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LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
LAFS SVI Session 7 - Game Publishing
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LAFS SVI Session 7 - Game Publishing

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Lecture for Session 7 of The Los Angeles Film School's Survey of the Videogame Industry course.

Lecture for Session 7 of The Los Angeles Film School's Survey of the Videogame Industry course.

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  • A man-hour or person-hour is the amount of work performed by an average worker in one hour.[1][2] It is used in written "estimates" for estimation of the total amount of uninterrupted labour required to perform a task. For example, researching and writing a college paper might require twenty man-hours. Preparing a family banquet from scratch might require ten man-hours.
  • A common distinction is made between 'goods' that are tangible property (also called goods) and services, which are non-physical.
  • Capitalism is an economic system that became dominant in the Western world following the demise of feudalism.[1] There is no consensus on the precise definition nor on how the term should be used as a historical category.[2] There is general agreement that elements of capitalism include private ownership of the means of production, creation of goods or services for profit or income, the accumulation of capital, competitive markets, voluntary exchange and wage labor.For the purposes of this class, Capitalism should be thought of at the minimum as a system of creating Profit by means of providing a Good or a Service.
  • Let’s examine business principles by looking at your personal finances…
  • Consider the following venture: “Air Guitar Hero”, a video game that needs no plastic guitar using Microsoft Kinnect:Technological risk: What if the motion capture of the Kinnect can’t accurately read the air Schedule risk: What if the team can’t deliver milestones on time, whether the slip comes from internal or external impediments?Market risk: What if the market is simply done with guitar simulation games?Inventory risk: What if insufficient discs are manufactured? What if too many are manufactured?Distribution risk: What if the distributor doesn’t get the product in time? What if the deal with Target/Walmart/Gamestop/etc. falls through?Liability risk: What if there are lawsuits from kids whacking each other playing the game?
  • Michael Goodman, author of the report "Marketers Look to Video Games to Drive Their Message Home," points out that only 10 to 20 percent of video games actually break even.
  • Publishing is the process of production and dissemination of literature or information — the activity of making information available to the general public. In some cases, authors may be their own publishers, meaning: originators and developers of content also provide media to deliver and display the content for the same.
  • Stakeholder (corporate), a person, group, organization, or system who affects or can be affected by an organization's actions.Movie Studio Stakeholders: DevelopmentCastingProductionMarketingFinance
  • Stakeholder (corporate), a person, group, organization, or system who affects or can be affected by an organization's actions.Game developer Stakeholders:Studio HeadTechnical DirectorLead ProgrammerArt DirectorDesign DirectorBusiness Development Manager (Sales)
  • Game Publisher Stakeholders:MarketingProduct DevelopmentInternational divisionsCFO (Chief Financial Officer)Sales
  • A: A video game publisher is a company that publishesvideo games that they have either developed internally or have had developed by a video game developer.As with book publishers or publishers of DVD movies, video game publishers are responsible for their product's manufacturingand marketing, including market research and all aspects of advertising.They usually finance the development, sometimes by paying a video game developer (the publisher calls this external development) and sometimes by paying an internal staff of developers called a studio. The large video game publishers also distribute the games they publish, while some smaller publishers instead hire distribution companies (or larger video game publishers) to distribute the games they publish.Other functions usually performed by the publisher include deciding on and paying for any license that the game may utilize; paying for localization; layout, printing, and possibly the writing of the user manual; and the creation of graphic design elements such as the box design.
  • Technological riskSchedule riskMarket riskInventory riskDistribution riskLiability risk
  • Source:http://www.gamecareerguide.net/industry_news/28391/news/11933What’s happening today in the game industry is a phenomenon that Prof. Anita Elberse at Harvard Business School calls the “Blockbuster Trap.” In this repetitive cycle, video game companies attempt to replicate the success of competitors by imitating “winners” and increasing their own level of investment. Their success causes other video game companies to follow suit, causing investment levels in the industry to catapult. As the level of investment goes up, companies become more risk averse, and are more likely to try and copy their own successes (You've seen a ton of vampire brands and will see even more, thanks to the “Twilight” series!). 4/analysis_what_the_video_game_.phpWhether you’re developing for social networks or console, marketing what makes your game brilliant is crucial in the war for the hearts and minds of gamers.
  • Portfolio Management is like being a Pokemon trainer
  • (Assetcomplete = All Assets represented)(Feature complete = All Assets + Working + Free of bugs)
  • A business model describes the rationale of how an organization creates, delivers, and captures value[1] (economic, social, or other forms of value). The process of business model construction is part of business strategy.
  • RetailRetail (bricks & mortar), selling boxed product at places like EBGames, Gamestop or Virgin Megastore. This also includes mom & pop stores, hardcore specialist gamer shops, and online retailers like Amazon.com that ship the product to your door. The gap in this market is “same day” physical delivery of games too big to download or 1st party titles (basically combining online & bricks and mortar in one solution.) The future of this space is pre-paid cards as the consoles will (in the future) go online only, distributing everything directly to the consumer, so retail (to make it worth selling the hardware) will need a cut of the software sales. Hence prepaid cards. The Gamestop tactic of re-selling USED games (to avoid paying for new product) will finally be over. To drive users to retail, the making of special “enhanced” versions just for their retail chain is a common practice.Digital Distribution (direct download, direct to consumer), like the Steam service from Valve Software, the PlayStation Store or Xbox Live Arcade from Microsoft. This also technically includes “unlocking” access to a game already on a service, like the faux install process on Facebook (however the player would have to pay to do this unlock.)Pre-Sell the Game to the Players. This model lets your fans actually fund the development of the title. For example, they pre-pay $5 in advance for a $50 game. (They also get to see it get developed and get to provide feedback.) When the game is launched, they get it for free (as they already paid the $5 advance.) Clearly you have to either have a reputation or a very hot idea to generate enough interest in advance, but once you get on a roll, this can work.Buy Something, get the game for Free – This is the Trialpay model, where the player buys something they want (like a subscription to Gamefly), then Gamefly gives Trialpay a nice fat fee. From that fee, you get paid, and Trialpay gets paid. So by signing up to Gamefly, they get their service and they also get your game (technically) for free.Ad BasedIn-Game Advertising (either obvious billboards or branded items in the game world, or subtle product placement (certain clothing, sunglasses or vehicles like Gaia Online), or built into story elements (like the hero’s girlfriend works for a Neutrogena). Companies like IGA, Massive, Game Jacket, Mochi Media, Google, VideoEgg etc.Around-Game Advertising (basically making money from banner & skyscraper adverts that circle the gameplay window), this is common on flash game aggregator sites, they use services like Google, Commission Junction, personal affiliate deals etc. The revenue comes from CPM (cost per thousand views), CPC (cost per click), CPA (cost per acquisition of a player), CPP (cost for a “real” player who really plays for a certain time, or to a certain level.)Advertgames (the whole experience is an advert), common on movie websites, can also be big like America’s Army or the Burger King games on Xbox 360. I did one of the first of these called “Cool Spot” for 7-UP. The advertiser helps fund the game and depending on the deal, that determines who earns cash out of the revenue. Your reputation will impact this equation.Sell Access to your Players (like lead generation, special offers etc.), this is where you monetize your user database by inserting special offers, or personal profile questions into the registration loop. Like when you register, you’re asked if you would fill out a profile in return for virtual points. This is then paid for by an external agency who collects the data live. (Value is equal to how exclusive the data is, how detailed (revealing), and how fresh.) The agency would generally give you the questions and the capture code.Premium Based - (pay as you go)“Try Before you Buy” / Trialware / Shareware / Demoware / Timedware (this is letting you play crippled, shortened, or restricted time versions of a game for free, while trying to up-sell the full version.) This is a real balancing act as too much in the demo can kill any hope of future sales. Xbox Live has been experimenting with this concept, they seem to have hit the sweet spot by giving one playable level and then giving a big reveal (like there’s a giant boss monster around the corner) then they say “Buy the full version to continue!”. That’s basically the ‘cliff-hanger’ trick, and just like TV it works.Episodic Entertainment (borrowing from the TV model), you either buy the episodes in a serial fashion as they become available, you can pay for all episodes unlocked for a period of time, or they are sold as expansion packs.Velvet Rope or Member’s Club (where the user pays for VIP access), they get special privileges and access to special areas on your site or in your game. They sometimes get special access to new product before anyone else etc. (Basically the more interesting perks you give, the more likely people will want it.)Subscription Model (like World of Warcraft or Conan) paid monthly, usually by credit card or automatic debit payment. It’s sometimes coupled with a retail purchase to get the install files / manual. Commonly players set up the credit card payments and don’t stop them, as they want to keep the game ‘available’ or keep their characters alive that they’ve worked so hard to create. (It’s pretty great to get a subscription from people that don’t even play, so expect more people to design games were they will clearly KILL your characters if you stop paying. Not good for players, but it’s on the list as it’s a monetization method.)Micro-Transactions (small, impulse driven up selling), for vanity, saving time, better communications, leveling up faster etc. These are generally paid for using virtual points (earned in the game) or the points being bought by the player for real money. A new trend is using Friends to buy these items, where the item just costs you inviting a friend to the game, or an amazing item costs you inviting ALL your friends to the game. Another trend is to sell consumable items like actually selling the bullets you fire, or buying gas for the car you race, however this really grays the “free to play” line.Pay per play / Pay as you go / Pay for Time (like the old arcade machine or pinball system), you only pay for what you need, for a pre-set number of lives, or as long as you can last. Also used in Internet Cafes and game parlors. This model could be used for game time online as well.Pay for Storage Space (on a server) to save progress, stats, game data etc. As an example, this can be used for Karaoke games where you pay to store your library of songs. (Or at least you think you do, even though you are technically just making virtual storage space for your songs.)Pay for Private Game Server (where your friends come to play), like renting multi-player servers, or giving your friends a maximum quality experience. This is more for the hardcore First Person Shooter multi-player crowd.Selling Branded Items from your site (using a service like Cafepress) – You need to work hard on your identity to make this interesting for people to wear. For example, Gamer Vixens http://www.cafepress.com/gamervixens/Freemium - Give the game away for free, but offer many upgrades at a premium. Big spenders support the free loaders. (uses any of the premium mechanisms above)Incentive BasedSkill-Based Progressive Jackpots (where players buy a ticket to enter into a tournament) this generates a progressive jackpot and winner who reaches a certain (winner) status wins the jackpot. You keep a percentage of the jackpots. The game must be skill based.Sponsored Games / Donationware (serious games, games for good, charity games), these are the games that are somehow helping society, so could be paid for by a philanthropist, or by a charity or non-profit, or by player donations. www.Onebiggame.org is an example.Pay Finder’s Fee from First Dollar. This allows you to pay much higher finders fees with no risk. Like offering (as the finder’s fee), the first $25 that comes in from any player they find. You balance the fee to a sensible percentage of the average income you get from players. We [Acclaim] get around $70 per paying player, so this seems reasonable.Player to Player trading of Virtual Items (letting them trade land, property, characters, items, also by auctions). You keep a cut of all the money exchanged. You also keep the transactions safe for the player (they don’t have to go to the gold farmers or risk the black market for characters.) Some games let the players cash this money out of the game, so it can become a full time job, but is also a major fraud generator (they use fake credit cards, buy things, trade things, sell for cash, cash out).Player to Player Wagering (they place wagers before they go head to head), the winner keeps the pot and you keep a percentage of every pot. The games they play MUST be skill based games. Gambling virtual items is another technique, where they buy/earn/trade virtual items, then bet them on maybe a 1-on-1 basketball game, the winner keeps the items. (You made your money selling the items to them in the first place.)User Generated Content (letting users make endless new content), they can sell it to each other, or sell access to it, or get people to pay for time spent playing it, for points they can turn into cash (like IMVU), and you keep a cut of all sales.Investment BasedForeign distribution deals (like the movie industry), where you need funding, so you pre-sell your foreign distribution rights in advance, then use that money to fund the project in the countries you care about the most. www.gameinvestors.com will be helping people do this.Freeware (get lots of users), it’s not a plan to make money, but then again, if you make something that’s very compelling you can expect offers to acquire your software, company or technology.Loss Leader (focus on your real goal), meaning you sell the game far too cheap. There’s clearly TOO much value for money, (like the PS3 Hardware strategy). You use the passionate following to your free game to help sell something else, like a Toy, TV or movie deal, and that’s where the real money is that you were focused on.Peripheral Enticement (the game cannot function without a piece of equipment), so it’s really a way to make you money on the hardware. (Gym equipment is a good example, like the virtual bike or rowing games, you tease them with the software into a very expensive purchase.)RentalRental (stores like Blockbuster, or online like Gamefly), the old rental paradigm meant trying to design the game so it couldn’t be played through within one rental period. These days with the Netflix / Gamefly Model, it doesn’t matter anymore.Licensing Access (like signing a deal with a chain of cyber cafes to unlock your game for their users.) Or using your game as a part of a TV show. Or letting a corporation use your brand in their advertising such as McDonald’s Line Rider commercial
  • 5% Rule
  • The Purpose of Marketing is to create DemandMarketing is "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.Creating Awareness of the ProductIdentify Optimal Communication ChannelsIdentify Optimal MarketUnderstandValue Proposition
  • Installed base or installed user base is a measure of the number of units of a particular type of system—usually a computing platform—actually in use, as opposed to market share, which only reflects sales over a particular period. Because installed base includes machines that may have been in use for many years, it is usually a higher figure than market share. Many people see it as a more reliable indicator of a platform's popularity. Installed base is not the same as the total number of units sold at any given moment in time (cumulative sales numbers), since some of those units will typically be out of use because they have broken, gone missing, or been made obsolete."Market share is the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity." Metrics (or Analytics) refers to the skills, technologies, applications and practices for continuous iterative exploration and investigation of past business performance to gain insight and drive business planning.
  • The study of humanpopulations, and how they change.From Ancient Greek δῆμος (dēmos, “people”) + -graphy (“written representation of”)Employed?Income?Education
  • Answer is both! Does the game determine the market? E.G.: Before Guitar Hero, nobody knew they wanted to play a plastic guitar game.orDoes the market determine the game? E.G.: After years of Guitar Hero, everybody knew they tired of playing plastic guitar games.
  • You have to answer all of these questions as they RELATE to the Market.
  • Maslow's hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation.[2] Maslow subsequently extended the idea to include his observations of humans' innate curiosity. His theories parallel many other theories of human developmental psychology, all of which focus on describing the stages of growth in humans.Maslow studied what he called exemplary people such as Albert Einstein, Jane Addams, Eleanor Roosevelt, and Frederick Douglass rather than mentally ill or neurotic people, writing that "the study of crippled, stunted, immature, and unhealthy specimens can yield only a cripple psychology and a cripple philosophy."[3] Maslow studied the healthiest 1% of the college student population.[4]Maslow's theory was fully expressed in his 1954 book Motivation and Personality.Some have criticized Maslow's pyramid as ethnocentric may stem from the fact that Maslow’s hierarchy of needs neglects to illustrate and expand upon the difference between the social and intellectual needs of those raised in individualistic societies and those raised in collectivist societies.Maslow's hierarchy of needs is often portrayed in the shape of a pyramid, with the largest and most fundamental levels of needs at the bottom, and the need for self-actualization at the top.
  • Product distribution (or place) is one of the four elements of the marketing mix. An organization or set of organizations (go-between) involved in the process of making a product or service available for use or consumption by a consumer or business user.
  • Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mall, in small or individual lots for direct consumption by the purchaser.
  • Buying Visibility – answers the questions:What is the “Street Date” of the game? (Day the item first goes on sale)What is the “Stock Date” of the game? (Day the item is available in stock. There can be several in-stock dates)
  • A pre-order is an order placed for an item which has not yet been released. The idea for pre-orders came when people found it hard to get popular items in stores due to their popularity. Companies were then given the idea to allow people to reserve their own personal copy, before the release, which has been a huge success. Pre-orders allow consumers to guarantee prompt delivery on releaseManufacturers can gauge how much demand there will be and hence how large initial production runs should beSellers can be assured of minimum sales. Additionally, high pre-order rates can be used to generate buzz, or publicity to further increase sales.
  • Downloadable content (also referred to as DLC) is official additional content for a video game distributed through the Internet. Downloadable content can be of several types, ranging from a single in-game outfit to an entirely new, extensive storyline, similar to an expansion pack. As such, DLC may add new game modes, objects, levels, challenges, etc. to a complete and already released game. In the case of episodic video games, a new episode may come in the form of downloadable content, whereas music video games utilize this media to offer new songs for the players. Downloadable content became prevalent in the 21st century, and especially with the proliferation of Internet-enabled, sixth-generation video game consoles. Special edition re-releases of games often incorporate previously released DLCs along with the main title in a single package. Video game publishers sometimes offer a DLC "season pass", which allow users to purchase all of the downloadable content for a video game at a smaller price than it would cost to buy each one separately. Users can also buy such a season pass before the availability of its respective DLCs; in this case, the player will get access to the content as they get released.Two episodic packs for Grand Theft Auto IV have been released. These two episodes were first released separately on Xbox Live as downloadable content (DLC), requiring the original game to play. Following that in October 2009 they were released together as part of a standalone game called Grand Theft Auto: Episodes From Liberty City for the Xbox 360 that does not require the original Grand Theft Auto IV media to be playable.[69] The first expansion is entitled The Lost and Damned, originally released on 17 February 2009. The second is entitled The Ballad of Gay Tony, released on 29 October 2009.[70][71] Both episodes were released for PlayStation 3 and Microsoft Windows on 13 April 2010[72] in North America and on 16 April 2010[72] in Europe.[73]Jeronimo Barrera, Vice President of Product Development for Rockstar Games, has said that the episodes are experiments because they are not sure that there are enough users with access to online content on the Xbox 360.[74] Take-Two Interactive'sChief Financial Officer, Lainie Goldstein revealed that Microsoft was paying a total of $50 million for the first two episodes.[75]
  • Downloadable content (also referred to as DLC) is official additional content for a video game distributed through the Internet. Downloadable content can be of several types, ranging from a single in-game outfit to an entirely new, extensive storyline, similar to an expansion pack. As such, DLC may add new game modes, objects, levels, challenges, etc. to a complete and already released game. In the case of episodic video games, a new episode may come in the form of downloadable content, whereas music video games utilize this media to offer new songs for the players. Downloadable content became prevalent in the 21st century, and especially with the proliferation of Internet-enabled, sixth-generation video game consoles. Special edition re-releases of games often incorporate previously released DLCs along with the main title in a single package. Video game publishers sometimes offer a DLC "season pass", which allow users to purchase all of the downloadable content for a video game at a smaller price than it would cost to buy each one separately. Users can also buy such a season pass before the availability of its respective DLCs; in this case, the player will get access to the content as they get released.Two episodic packs for Grand Theft Auto IV have been released. These two episodes were first released separately on Xbox Live as downloadable content (DLC), requiring the original game to play. Following that in October 2009 they were released together as part of a standalone game called Grand Theft Auto: Episodes From Liberty City for the Xbox 360 that does not require the original Grand Theft Auto IV media to be playable.[69] The first expansion is entitled The Lost and Damned, originally released on 17 February 2009. The second is entitled The Ballad of Gay Tony, released on 29 October 2009.[70][71] Both episodes were released for PlayStation 3 and Microsoft Windows on 13 April 2010[72] in North America and on 16 April 2010[72] in Europe.[73]Jeronimo Barrera, Vice President of Product Development for Rockstar Games, has said that the episodes are experiments because they are not sure that there are enough users with access to online content on the Xbox 360.[74] Take-Two Interactive'sChief Financial Officer, Lainie Goldstein revealed that Microsoft was paying a total of $50 million for the first two episodes.[75]
  • Downloadable content (also referred to as DLC) is official additional content for a video game distributed through the Internet. Downloadable content can be of several types, ranging from a single in-game outfit to an entirely new, extensive storyline, similar to an expansion pack. As such, DLC may add new game modes, objects, levels, challenges, etc. to a complete and already released game. In the case of episodic video games, a new episode may come in the form of downloadable content, whereas music video games utilize this media to offer new songs for the players. Downloadable content became prevalent in the 21st century, and especially with the proliferation of Internet-enabled, sixth-generation video game consoles. Special edition re-releases of games often incorporate previously released DLCs along with the main title in a single package. Video game publishers sometimes offer a DLC "season pass", which allow users to purchase all of the downloadable content for a video game at a smaller price than it would cost to buy each one separately. Users can also buy such a season pass before the availability of its respective DLCs; in this case, the player will get access to the content as they get released.Two episodic packs for Grand Theft Auto IV have been released. These two episodes were first released separately on Xbox Live as downloadable content (DLC), requiring the original game to play. Following that in October 2009 they were released together as part of a standalone game called Grand Theft Auto: Episodes From Liberty City for the Xbox 360 that does not require the original Grand Theft Auto IV media to be playable.[69] The first expansion is entitled The Lost and Damned, originally released on 17 February 2009. The second is entitled The Ballad of Gay Tony, released on 29 October 2009.[70][71] Both episodes were released for PlayStation 3 and Microsoft Windows on 13 April 2010[72] in North America and on 16 April 2010[72] in Europe.[73]Jeronimo Barrera, Vice President of Product Development for Rockstar Games, has said that the episodes are experiments because they are not sure that there are enough users with access to online content on the Xbox 360.[74] Take-Two Interactive'sChief Financial Officer, Lainie Goldstein revealed that Microsoft was paying a total of $50 million for the first two episodes.[75]
  • Transcript

    • 1. Session 7 David Mullich Survey of the Videogame Industry The Los Angeles Film School
    • 2. Economic Terms  Cost: The value of money used to produce something  Revenue: The income a company receives from its business activities  Profit: When revenues exceed costs
    • 3. Man-hour  Man-hour: The amount of work an average worker can perform in one-hour  Researching and writing a college paper might require a student to do 4 man-hours of work  Preparing a family banquet from scratch might require 10 man- hours
    • 4. Goods and Services  Good: A product or material that is sold to satisfy the wants and needs of a customer  Service: An intangible item that satisfies a customer’s wants and needs  Market: A system where parties engage in the exchange of goods and services  Value: The worth of a good or service as determined by the market
    • 5. Video Game: Product or Service?
    • 6. Capital(ism)  Capitalism is a system of creating a profit by producing a good or service  Financial Capital is “money lying around”
    • 7. Personal Capital  Your weekly salary  Taxes  Expenses ○ ○ ○ ○  What’s left is Discretionary Income
    • 8. Discretionary Income (DI)  Revenue – Overhead = DI  …or Gross Income – taxes – necessities = DI  What do businesses do with their discretionary income?
    • 9. Financial Capital  Capitalists want to put their money to use to make more money  This is called “Re-Investing”  Any use of such money involves RISK
    • 10. Risk  “Nothing ventured, nothing gained.”  Lottery players > Very great risk of money, no risk of time  Stock buyers > Moderate risk of money, small risk of time  Entrepreneurs > Great risk of money and time  Corollary to the Golden Rule:
    • 11. Golden Rule of Risk  Whoever risks the most gets the greatest reward.  Which of these two risks the most at the Springfield nuclear power plant?
    • 12. Labor vs. Owners  Employees (laborer):  No risk of income (as long as company stays in business)  No share in profits (unless negotiated or offered)  Owners (capitalists):  No guarantee of income unless company makes a profit  Lion’s share of profits (less what they’ve promised to investors)
    • 13. Risk = Stress  Most released games don’t make a profit  Game projects are frequently cancelled  Employees are frequently laid off
    • 14. Why don’t most games make a profit?
    • 15. Sturgeon’s Law 90% of everything is crap
    • 16. Pareto Principle (80/20 Rule)  For many events, roughly 80% of the effects come from 20% of the causes  80% of your sales come from 20% of your clients  Only about 10-20% of video games break even
    • 17. Publisher A video game publisher is a company that publishes video games that it has either developed internally or has had developed by a video game developer
    • 18. Game Developer (Studio) Stakeholders  Studio Head  Technical Director  Lead Programmer  Art Director  Design Director  Business Development Manager (Sales)
    • 19. Game Publisher Stakeholders  Product Development  Legal  Finance  Marketing  Sales  Customer Service
    • 20. Electronic Arts G4 Icons Episode #45: Electronic Arts (21:32)
    • 21. Publisher Functions  Finance  Production  Marketing  Market Research  Advertising  Packaging  Manufacturing  Distribution  Support  Technical  Community Management
    • 22. Most of All – Publishers are the Bank  Have the most money at risk  Cost of development  Cost of marketing  Cost of inventory
    • 23. Types of Risk  Things that can go wrong all along the chain:  Technological risk  Schedule risk  Market risk  Inventory risk  Distribution risk  Liability risk  Result is always the same: MONEY LOST
    • 24. The Blockbuster Trap Companies try to replicate success Source: Anita Elberse, “The Creative Industries: Managing Products and Product Portfolios,” HBS No. 409-077 (Boston: Harvard Business School Publishing, 9002), p. 11 because demand is uncertain, they imitate “winners” competitors do the same, so investment goes up greater reliance on winners greater desire to avoid risk and copy past successes
    • 25. Portfolio Management  Diversify by genre  Diversify by platform  Diversify by budget  Hope that your hits cover your losses
    • 26. So Why Do So Many AAA Games Suck? Source: http://www.gamasutra.com/view/news/231661/When_big_games_launch_badly _Breaking_the_vicious_cycle.php
    • 27. Avoiding “Technical Debt” Source: http://www.gamasutra.com/view/news/231661/When_big_games_launch_badly _Breaking_the_vicious_cycle.php Technical debt is bugs and other technical problems that arise early on and become worse the longer you put off fixing them. • Sort out potential technical problems early, before they become "known shippable" problems. • Be more aggressive about getting their games in front of lots of people before launch day However, developers get the short end of both sticks: death marches and the blame for low quality. The solution is to address this culture of unrealistic expectations from publishers.
    • 28. The Greenlight Process Greenlighting is getting everyone on your team to agree “let’s do it!”
    • 29. Development Contracts  Work-for-Hire  Flat fee  No retained rights to developer  Publishing License Agreement  Advance against royalties  Developer may retain certain rights
    • 30. Royalty  Percentage of every sale  Up-front money is an “advance” on future royalties  Advance must be “earned out” before true royalties are paid
    • 31. Stupid Developer Trick  “I’ll cover all my costs with the advance and wait for profits when the royalties come.”  MOST GAMES NEVER EARN OUT (make a profit).
    • 32. Advances  Never paid in one lump sum  Too risky  Bad for cash flow  Paid out over a series of “milestones”
    • 33. Milestones  Typically paid against “deliverables”  Signed Contract  Documents (GDD, TDD, Schedule)  First Playable (Will it work? Will it be fun?)  Alpha (feature complete)  Beta (asset complete)  Gold Master (publisher approved to sell)  Source Code & Assets
    • 34. Milestones  Production milestones (such as Alpha and Beta) are typically defined by:  Features: Degree of completeness  Assets: Percent final  Bugs: Number and severity allowable
    • 35. Risk vs. Reward Video Game Developers vs Publishers: Who Wins? (12:33)
    • 36. 1950s-60s – Priceless
    • 37. Early 1970s - Rent Early video game machines were placed along side pinball machines, pool tables, foosball and air hockey
    • 38. Late 1970s - Buy
    • 39. Early 2000s - Rent You “bought” early mobile games, but you didn’t really own them
    • 40. Free To Play  Sell premium features via subscription  Sell items or services individually  Sell eyeballs (advertising)  Blend two or three
    • 41. Conversion Rate  Percentage of players who spend money on your game. (for example:)  Subscriptions  Premium features  Digital goods
    • 42. Online Business Models
    • 43. The Times – They Are A Changin’ Game Theory with Scott Steinberg - Episode 1: Reinventing the Video Game Industry (10:00)
    • 44. We’re Sudden Millionaires Our rich Uncle Carlos left us $2M (USD)!  We can save it  Risk?  Reward?  We can invest it  Risk?  Reward?  We can start a business  Risk?  Reward?
    • 45. Let’s Make (and Sell) a Game!  What are we going to make?  Vision Doc  Feasibility Study  Who’s going to buy it?  Business Case
    • 46. Marketing  Demand for the Product  Optimal Market  Value Proposition  Create Awareness  Communication Channels
    • 47. Market  “Those whose money you want.”  Who’s buying?  What are they buying?  How competitive is the market?  Are there voids to fill?  How do we create demand for our product?  Marketing seeks to answer these questions through the Business case.
    • 48. Marketing Terms • Installed base: a measure of the number of units of a particular type of system • Market share: the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity • Metrics: the continuous iterative exploration of past business performance
    • 49. Types of Research  Concept tests  Competitive research  Gameplay/usability research  Advertising research  Demographic research
    • 50. Demography “The statistical study of human populations”  How would we describe this room?  100% Californian  100% nerd  100% ages 17-34
    • 51. Demographics  Different ways of describing groups  Age  Gender  Geographic distribution ○ States or Regions ○ Urban / Suburban / Rural  Income  Ethnicity  Family size ○ Single/Married ○ # of kids
    • 52. Research  Inherently flawed  Sample size  The Observer Effect  Asking the wrong questions  Misinterpreting the results  Better than  Anecdotes  Polling your friends  Calling your daughter during a meeting
    • 53. Chicken / Egg Question:  Does the game determine the market? or  Does the market determine the game?
    • 54. Considerations  How does the market impact game design?  What genres are appropriate?  What platforms are appropriate?  How difficult is the game?  How steep is the learning curve?  How long does it take to play?  Is it single-player or social?  What licenses work?
    • 55. Why to Buy?  The marketer’s (and the designer’s) job is to answer that question.  Answer must be more specific than “it’s cool!” or “it’s fun!”
    • 56. We Buy to Fill Needs  Cheetos  hunger  Mountain Dew  thirst  Zoo York hoodies  clothing  Gasoline  transportation  Anything cool  self esteem Psychologist Abraham Maslow proposed that we unconsciously prioritize our needs:
    • 57. Maslow’s Hierarchy of Needs
    • 58. Know Your Market  Mass  Core  Niche
    • 59. Mass Market  Very large and diverse
    • 60. Core (or “Hardcore”) Market  Smaller and more homogeneous
    • 61. Niche  Small but very loyal
    • 62. Marketing Channels  Magazine/Web Advertisements  Billboards  Tradeshows  Radio/Television Commercials
    • 63. PR ≠ Advertising Public Relations is publicity that you don’t pay for.  Sending out press releases  Doing interviews and press tours  Being reviewed  Writing blogs  Appearing on podcasts
    • 64. There’s no such thing as bad PR  Screw-ups double the press  Piracy is a nice issue  Linux port? Do it!
    • 65. Create Assets  Make a deviantArt account for your concept art  Post gameplay videos on YouTube  Publish and spread screenshots
    • 66. Everything A Game Trailer Should Do  Have sound  Be shorter than two minutes  Have a minimum of text  Leave viewers with an understanding of how your game plays  Show what makes your game special
    • 67. Distributor An organization or set of organizations (go-between) involved in the process of making a product or service available for use or consumption by a consumer or business user.
    • 68. Retailer Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser.
    • 69. Retailers  Major, Game Retailer  GameStop/EB Games  Minor, Game Retailer  Pink Godzilla (Gorilla), Hyper Game, Hastings  Major, Tech Retailer  Best Buy, Fry’s Electronics  Major, Mass Retail  Wal-Mart, Target, Kmart, CostCo, Amazon
    • 70. Retailer Issues  Displays  Pre-orders  Trade-ins  Ratings/Appropriateness  Cross-Regional sales
    • 71. Displays  Buying Visibility  “Street Date”  “Stock Date”
    • 72. SKU A SKU is a stock-keeping unit, a number code that represents a unique identifier for each distinct product and service that can be purchased.
    • 73. Pre-Orders  Consumer: Guarantees prompt delivery  Manufacturer: Allows them to gauge demand  Retailers: Assured of minimum sales  Marketing: Used to generate buzz A pre-order is an order placed for an item which has not yet been released.
    • 74. Trade-Ins  Decreases unit sales for publishers (and developers)  Significant profit for retailer
    • 75. Downloadable Content (DLC)  Additional content released through the internet  “Live Team”:  Producers  Development  QA  Community Managers  Revenue is NOT split with retailers
    • 76. DLC by Genre  Fighting: Extra characters, costumes  Shooting: Maps, multiplayer modes, unbalanced new weapons  Sports: Release annual full-priced title instead  Action-Adventure: New areas, sidequests, non-standard weapon type  RPG: Items, weapons, armor, quests
    • 77. DLC by Genre  Strategy: New scenarios, maps, units  Racing: Cars, tracks, combat mode  Party: Minigames  Music: Songs, famous musician avatars  Exercise: Routines, yoga poses, mode where the game just complements your body
    • 78. Community Managers  MMOs and other Online games  Roles:  Beat Cop  Cruise Director
    • 79. Beat Cop  Griefing  Abuse  Fraud  Farming  Exploits
    • 80. Cruise Director  Information help  Problem solving  Event planning and management  Content creation
    • 81. GM Tool  Master control panel for any account  Create/delete items/money  Change character attribute  Customer service functions  World control  Rare spawns  World events
    • 82. Community Management Extra Credits: Community Management (5:17)
    • 83. Indie Development Extra Credits, Season 6, Episode 21 - So You Want to be an Indie (6:29)
    • 84. Indie Project Funding Options  Publishers  Day Job  Credit Cards  Friends, Family & Fools  Festivals & Contest Prizes  Crowdfunding  Angel Investors & Venture Capitalists  Incubators & Accelerators  Government Programs
    • 85. Crowdfunding Extra Credits, Season 4, Episode 10 – Crowdfunding (7:29)
    • 86. Monetizing Indie Games  Portals – Share of ad revenue  Kongregate.com  Newgrounds.com  Miniclip.com  Addictinggames.com  Many, many others!  iOS, Android – Direct sales  WiiWare, PSN, XBLA – Direct sales  Web self-publish – 100% of ad revenue
    • 87. Game Trailer Analysis In this lab, each of you will present your analysis of a game trailer. Like this one… Assassin’s Creed 1 Trailer (1:52)

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