The IP Game -- Part One

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
Game?

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.

Comments

[Gabby Dizon]

That's a pretty bleak picture.

The question is, how do you re-tool the game development studio so that you do not lose leverage while negotiating your IP with the publishers for several months? You would have to have a team under 10 people, unless you've had a previous hit and are financially independent.

Yes, the publishers are slime. But the independent studios also need to adapt.

[Tadhg]

It's bleak. But so far nothing new, tbh.
What does the latter half say?

[kik]

I've mentioned this point in the other thread, but I may as well repeat it: How is the general position that the publisher takes, any different from the position gamers take towards new games?

How many average gamers would risk their money on an unproven developer's new IP, with no demo or reviews, and no guarentee of after release support?

On what basis would they want to pick up that game compared to say, San andreas? Some 'innovative' idea that they see as a gimmick? Some promise like that the dev understands games, and will do away with the cliches of the industry?? I don't know, what?

Sure, gamers may not be slime, but they do seem rather greasy...

[Gabby Dizon]

Kik,

Gamers bought Halo. They bought the original Half-Life. And they bought Grand Theft Auto 3.

Heck, they bought the original Sims even though EA thought it was a bomb...

[kik]

Halo, GTA 3 and the Sims were all made by well established developers and had great reviews and buzz. What's the equivalent of great reviews and buzz for Publishers?? (hint: hollywood).

Valve may of been an unknown, but Half-life had one hell of a demo with 'day one'.

[Factory]

kik:
That's a silly argument, developers and franchises do not start successful, someone has to buy their stuff in the first place for them to become successful.

I would also add that ppl buying a game because it is made by developer X is a better deal for the developer than ppl buying games because it is franchise Y. The developers then do not have to deal with the limitations of the IP.

[Tadhg]

While I do agree with you, kik, that gamers of the current generation are quite conservative, I don't agree with where your logic is taking you. Games are much like any other medium, in that sales follow wherever exposure and good marketing lead. It is simply the case that many customers out there don't buy any one of a thousand games that appear because they simply never hear about them, either through print, TV or on the grape vine. Thus, when they come to the store itself, they only see a few boxes of said original game and don't know it from Adam.

[kik]

Let me clarify my questions: What's wrong with a publisher needing proof that a developer's concept is good, and that they are capable of creating it?

Publishers are businesses, not charities.

[someone]

The problem with gaming is that it's a business.

The problem with business people is that they don't play games.

More gamers need to start making games, and game makers need to listen to their customers better.

[Steve Williams]

Publishers want rights over the IP because they do not want to risk losing it if the IP becomes valuable. Sony did not have the rights over Spyro and one day the developers walked away from the PS2, leaving Sony with no more cute dragon platformer.

[gren]

Well, it's obvious why publishers (or anyone really) wants to own IP. But a quick correction: The original developer of Spyro, Insomniac Games, never walked away from the PS2. In fact, Ratchet and Clank: Up Your Arsenal is coming out exclusively for the PS2 in a matter of days. AND, the latest Spyro game (developed by someone else) IS on the PS2, just not exclusively.

[Anon]

Gamers bought Halo on the strength of bungie's reputation from past games (myth and marathon). Gamers bought Half-Life of the strength of the leaked Day One demo (nobody cared about it before then for the most part).

[Erwie]

I don't think even 90% of the Halo players knows Myth and Marathon, they just bought Halo through good reviews and good marketing, as it being by far the best launchtitle for a console with incredible specs for it's time.

[Tadhg]

"Let me clarify my questions: What's wrong with a publisher needing proof that a developer's concept is good, and that they are capable of creating it?"

What's wrong with it is that it elminates anyone who can't afford it, and leaves only a tiny pool from where ideas can spring.

[Scott Miller]

I'll just add that it's in the industry's best interest to have strong, indie studios who can call their own shots. It adds diversity to the creative pool, and it spreads the wealth better, because we have more IP owners, rather than it all being owned by the publishers.

Is it better to have Pixar as an indie, or owned by Disney? The former, of course (and luckily, Pixar is self-owned). OTOH, look what Disney recently did to another creative powerhouse, one they bought some 14 years ago: They just fired the creative heads of Miramax. This will result in that studio being more fully controlled by a Disney lackey, and we can pretty much kiss good-bye to Miramax as one of the industry's bright spots.

Again, we need more indies doing their own thing without being told what to do by a limited group of publishers.

[Cristopher Boyer]

I won't say that it's a bright picture painted in that article. But I can't say a publisher ought to pay for a team - especially an untested one - to develop their own IP AND hang onto it AND create a game demo that might not even bang out into a full game. That's like hiring an architect to build a house who's never done it before, and paying them in advance, and they might still get to keep the house for themselves when they're done.

Sadly, indie developers need to be able to fund their demos/proofs of concept, but publishers need to cut them better deals when they've done this. The concept of "cutthroat business" shouldn't be to cut the throats of the guys who provide your publishing house with content.

[Badman]

One thing I must point out: The Grand Theft Auto IP is different from that of Tomb Raider in a fundamental way - it describes a _play style_ without associating any particular character or setting with it. In this way it is similar to the Final Fantasy IP. Every Final Fantasy game is set in a completely different world with completely different characters and a completely different (thought always thematically familiar) plot. And the GTA games are the same way. If you are fortunate enough to create an IP like this (a distinctive playing style rather than a particular set of boobs) you can create far more games associated with the IP before players get sick of it. Players certainly aren't sick of GTA's play style yet (and San Andreas executes that play style brilliantly), and are just now starting to tire of the Final Fantasy series after TWELVE games across multiple platforms. And if the FF guys can find a way to revitalize their play style, they can still gain the tremendous marketing benefit of being able to put the worlds "Final Fantasy" on their games.

[PaG]

Publishers (and big developers who can afford it) should invest in actual research, not just in development. They should hire a few designers along with minimal teams to come up with cool ideas for games and prototype them. It would be cheap and it would bring much needed creativity to the industry.

This is similar to what companies like Microsoft, IBM, 3M and Xerox do to come up with new products. Of course most of what comes out of R&D is crap, but a single success from it pays for all of the research. This model has proven itself for many other industries in which creativity matters -- why can't we use the same method?

"That's like hiring an architect to build a house who's never done it before, and paying them in advance, and they might still get to keep the house for themselves when they're done."

I'd say it's more like hiring an architect fresh out of school, paying them in advance and letting them keep the plans they come up with to build other houses. Nothing that exceptionnal really -- of course I'd expect to pay less such an architect than a more experienced one, but I would have no problems with it for a simpler project like a house or something.

What your example tells me is that publishers should accept to fund smaller projects by new (and promising) teams if they don't ask for too much (ie. keep production costs lean). The publisher lets them keep their IP so they have additional motivation to make it kick ass -- as long as the publisher treats them reasonably well, they're more likely to stick the people who helped them start anyway...

[AdamW]

@badman: actually, the GTA games (from 3 onwards, anyway, 3 didn't follow 1 and 2) take place consecutively in the same world and feature a continuing storyline.

I wouldn't say players are getting tired of Final Fantasy - X and X-2 sold bucketloads, and XII is one of the most highly anticipated games around, according to most game sites. I also wouldn't say the FF series is about a single playstyle; or only if you define playstyle as broadly as 'party-based RPG which involves levelling-up in some way', and Final Fantasy hardly has a lock on that. They've used many completely different battle and levelling systems throughout the life of FF games. The basis of the series - and the reason why Scott things calling all the games FF is dumb - is even more broad and tenuous than a playstyle. It's hard to describe, but it's best to imagine yourself getting hired as director of Final Fantasy XIII; all you know is you have to make a big, party-based RPG with a non-real-time battle system. It's got to have moogles in it. And it had better be _really, really good_, or you'll be in some serious trouble. :)

[Robert Howarth]

One of the major problems that series have is that they seem to die off after around part 3. Perhaps they run out of ideas, or just get burnt out making the same games, but it's rare to see a brand have the staying power to make compelling sequels year after year.

And as far as Duke Nukem goes, the biggest problem that IP is facing is that most gamers under the age of 30 have no idea who he is.

[RodeoClown]

Someone said "game makers need to listen to their customers better".
I think the problem with this kind of attitude is that gamers have no idea what makes a good game. Really. They know what they like from games they play (but can't always put their finger on exactly what it is that makes it good), and assume that particular elements (sniper rifles, sandbox play, levelling-up, emergence and so on) just need to be put together to make a game great. The problem is that just throwing elements together doesn't make a good game, or even necessarily a fun game, it just makes a game with a lot of bullet points for the back of the box.

I think this partially explains why gamers (not all of them, but the vast majority) think great graphics is what makes the game; they see a fantastic looking screenshot and can say 'that looks great!', but how do they convey that a game plays brilliantly?. They can put their finger on graphical technique and say that it is cool, but how do you explain WHY the game 'N' is so fun?
It's really simple graphical and play style makes it 'look' like it will be terrible. But it isn't.

I think that good IP gives a gamer something to point at and use it to explain why they like something. The original Tomb Raider didn't sell well because it had a 'hot chick' in it, it was because it played well AND had a 'hot chick' in it.

[Anon]

PaG, is the kind of research you're suggesting done in other entertainment industries? Do book publishers hire staff dedicated to researching "book ideas"? Do movie studios hire staff to research movie ideas? What about record labels?

[Tadhg]

Book publishers, moviemakers and music publishers don't have to do it because they have such a vast amount of potential ideas coming at them from the general public and arenas like the indie movie, indie music and small press scenes that they can pick and choose. This is what keeps these media alive and fresh for the most part, though of course they wax and wane like anything else.

The games industry, on the other hand, does not have that luxury because it sets its bar too damn high, expecting everyone who approaches a publisher to have a full-fledged demo ready to go, costing hundreds of thousands and a lot of time to do. It's idiotic because it reduces the number of potential ideas that they could be publishing down to very few, while at the same time encouraging those developers that do have the money to play it very safe. So the cycle continues and the industry moves slowly out of touch.

I don't necessarily think that research is the way forward though, because that research is still coming from those developers that play it safe. Even the much-vaunted indie developers are for the most part working on sequels or very 'safe' games at the moment (which directly questions Scott's assertion about how necessary those developers really are).

What really is needed to drive the industry forward is a means of lowering the bar, either through expecting a lot less from a developer in the initial stages, or getting away from the notion that the source of ideas must be a developer instead of, say, a writer.

[PaG]

True that: writing a novel, a screenplay or a few songs is incredibly cheap compared to writing a good-looking demo for a 3D game.

As for research, the whole intention is to ask them to do things that are not safe. There's really no point in asking people to research proven concepts, they're already well understood. If, on the other hand, you ask them to come up with original game ideas that don't fit the current mold, then you get something worthwhile.

As for lowering the price of presenting a new idea, how do you do it? The problem is that you can't really tell the quality of a game idea from a game design. I guess the easiest the solution would be for publishers to trust developers more ("You've done great work in the past, now do something new and cool"), but I don't see that happening soon...

Actually I think the overall solution would be to find a way to make commercially viable games very cheaply. Games that don't have to sell huge amounts of copies to be profitable. That platform could then become a proving ground for potential developers, since failure would be cheap. Anybody has an idea about how we could do that?

[JP]

"The problem is that you can't really tell the quality of a game idea from a game design."

Depends on what form the game design takes. This is where I see the value of prototypes and proof-of-concept demos: a working implementation, in code, of any game mechanics that are unproven / unconventional, some sample content like prototype levels, and a small batch of nice-looking, finished (i.e. NOT placeholder) art content that expresses what the visual style of the finished piece will be like - even a single screen full can convey that.

That way, a dev can tell a publisher, "Look, parts of our design are unproven, but those have been prototyped here for you to see. We know what our game will look, feel and play like. The hard part is over, creativity-wise."

Now you might THINK that this is what developers already do when "pitching" a game to publishers... but it's not. Pre-contract pub demos are almost always tests of one thing: the developer's ability to create nice art content (and, peripherally, the ability to create code that doesn't crash for the length of the demo). The problem with this is that said art content usually takes much longer - and ends up being a much bigger drain on developer resources - than that prototype I described would take, but it means none of the difficult problems that are likely to come up later have been solved. Many times, the publisher doesn't even look at the demo itself, they look at pre-recorded footage (as if they would sully themselves by picking up a controller and trying it out), screenshots, cinematics and written design materials. These are nice to show off but none of them represent the actual game.

Developers only have to show that they can ape real development practices to get a contract and are essentially selling a lie. This is why we get so many finished games that are really just going through the motions... competently done content, and gameplay that either covers one millimeter of creative territory or a broken, failed experiment.

Small, focused prototypes that address real problems are the better alternative. What's better, they take less time and resources to create, so suddenly the barriers to entry are lower as well - you don't need an EA-sized content farm to make one.