1. To understand financial issues in the gaming industry.
GTA V Minecraft Pokemon Red/Blue
Tetris Mario Kart Wii COD: Modern Warfare 2
Super Mario Bros. Wii Sports Resort Wii Sports
New Super Mario Bros.
2. To understand financial issues in the gaming industry.
1. Wii Sports (Wii) – 82 million
2. Minecraft (various) – 54 million
3. Super Mario Bros. (NES) – 40.24 million
4. Mario Kart Wii (Wii) – 35.53 million
5. Wii Sports Resort (Wii) – 32.37 million
6. Grand Theft Auto V (360/PS3) – 32.5 million*
7. Pokémon Red/Blue (GB) – 31.37 million
8. New Super Mario Bros. (DS) – 30.38 million
9. Tetris (GB) – 30.26 million
10. Call of Duty: Modern Warfare 2 (360/PS3/PC) – 28.5 million
3. To understand financial issues in the gaming industry.
1. Best-selling action-adventure videogame in 24 hours
2. Best-selling videogame in 24 hours
3. Fastest entertainment property to gross $1 billion
4. Fastest videogame to gross $1 billion
5. Highest grossing videogame in 24 hours
6. Highest revenue generated by an entertainment product in 24 hours
7. Most viewed trailer for an action-adventure videogame
4. Final Fantasy VII
To understand financial issues in the gaming industry.
Call of Duty: Modern Warfare 2
Destiny
Star Wars: The Old Republic
Grand Theft Auto V
5. 1. Destiny $500 million
To understand financial issues in the gaming industry.
2. Grand Theft Auto V $265 million
3. Call of Duty: Modern Warfare 2 $250 million
4. Star Wars: The Old Republic $200 million
5. Final Fantasy VII $145 million
6. To be able to…
P1
describe current financial issues in the games industry with some
appropriate use of subject terminology
M1
Explain financial issues in the games industry with reference to detailed
illustrative examples and generally correct use of subject terminology
D1
comprehensively explain financial issues in the games industry with
reference to elucidated examples and consistently using subject
terminology correctly
7. To understand financial issues in the gaming industry.
business models
budgetary systems
financial responsibilities
preparing a budget
evaluating performance against budgets
budgeting periods
management and reporting systems
break-even analyses
funding groups
Licensors
Franchises
Milestones
8. To understand financial issues in the gaming industry.
Financially, the games industry is a very risky businuess. Only the top 5% of
games released make a profit, and due to the high costs involved in making
a game, and the way the money made from the games is dispersed between
those involved, a failed game can often mean a small developer declaring
bankruptcy, while the larger companies report huge losses, especially
against projected profits for a game based around a popular franchise with a
strong fanbase.
Its not uncommon for games to cost $12 million to develop, with top end
games costing up to $30 million.
This budget does nothing more than cover the costs of getting a game to
the store. Virtually no profit is made, and it is entirely up to the public
whether a game succeeds or not.
12. To understand financial issues in the gaming industry.
In the early stages of development before production begins, a developer will put
forward their concept to a publisher in the hope of receiving financial backing for the
development of the game. The publishing agreement will usually stipulate that the
advances paid to the developer must only be used for the development of the game,
and not cover the overhead costs of the studio itself. As the developer may not see
any return from the game until after completion, this can put great strain on the
studio.
Upon completion of the game and its move to retail, the publisher will retain all of
the games income until the income exceeds the advances paid to the developer.
Once the advances have been repaid, the developer will begin to receive royalties
from the games sales. However, the publisher will still retain a large percentage of
the income.
13. To understand financial issues in the gaming industry.
In a contract whereby a game may have multiple sequels, the publisher may ask that
the royalties the developer receives from one game would pay back the advances
from a recently released sequel. This is known as cross-collateralization. The
downside to this is that the developer may not see any return for its efforts until all
advances to the publisher have been repaid.
Should there be complications during the development process, the developer will
have the option of paying the publisher a kill fee. This kill fee will usually cover the
cost of any advances the publisher had made to the developer during the
development of the game. The value of the kill fee is determined by how far into the
development cycle the game was before termination.
14. To understand financial issues in the gaming industry.
http://arstechnica.com/gaming/2012/02/why-dont-more-game-developers-
see-royalties-from-their-work/
16. To understand financial issues in the gaming industry.
Milestones are in place in the development stage of the business to ensure that no
financial issues or deadlines are a problem. They keep the business organised so
that every step of the way the project is at the stage it needs to be.
During the negotiation of a publishing agreement, a milestone schedule will be
drawn up; outlining a set of milestones the developer must meet in order to receive
further advances of payment and not breach their publishing agreement. This
document usually consists of around eight to fifteen milestones.
Although most milestone schedules will contain milestones relative to the game,
there are a few standard deliverables that appear in all. The first of these would be
the design document; this document would contain the game’s story, key features,
gameplay mechanics, technical specification and concept art.
The delivery of a prototype is also another common milestone. This would be a
rough demonstration of the game in its earliest playable form with placeholder
geometry and textures. Often, the project may not even be given the green light
until a prototype has been delivered.
17. To understand financial issues in the gaming industry.
The final three milestones are typically alpha, beta and gold stages of
development. All three of these stages occur in the production stage.
The Alpha stage typically states that the game is around 95%
complete. Some levels, geometry and textures may be incomplete,
and the game will most likely contain bugs. This gives the publishers
an idea of what stage the game is in and gives them a rough idea on
when it will be completed.
Beta indicates the game is ready to go to quality assurance testing
to uncover any last acceptable bugs and make final tweaks to
gameplay mechanics. As it’s impossible to remove all bugs, the
developers should take it upon themselves to make an agreement
with the publisher as to what defines an acceptable bug. At this
stage it may also go to public testing, which can aid with
marketing.
18. To understand financial issues in the gaming industry.
Gold Master generally pertains to the game’s code being
complete and ready to go to the publisher for manufacturing
and distribution. All unacceptable bugs will be removed at this
stage.
During the agreement of the milestones the developer should ensure the
milestones set are realistic and achievable, as any delay on deadlines could
cause a breach in contract and push back any advances to the developer.
Should the publisher reject a delivery, it’s in the developer’s best interests to
ensure the publishers concerns are met and the delivery is re-submitted, as
again, any delay on deliveries could result in a breach of contract and delay
advances to the developer.
