CO1301: Games
epts 2015
Lecture 4
Sales Contracts - A Primer
plus Design & Development Summary (Revision)
Dr Nick Mitchell (Room CM 226)
email: [email protected]
Material originally prepared by Laurent Noel & Gareth Bellaby
On the Shelf…
 A “AAA” console game might
retail at around £35+
 Who gets this money?
 The
developer
 The publisher
 The retailer / distributor
 The government
 We will look at how this money
is divided up.
 We will also look at the contracts
involved.
Game Sales – Who gets What?
 This is a simplistic breakdown
of a typical game sale.
 Two points are immediately
clear:
 The retailer takes the
largest slice of the money.
 The game developer takes
the smallest slice (the red
slice).
 Next, we will look in more
detail at this breakdown.
Share of a £35 Game
12%
(£4.20)
20%
(£7.00)
28%
(£9.80)
40%
(£14.00)
VAT
Publisher
Retailer
Developer
Tax and Retail
 In the UK, since January 2011, 20% of the game price
is paid to the government in Value Added Tax. This
amount is ignored in the remaining calculations.
 So the effective price of the game is £28.
 Many other territories have a similar tax.
 The game publisher will negotiate a contract with the
retailers (and distributors) to divide up the remaining
money.
 Here, we have assumed a 50:50 split, which is
fairly typical.
 However, there is a wide range of possibilities.
Developer Royalties
 So in this example, the publisher will receive £14.00
after tax and retail costs.
 Now the game developer will be paid some of this
money as royalties for writing the game.
 The royalty (if paid as a percentage of revenue) can
range from 15% to 50%.
 It depends mainly on the developer’s track record.
 In this example the developer is paid 30% royalties.
This is 30% x 14.00 = £4.20 for each game sold.
Advance Royalties
 Developers often get
money from the publishers
before the game is sold.
 These are ‘advance
royalties’.
 When the game goes on
sale, the developer gets no
royalties until the
publisher has recouped
this money.
 So developers get no
royalties until a certain
number of sales is reached.
 Advance royalty example:
 Developer
is paid
£500,000 in advance.
 Developer should
receive £4.20 per unit.
 So there will be no
royalties until there
are 500,000 / 4.2 =
119,048 sales.
 We will call this the
‘break-even’ point.
Advance Royalties 2
 The majority of games do not reach the break-even
point.
 However, advance royalties are rarely paid back to the
publisher, even if:
 The game doesn’t reach the break-even point (the
publisher doesn’t recover the advance royalties).
 The game is cancelled (‘canned’) by the publisher.
 This insulates developers from the unpredictability of
the games market.
 Publishers publish a large number of games to
protect themselves. The minority of games that do
break-even will pay for those that don’t.
Sales Examples
 Sample sales figures using our example:
Advance
Royalties
£300,000
Breakeven
Sales
Actual
Sales
71,000 100,000
Further
Royalties
Publisher
Gross
Income
Publisher
Net Income
£122,000
£1,400,000
£978,000
£500,000 119,000
50,000
£0
£700,000
£200,000
£1,000,000 238,000
60,000
£0
£840,000
£-160,000
£1,000,000 238,000 500,000
£1,100,000
£7,000,000
£5,055,000
 Note that the publisher only has a negative income when
the sales fall far short of the ‘break-even’ point for the
developer.
Implications for Employees
 The figures in the previous table are before costs.
They do not tell us if the developer or publisher are
making a profit.
 In general, developers do make a profit if they
exceed their break-even points.
 If you are paid bonuses as an employee, you can only
realistically expect them to be large if the ‘breakeven’ point is far exceeded.
 But check your contract and with also with
management, don’t assume.
 To get an estimate of the advance royalties: Total
staff salaries for the project x 2
Implications for Job-hunting
 Games development companies are stable
environments so long as they have publisher
contracts.
 They are not directly affected by having low sales
figures, although it will make future contracts
harder to come by.
 Look for games companies with several games in
progress. Be careful with very small companies.
 Try to join at the beginning of a new project rather
than at the end of an existing one.
The Games Industry
 Reality Check:
Game Development != Game Playing!
 Games are developed and designed by a team.
 Hard work – but the rewards are there.

 But…

Rewarding, exciting, varied, relaxed, and all about
games…
Design & Development Summary
Game Design
 Designs go through several stages:

Proposal/Pitch to Game Design Document
 First drafts must capture interest
Detail is not important
 Excitement, intrigue, and marketing is…

 Later designs must be comprehensive
Otherwise expect unforeseen problems
 But don’t forget the fun

Game Development
 Roles
–
–
–
–
Programmers
Artists
Designers
Management, Testers, Musicians etc.
 18 months of team working – like a film
 Publisher provides funding
 Developer must satisfy publisher
 Royalties (+bonuses?) if game sells well
Programming
 Games are large and complex programs
 Programming Tasks:
3D Engine
 Game logic
 Tools and technology
 Also, physics, networking etc.
 Consider programming at design time
 Code reuse is good, but so is innovation
 Strike a balance
 Expect trouble when you first reach program
testing…

Artwork
 3D artwork is half-sculpture, half-architectural
drawing
 It is highly skilled, don’t expect to be able to do
much yourself
 But do try to understand the processes
 It will make you more productive in a team
 Programming, art and design meet during:
 Game design
 Level creation
 Testing
TL-Engine
 A simple, but realistic environment
 For Assignment 1 you should know about:
Initialisation and the game loop
 Loading and creating models
 Controlling models and cameras

 Coming next: Parenting and nodes
 Coming soon: Basic collision detection / resolution
Learning and Teaching
 Lectures give you key information.
 Practicals allow you to apply the information.
 Play allows you to see what happens if...
Or to put it another way...
 Lectures are easy to forget.
 Practicals let you learn.
 Keep playing (= experimenting) and you will master
programming.