quality' across games, books and films, it's perhaps
not surprising how little good IP there is left to exploit. There
cannot be much left in the treasure chest - everything is nearly used
up: Stephen King, Spider Man, Alice in Wonderland, Winnie the Poo,
Catwoman, Tom Clancy, Boadicea and so on. What's left? Slipknot: The
What's clear is that AAA original IP has a huge value and forms the
very foundations of the various entertainment industries. These assets
collectively are worth billions of dollars. It seems odd to me then
that even though IP is very valuable, independent developers invariably
just hand over their original IP to the games publishers. How does this
happen, and what are the implications?
For a moment, let's look at the wider the picture. The dilemma that
publishers are starting to have is that their biggest selling brands
are getting well into high sequel numbers (Driv3r, Metal Gear Solid 3,
Splinter Cell 2, GTA (San Andreas) 4) and, following the most recent
Tomb Raider's sudden demise, they are realizing that there may well
come a point where those games licenses just dies on its feet.
A further issue is that Hollywood appears to be getting a bit grouchy
with the games publishers - for example, Warner Bros has set up its own
games division (again) and is getting tough on the quality of games
that exploit its IP. The prices of movie licenses are also going up,
and furthermore Hollywood never gives enough time for the game to be
made (a bit unfair when they want great review scores). In short, the
honeymoon is over, the marital rows have begun.
So having bought a handful of expensive Hollywood licenses with a lot
of hassle, where else can the publishers go to get more IP? Well, the
big publishers then look to their big internal studios, and they
invariably discover that they have created expensive factories, not
dynamic innovative teams that come up with original and wacky IP.
Walking round these studios is now like visiting IBM or Logica with
smooth production but a little sterile - and if anyone has a highly
original idea, they are going to it for their sabbatical or for when
they are fired.
Where is left for the big publisher to get their IP? The independent
developers of course. But before meeting with the developer, the
publisher makes it known that it will only sign games with full demos.
The developer has to have a 'Vertical Slice' (as coined by EA) to show
to the publisher. (For Vertical Slice, think of a thick slice of black
forest gateaux with cherries and thick cream oozing out the sides. One
bite and you know how the rest of the gateaux will taste.)
The most widely heralded example of a Vertical Slice was the Medal of
Honor Demo that showed a full D-Day landing. In that moment you could
see, hear and understand the complete vision of the game. Of course,
the typical Vertical Slice costs the developer several hundred thousand
dollars. The cost to the publisher is typically around zero dollars.
As a result of prolonged and publisher-controlled negotiations over
several months - with a full development team of 25-plus on standby at
the studio (as required by the publisher's due diligence) that the
developer is funding (unlike the film world which requires only a
skeleton crew) - the developer's negotiation position is badly weakened.
So much so that they hand over the IP to 'get the damn thing signed'
and they also sign over moral rights for good measure.
Next month: it gets worse.
Again, I'll post part two of Latham's series next week.