1) The gaming industry faces financial issues that can affect game development budgets and milestones. A game that underperforms can lead to losses and even bankruptcy for a company. 2) There are two main business models - retail and online. The retail model involves developers, publishers, distributors, and retailers, but developers see little return until costs are recouped. The online model involves downloading games directly, reducing costs. 3) During development, milestones like designs, prototypes, and game builds must be met for a developer to receive further funding from the publisher. Budget constraints can strain developers.

1. Current Financial Issues
Withinthe gamingindustryfinancialissueseffectsretailing,the milestones,budgetsmarket,the
productsin the industryandservices withinthe game andindustrytrendsandshow how game
companiesmightbe facingbankruptcy because maybe agame thattheyhave releasedhasn’tbeen
that successful andlosingprofitsandhasgone bustbyspendingall the companiesmoneyforthat
single game andhopingforitto be a bighit inthe industryitjustshowshow tough the games
industryare usuallyandhowthe publicwantsa certaingame that theyare interestedinandfindsit
amusingbythat youcould gainprofitif the game is reallysuccessfulanditattracts a lotof people’s
attention.
Retail Financial
The retail consistsof a developer,publisher,distributor,retailerandconsumerasthe game nears
completion andreachesthe milestonewiththe game beingpassedalongtothe publisherswhowill
ensure the game ispackagedand readyto be distributedtothe retailersworldwideasthe diagram
passesfromlefttoright the distributorwill purchaseanumberof unitsfromthe publisher,whowill
shipand sell these tothe retailer.Inthismodel the publishertakesalarge cutof the revenue andit’s
onlywhenthe revenue exceedsthe advancesthe publisherhasgiventothe developerthatthe
developerwillstarttosee a return. The retail model iscurrentlythe mostpopularandviable
businessmodelinthe gamesindustryasit’savailable toeveryone regardlessof whetherorthey
have access tothe internet. The developeralsoreceivesadvertisingfortheirgame fromthe retail
stores.The downside tothismodel comesfromusedgamessaleswhichwhenthe retailerbuysback
and re-sellsthe videogame tothe publisheranddeveloperseesnoreturnfromthistransactionand
withthe usedgame salessopopularintoday’smarket,they’re losingoutona lotof possible sales.
Online Financial
The online businessmodelconsistsadeveloper,advertiser,publisherona website orpointof
downloadandconsumerunlike the retailmodelthere isnodistributororretail inasense.All sales
and deliveriesare done throughthe websiteorthe online store whichbenefitsthis toolittletono
manufacturingcostsandverylittle distributioncost andthe advertiser,the visitorsmakesthe
advertiserwouldreceivemoneyinreturninteractionsbetweendeveloperandpublisherwould
remainsimilarbetweenbothmodelsbuthoweverthe online model woulddeliverthe game tothe
website orthe online store whowouldthendeliverthe producertothe consumer. Asthe consumer
will purchase the product,the moneyisreturnedinthe diagramfromlefttoright.The website or
the online store wouldtake acut to the coverthe cost of servermaintenance andmake asmall
profit.The publisheragainwouldtake alarge cut and the developerwouldstarttosee an income
once the revenue begantoexceedthe advancesmade bythe publisher.Thisbusinessmodel has
beenmade popularandhas become aviable methodof deliveringgamessuchasthe xbox live,
PlayStationnetworkandvalve’ssteam. Thismodelbenefitsfromlow manufacturinganddistribution
costs leadingtogreaterprofitmarginsforthose whoare involved.Asthe deliveryisdone bythe via
internet,thismodel isonlyavailable toamuch smallertype of market.
Milestones

2. Duringthe negotiationof the publishingagreementthe milestoneschedule willbe drawnup
outliningasetof milestones.The developermustmeetinordertoreceive furtheradvancesof
paymentandnot breachtheirpublishingagreement.Thisdocumentusuallyconsistsof around8to
15 milestones.Althoughthe mostmilestonescheduleswill containmilestonesrelative toatype of
game,there are a fewstandarddeliverable thatappearinall.The firstof these wouldbe the design
documentthisdocumentwouldcontainthe game storyof the featuringlike gameplay,technical
specificationandconceptart.The deliveryof aprototype isalsoanothercommonmilestone.This
wouldbe a rough demonstrationof the game initsearliestplayableformwithplaceholderoftenthe
projectmay notevenbe giventhe greenlightuntil the prototypehasbe deliveredinthe final 3
milestoneare typicallyalphabetaandgoldstagesof development.
Budget
In the stagesof developmentbefore the productionbegins,adeveloperwill putforwardtheir
conceptto a publishandthe hope of receivingfinancial backingforthe developmentof the game.
The publishingagreementwill usuallystipulate thatthe advancespaidtothe developermustonlybe
usedforthe developmentof the game,andnot coverand overheadcostsof the studioitself.Asthe
developermaynotsee anyreturnfrom the game until aftercompletionthiscanputa great strainon
the studio.Uponcompletionof the game will move toretail andthe publisherwillretainall of the
gamesincome until the income exceedsthe advancespaidtothe developer.Once the advances
have beenrepaidthe developerwill begintoreceivefromthe gamessales.Howeverthe publisher
will still retainalarge percentage of the income.
Market Trends
The videogame industryisconstantlychangingasare the people whoplayandbuygames,thisis
whymarkettrendsare mostlydevelopandpublishedbyfollowingcloselyinordertohelp determine
whetherornot a game wouldbe successful intoday’smarketandwhatwill itfeaturesand
mechanicsconsumersexpectfromagame or console.Inorderto dothisthe developerswill lookat
boththe hardware andsoftware that’scurrentlybeingdevelopedbyitscompetitorsaswell aslook
at trendsinother industriessuchasfilm,theyisreallychangingaffectingdifferenttypesof game
companiesinthe gamesindustries.
Products
Market trendsinhardware playa particularlylarge partin the developmentanditupdatesa
console.Thishasbeenmade evidentmostrecentlydue toSonyandMicrosoft’sventure intomotion
basedcontrollersafterthe unexpectedsuccessof the NintendoWii.Anotherexample where this
occurs inthe rhythmbasedgamesis companiesthatspecializedinmanufacture of game controllers
was inspiredtocreate andseeingthatpotential forthatdevelopmenttobeginanditmightbring
withitfurthertitlesforthe publictobe interestedinthatcertainproduct.
Services
The market trendsnolongerpertainsolelytothe salesandthe developmentof the hardware and
software are takenintoconsiderationwhendevelopingservicessuchasSony’sPlayStationNetwork,
MicrosoftXbox Live or the NintendoWii’sthesetrendsare currentlyseeingintheseserviceswhich

3. inthe inclusionof social networkssuchasTwitterandFacebookas well asotheradditional media
streamingsiteslike YouTube.