Greetings Indie Vision.

I wanted to ask a question based on the digital distribution service steam.

I’m an indie developer and i’m currently approaching my local government for funding a game project targeted for platforms like steam and impulse. One of the requirements of securing such funding is to prove that there is a reasonable chance of getting a healthy working relationship with steam going as getting a game on steam is a big step in customer visibility and simply getting the game selling.

Steam is notorious for not replying to enquiry and being hard to get a work relationship going. Is there any resources available on the subject of approaching a large scale digital distribution service like steam to listen to your game project and evaluate whether or not it’s a product they would like to support and have on their platform?

Thanks for your time,

Chris Watts.

Over to Mark Morris of Introversion…

At Introversion we are lucky enough to have a great relationship with Valve. They really helped us out with Darwinia and we continue to talk to them about development and commercial advice – I understand that not all developers are that lucky. The valve guys will see 100s of games a day all from hopeful developers who are keen to get their game published. There is no easy way to make sure your game is a head of the queue, it takes tenacity, dedication and work to make it onto their radar – If you don’t know what I’m talking about watch the first part of Wall Street and you’ll see how Charlie Sheen breaks into the business.

There are however, some fundamental things to get right:

1. Ask yourself what are Valve looking for?

They are going to want to know that you are trustworthy and capable individuals. Make sure your communication is well formatted and professional – why would they want to work with someone who doesn’t know how to use capital letters? Keep it short and sweet these are busy people. E-mail is good, but don’t forget snail mail – how many e- mails do you get everyday? How many envelopes fall on your mat in the morning?

　

Paragraph 1:

Tell them about yourself and your background – who are you, what experience do you have, how many games have you shipped in the past, are you an incorporated company or an individual – sell yourself and your team.

Paragraph 2

Tell them about the game – what is the concept, what is the gameplay, who is it aimed at and why well it sell. This is your elevator pitch

- get them excited, but be honest and not over the top.

Paragraph 3

What do you want – a steam launch is your end goal, but when will that be – they wont want to engage if you are three years of launch. You want a meeting to discuss your game at Valve’s office or a call or a meeting at GDC or what? Be clear on what you are asking for.

Most Importantly

The game – they play everything that goes on steam – send them a link to an exe on an ftp. Test this to hell. If Valve install it and it crashes before they can play you have just blown your chance. I think it is a good idea to make a gameplay video with a voice over perhaps and / or a trailer to that Valve can view this just in case they do have problems with the exe. Make damn sure that you include the right codecs for the video or use something like YouTube to make sure it’ll be viewable.

2. Keep on at them – don’t badger, but phone up a week after your letter – did you receive it? have you played it? When do you think you’ll get to it? I’ll phone you in a couple of weeks to see what you think.

Just my thoughts.

Mark.

We’d like to say a big thank you to Mark for answering that.

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-What would you say is the function of each system? E.g. XBLA for monetary gain, XBLIG for exposition?

XBLA is a continuation of the regular store sales channel, except it removes the store. MS adds restrictions on release frequency and dates.
XBLIG is a low cost and maintenance system by MS to allow small indie teams to get product onto Xbox, which could otherwise be difficult/impossible to achieve.

-What would make one system more ideal than the other?

If you are unable to get a slot from MS then you simply can’t release on XBLA. This is very hard to get – their green light process is rigorous many smaller indies may not be able to get this approval.
XBLIG has no restrictions on who releases what, or how frequently.

-What is the demographic targeted by each? My understanding is XBLA = public, XBLIG = indie developers

XBLA is simply far more professional and MS has a vested interest in exclusives and high quality content.
XBLIG is a free for all – and more of an experiment to court a tiny bit of money but a lot of press and goodwill.

-What monetary systems are in place, is there only the Microsoft points? Is there no free-to-play model available; was there ever such a thing in the XBLIG?

Only MS points – no free to play on either. There never was free to play. All XBLIG games automatically have an 8 minute free demo mode enabled which can be further modified by the app. XBLA have their own different demo restrictions.

-What different marketing options are available? I keep reading about the 50 copies given via XBLIG, but what else is there apart from self-funded marketing?

XBLA – its still up to the publisher to do most marketing. For indies often the publisher is MS, and marketing would have to be negotiated with them on a case by case basis. MS have a variety of available avenues such as promotions and news on the XBL service.
For XBLIG – nothing really. MS may showcase some of them (there are channels for competition winners) but you really are on your own.

-Once a game is released on one system, is it possible to transfer it to the other? Is there a method in place for this -for example I hear about XBLIG peer reviews that make it possible to eventually enter XBLA territory

XBLA -> XBLIG… No chance.
XBLIG -> XBLA… possible as some games have done this. But that doesn’t mean it easy (far more QA and compliancy is required to MS standards) or even possible given MS have to give you a highly coveted release slot and approve your concept.

-What protocols, authentifications etc. have to be made for either? Which provides the easiest/most cost-effective approach?

A little unsure what you mean by this…
If you want to make an XBLA title, you have to approach MS. There is no other way – and MS will lead you through the process. It could well add 6 months to a year onto the development timescale, especially for a first time indie.

Developing for XBLA will add 10s of thousands of additional costs; for devkits / QA testing / increased required features / increased TRC compliancy / legal fees / insurance. Marketing of your own on top.
XBLIG developing is very cheap – zero in comparison. But then XBLA titles cost from 800 points (or so) upwards and will sell 30k units or more, and XBLIG cost less than 400 and will sell only hundreds.

-Once the above the above point has been implemented for one system, can it be applied to the other or the whole process has to be repeated again?

Getting a product out on either channel is entirely unrelated to each other; totally separate processes.

Above all, I want to have a clear understanding of what is XBLA and what is XBLIG. Our initial aim from our obviously outdated info was to release on XBLIG as a free-to-play game to get exposition, and possibly get enough peer/creators reviews to be transferred to XBLA. Yet it is more and more apparent that we haven’t got the full picture, and need to understand how viable this approach would be and/if we should aim directly for XBLA

The big mistake here is thinking there is any connection between XBLIG and XBLA – there isn’t really. There is no such thing as “promotion” from XBLIG – it has nothing to do with peer/creators reviews. Its down to you approaching a publisher or MS with a demo (which may be on XBLIG or not) and entering into negotiations. 

MS did say they might pick up some titles for XBLA, but so far I can think of only one that did, and to make matters worse I can’t remember which one it is now!

They also promised the winners of the Dream-Build-Play to be helped onto XBLA – I’m sure they will always pick up good titles, but in all honesty its not a valid route to go XBLIG and hope MS will pick it up. 

They also mentioned their usual cut of 30% of revenue would increase to something between 30 and 60% if the game was featured on their “new cool” games bit, but this appears to have been dropped – it is a blanket 30% across the board.

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Ok so we had interest from X, Y, Z and A, after thinking about Game x only A made the team an offer.

Basically we were to sign over the I.P to them in return we get 5% Royalties each so that would be 25% in total of Profits that A makes. They also offered the possibility of getting full time employment in the event the game gets picked up by a publisher. For various reasons we didn’t not accept the offer but it still is valid till the end of November.

Our second offer is very different in that it comes from two private investors one of which I know well, he is also the creator of the steam game Steam Game so he has money to invest and some background in game development. The other Investor is his friend who comes from a business background and he also has cash to invest.

They have offered to buy the IP with and have given few options.

Buy out options:
1: Cash buy out/ forgivable loan
2: 5% Royalties of Sales from Game x

Working on it:
1. Anyone that wants to work on it will get paid a full time salary but will not have any stake in Royalties
2. Sweat equity where you get the 5% Royalties and a small Salary which you get if the game clears the development cost

Investing:
1. Sell your initial share of the I.P for 5% Royalties and after X amount of time working for FREE no initial Salary you will be given a further 10% share in the Company, this 10% can be increased if Game x is a susses and I am willing to Invest into the company.

There are different options as not all the Team member has the same needs. I can also tell you they are thinking of investing at most £180,000! which I think is a bit much but I have no idea really. How long is a piece of string? I know this is very rough information but I will try and provide more specific information that you may need.

Basically the team have no Money to invest in development so does get 5% Royalties for our I.P sound good to you? I am the only one from the team so far that would be willing/able to work for free so I could get 10% stake in a company cause I want to make a career in concepting and making my own IP.
(We can all dream )

I am worried about a few things.

1. How to protect myself if we have no money for Legal Advice?
2. Is working for free a good idea? I know it a risk but I want to be part of a Company as I want to be in the position to concept and develop my own games
3. Is this a good offer?
4. Should we hold out for another offer?

I know that some of the questions may be a big ask and I appreciate that this service is free and done with the help of people investing our/their free time. If you can offer any advice we would be very grateful and as I said we would be happy to document the process of how we setup our Indie Shop to hopefully help the site and its users.

Before I get to specifics, then there is one factor you must seriously consider (and discuss with your colleagues) which will influence any decision you make. Are you willing to completely sell out your idea/concept/game (the IP) for a lump sum or royalties on the basis that such money could be used to set up REMOVED as an independent, self-funded developer for the next game you produce? Personally, I think such a sacrifice is worth making provided you are all committed to continue together to pursue the dream of becoming a fully-fledged development studio. However, if this is just a one-off and everyone will be quite happy for the money to buy a car or whatever, then you must take that into consideration when making your decision.

You realise that the move towards Digital Distribution is, over the next few years, putting the developer more firmly in the driving seat? It will be easier – and a lot cheaper – for you to be able to exploit your own IP in the not too distant future and so it’s wise to consider using this time now to cut your teeth and learn as much as possible (from the inside) about how to go about it. It sounds like Game x might be the ideal vehicle for you to do this. Just a thought.

Royalties. The word ‘royalties’ has a number of different interpretations and I guarantee that your understanding/expectation will be very different to that of the person who is offering them. You need to ask them to define the EXACT nature of the ‘royalties’- Royalty from Net or Gross revenues? Royalty of gross (unqualified) means a percentage of the revenue they generate from the game. So if the game sells (from them) for £10 then a 10% royalty would be £1, yeah? Well, actually it wouldn’t, as they would need to deduct the VAT (or any other international tax), so it’s more like £8.50-ish. Royalty of net revenues is a much different can of worms. Most companies define ‘Net Revenues’ as gross revenues less costs… and you must NEVER accept that definition. ‘Costs’ can vary from taxes, billing charges, marketing, envelopes to wages of every person slightly involved in the production and sales administration of the game. And those costs will, in all likelihood, always exceed the money generated. Which equals nil royalties. Always ask for a detailed definition of the revenues from which you would derive your royalties.

Buy out options:

1: Cash buy out/ forgivable loan

• This is an option to consider if you want a quick buck and no ongoing interest in the product. You’re on a winner if the game doesn’t get developed/published or doesn’t sell well due to bad conversion/marketing, etc. I haven’t heard of a ‘forgivable loan’ being an option and I certainly wouldn’t accept such terms myself. If they are buying it outright, then they buy it full stop. It’s not a loan, forgivable or otherwise!

2: 5% Royalties of Sales from Game x

• If you really believe two things – that the game will be a huge seller, and that the Investor/Publisher is capable of exploiting those sales to the maximum, both locally and internationally, then the Buy-Out and royalties would be worth seriously considering. I assume that the stated 5% is per person again? If not, then this should be negotiable.

Now, the thing to bear in mind is that if you give away the IP without any significant up-front guarantee or advance then you have to consider the motivation of the investor. That is, if they haven’t paid a penny for the property then they haven’t got anything to lose. They aren’t compelled to choose the best developers to complete the game; they don’t need to spend any real money marketing or publicising the product; they don’t have to try very hard at anything – there is no down-side for them. This is why it is imperative that, if you accepted such a deal, you had a decent lawyer who would incorporate a number of conditions they would have to conform to – such as a marketing budget, a release-date, a development budget and – preferably – a guaranteed royalty to you guys.

Working on it:
1. Anyone that wants to work on it will get paid a full time salary but will  not have any stake in Royalties

• Again, this comes down to how much faith you have in the game and/or if you want a job. This is probably a double-edged sword in that if you take the salary option, develop the game and it’s a huge success then you will be kicking yourselves for the rest of your lives. If the game isn’t commercially successful though, I doubt whether the employment would last beyond that point. It’s a short-sighted, short-term option and would only be considered  depending on your personal financial circumstances.

2. Sweat equity where you get the 5% Royalties and a small Salary which you get if the game clears the development cost

• My first inclination was to dismiss this option out-of-hand, but on serious reflection I think it might be worth considering (bearing in mind I don’t know what a ‘small salary’ would be). If you can afford to live on what they are offering to pay then I believe the sacrifice might be worthwhile, depending on your own belief in the product, as per my original point above. However, I would reiterate my statements on royalties as previously explained and ensure that the investor is committed/obligated to make a reasonable effort to develop and sell the game to maximise the potential.

Investing:
1. Sell your initial share of the I.P for 5% Royalties and after X amount of time  working for FREE no initial Salary you will be given a further 10% share in the Company.this 10% , this 10% can be increased if Game x is a susses and I am willing to Invest into the company.

• Never work for free (says the guy who is dispensing this advice voluntarily!). Even if you could afford to do so, you would have to insist on SO MANY warranties by the investor/publisher to deliver their end of the bargain (commitment to publish, commitment to a marketing budget, commitment to global distribution, etc). There are so many other factors, for instance 10% of the company sounds well and good but what exactly is it 10% OF? If the next Tetris or Call Of Duty knocked on the publisher’s door what would compel your investor to publish it through your company rather than start up a new label specifically? I don’t mean to cast any aspersions on the investor (I don’t even know who it is), I’m just trying to give you a rounded, if a little cynical, overview of the considerations you need to take into account.

1.How to protect myself if we have no money for Legal Advice?

• Always, always, always get a prospective investor/publisher to sign a NDA before you discuss/show your ideas and concepts. There are plenty of places to get standard Confidentiality templates and I strongly recommend taking a good long look at THIS PAGE for some great legal advice on this very subject. Some companies refuse to sign third-party NDAs and so it is usually acceptable to sign theirs (provided you read it thoroughly beforehand of course!) . However, whichever route you take regarding the above options you MUST use a lawyer to formalise any agreement you make.

This brings me to another unfair business/commercial reality – in making a deal like this it is always in your best interest (as the person who is selling) to have your own lawyer draft the agreement in the first instance. This way, you ensure all your own conditions are specified. It is then incumbent on their legal department to amend and renegotiate key terms. The downside though, is that this is far more expensive than having their lawyer do the draft and yours make the amendments. Not fair, but an unfortunate reality.  
2.Is working for free a good idea? I know it a risk but I want to be part of a Company as I want to be in the position to concept and develop my own games

• It’s only a good idea if you really, truly know the people involved and trust them implicitly. No-one is in business for charity and everyone is looking out for themselves. Don’t let your eagerness to get into the business cloud your judgement and overrule your common-sense. There are certain times when, yes, it might be a good risk to do some unpaid work, but you must be 100% confident the sacrifice will pay off if you deliver the goods. ‘Hope’ isn’t a good basis for business.

3. Is this a good offer?

• You must weigh up your perceived value of the IP against the here-and-now. I bring you back to my original point again, and I think I’ve covered my opinion(s) of the offers in the above paragraphs.

4. Should we hold out for another offer?

• I do find this one the hardest to answer. Everyone is different and you must make your own decision. My best advice here would be to mull over EVERY one of the above points relating to the varied offers you have received and if, on reflection, they are all unacceptable to you then try and find another interested party. However, in this economic climate you are very fortunate to have anything on the table right now so don’t be too hasty to dismiss what is there.

I know I haven’t given you a definitive answer to any of your points… basically because there isn’t one. What I would do personally has no bearing on this as your emotional investment would be entirely different to mine – and anyone else’s. Some people perceive their IP as their ‘babies’ and therefore want to nurture it to full development and be a part of its life until it is ‘released’ into the real world. Others are just happy to sell their baby for adoption as soon as it is developed enough to do so. There is no right or wrong. The final decision rests with you, but please let us know what you actually DO decide!

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Our company is an approved Wii Developer and we are currently working on a WiiWare title. We are using a 3rd party engine which cost quite a few thousands of dollars per title.

 From what I understand there are a few options out there, one you may want to consider is Torque for Wii: 

• http://www.garagegames.com/products/torque-wii

 I notice something like Unity for WiiWare costs $15,000 per title, but Torque may well be cheaper.

In addition to that there are other costs that we will need to cover like rating, insurance and QA, and day to day operation costs.

We’ve been through the various stages so know the costs involved quite well. Indemnity insurance with the Nintendo arranged insurance scheme cost us $2,500 for the year. Also – don’t forget to fill out your source withholding tax forms (http://www.indievision.org/?p=548).

 Age Ratings – ours are all family games, so the exact costs for us were:

• PEGI – casual game fee of €250
• USK – €1000
• AGCB – AUS$1150 for the Level 2 submission (includes separate video recording)
• ESRB – causal lower budget game (under $250k development costs) fee is $800

 Australia can be a pain – you have to be very specific with the formats you sent the content over in. The WAD must be on an SD disk, and you need to provide a separate video recording; “Most formats for gameplay footage are fine (pretty much anything that will play in Windows Media Player).  So for example, DVD, CD or .WMV or .MOV files, etc.”

What I’m trying to analyze is the risk involved in releasing this game as a WiiWare title as an independent studio.

I have heard that some games didn’t pass the minimum threshold but there really isn’t any data on these games. The little bit of data that’s available on vgchartz is on the top games, not the bottom. 

Simon Carless’s Image Game Metrics slides are about the best info there is at the moment:

http://www.slideshare.net/simoniker/indie-game-metrics-october-2009-update

This is of particular interest: 

• LOW-END: 5-20,000 Units
• MID-END: 25-40,000 Units
• HIGH-END: 50-350,000 Units

 He also points out the following:

• Very few titles didn’t meet the minimum payment rate for individual territories

I wonder how fast your game drops from featured as a “new release” to the bottom of the pile, if it’s not a hit game. I hope it’s better than the AppStore As far as rating, I understand that if the game is for the whole family it’s a lot cheaper than violent games.

 Well as there are relatively few titles on the site – you should remain fairly visible, unlike the 100,000 Apps on the AppStore.

 Nintendo also do the occasional Featured apps mention, which could be worth pursuing.

 BUT – no real data on any of this I’m afraid. You really do have to go into WiiWare publishing blind, which is a very unfortunate state of affairs.

What about marketing? I hardly ever see any marketing for WiiWare titles besides press release on some game websites.

It seems like many studios decides to publish their own game on WiiWare.

Marketing is tricky as it can demand a lot of time, and you need to get familiar with everyone; build a list of all contacts and initially adopt quite a traditional approach; contacting the typical Nintendo websites, the smaller ones (& blogs) and press.

Make sure you have plenty of assets to send them – apparently they are also very keen on seeing ‘in-development’ assets; such as concept art – to really flesh things out.

www.gamespress.com is a handy resource for getting the message out too.

Do you think that as a small studio, a publisher is something worth pursuing?

I know of a few that do publish WiiWare developed by external teams – Majesco, Mastiff, Hudson. You will certainly lose out on royalties if you go down that route, but they will provide development money, and take care of the marketing, ratings, etc…

Here is a list of contacts:

http://www.indievision.org/?p=127

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“In addition to Gary, we will have other industry specialists involved, such as Martin Brown of Team 17, Mark Morris of Introversion, and we have access to many more so we are in the position of sourcing the best information for the question asked.” says Richard Hill-Whittall, founder of indievision. “We shall also include guest slots with industry lawyers and accountants who will be able to give useful pointers and tips about diverse issues such as IP Protection and Tax Credits.
Networking is one of the most valuable resources in any industry and via the above people we have access to practically all of the key ‘movers and shakers’ in the business.”

The aim is to try and make it a little easier for indie studio owners to find answers to the many questions that crop up on a day-to-day basis. We will then compile a whole history of these questions (and answers, of course) so they can be a referenced for all the other budding entrepreneurs out there. The ultimate challenge is to help them (if they want) shake off the ’small’ in small independent developer’!

The answers will be provided by people who have had a serious amount of experience within the sector in question.

The service is being offered to small, independent developers who are serious about their business and are actually starting/continuing a new/existing business.

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