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[rlyeh]

Hello tigsource\n

I'm new on the boards so my name's rlyeh and I've been in the industry since 2007. Nice to meet you all! : -)


I am thinking about creating a studio in my place in a friend's established company. So, I stumbled upon my own new business model idea, both for indies and companies, which might benefit both indies and industry. It is inspired in discographical business model someway, so it *should* work.

Let me know what you think after exposition please.


- Create a videogames studio/company/label (from now the Company), valid in law/legal/economics aspects related to your country/scope (~so you can publish games as third-party company).

- The Company adopt indie studios (from now the Studio) under its own label, publishing their games and giving them law/legal support, for a tribute in exchange (~so indies got company support)

- Each Studio feeds a tribute; a proportion of total expenditure for each month of the Company (~so, apparently, the Company has no costs).

- Each Studio decides how their game is going to be/look/feel and got the all the rights and intellectual properties about their own creations (~so, indies don't freak out about Company taking decisions on their game or about not doing what and how they want to do their game).

- It is a rule of friendship and cooperation that each Studio shares all the technology, knowledge and experience, as well as physically working at the site of the Company (~so we all help raising each other; fair play; sinergy; indies adopt milestones, journals, good industry workstyle habits).

- If the company will provide legal remedies for a Studio or make medium with other first / third parties for a Studio or manage / purchase contracts for a Studio or to sponsor a Studio or Studio's game(s) then an agreed extra charge or a percentage of the total profits of the Studio per fiscal year or project, as agreed with the Studio (~so the Company is still generating benefits per fiscal year).

- If the Studio has only used the physical resources of the Company, they take 100% of profits (~which is not bad, because at the time of publishing the game the Company got all the development tributes for that Studio, plus all technology, sinergy and experience involved).



Any weak point in my exposition? Ideas and suggestions are more than welcome. Thanks in anticipation!! : -)

[LemonScented]

Hmmm. I'm going to be horribly unfair and play Devil's Advocate, and poke holes in this - it sounds like that's what you want people to do...

So, it's a cross between a publisher (in that the Company publishes games) and an umbrella company (in that it handles the legal and tax work of a Studio, for a fee), although it also makes the rather unusual step of providing office space and demanding that Studios use it. So far, so weird. Questions:

- Publishing games costs money - a lot of it if you're going to be involved in marketing and distribution. Where does that money come from? It takes money from the Studios, but doesn't seem to take any cut of the royalties. How does it make a profit?

- Assuming that under some circumstances, the Studios do give up a percentage of a game's royalties to the Company, how can the company reconcile that with its policy of not having a say in the development process? If my Studio is going to pay its way by giving the Company a percentage of its profits, but I want to make something grossly offensive, or too large in scope to ever get finished, or just plain bad, how could the Company turn that into something profitable?

- The main reason an indie Studio would sign up to a publisher is because they're starving and can't pay the rent: they want some money upfront, in exchange for meeting agreed milestones, to fund the game's further development. Instead of offering funding, you're charging a fee for umbrella company type services. How do the Studios buy food during development? And if they have a means for buying food, why do they need you?

As a community, the idea of sharing code, tools and working practises is a good one (and is part of what various online communities such as TIGSource seem to be aiming to achieve). The moment you introduce money - particulary asking developers for money rather than offering it to them - it becomes a business, which is a totally different kettle of fish. From what you've described so far, I don't see how such a business could make a profit, or could offer anything substantial to the developers who pay for its services.

[rlyeh]

@LemonScented
yeah, devil's advocate thats what I wanted! : D thanks very much long the long reply

I have to remark that there is no real CEO or staff on top on Studios. It is just a collaborative indie effort, where all Studios work under a same roof, and where we try to grown up all together and help each other.


- publishing costs are paid by all Studios as an equally divided tribute, just like any other Company's cost. It always works in the same way.

- well... before ur current grossly offensive project gets accepted into the Company I think it would be wise to parliament your project with the other Studios. If your project passes the parliament then I find no reason why the game should not be done, as the Company has clearly spoken to allow its development; no matter what the public reaction will be.

By the other side, if your project is too large in scope the Company wont matter at all. The Studio is already paying monthly, so the Company has no costs with you, no matter how long u take to do it. I think all the marketing and stuff should be done after the game is done or almost done, as you're using the money from your workmates (the other Studios under your same roof) and you dont want them to waste their money. Anyways, if it's really a need for your Studio to get others' money before its done, then we should make a new parliament and decide all together what to do; fair.

- We, as indies, do not really need big budgets. We can create stuff for cheap; a chair, a table, laptop/pc and an optional development kit (depending on platform) is almost all we need. Any studio which joins the Company should get its rent actually lower, since Company initial costs are not that great (place rent+power bill+internet bill+few taxes / number of studios). I'd say if you want food, buy it yourself (that's what we do in my current industry office); but once again, if your Studio really demands some food and its a new thing to support on the Company, get it approved first by doing a parliament. If approved, all Studios will pay the food monthly, since it's a new Company's cost.

---

I have to clear up that I introduce the money concept just because its a need when publishing games and paying for the rent. So since I want all the Studios to help each other, I (as Company) have to ask for them. All invoices are public and company sales/costs can be reviewed by any Studio. There is no tricks in here, nor real benefits for the Company staff. All Company's profit per fiscal year is divided into equally parts to the Studios, or maybe reserved to pay costs next year. A parliament should decide again in this case.

[LemonScented]

I'm still not sure I quite get it.

I'd say if you want food, buy it yourself

With what money? The people in the Studios will have to come into the office to make games every day, so they can't have other jobs. What little money they might earn (from some kind of government benefits? Donations from family members? Credit card debts?) is being paid into the Company. I'm not talking about food as in "snacks for the office", I'm talking about food as in "how do we avoid starving to death?".

- publishing costs are paid by all Studios as an equally divided tribute, just like any other Company's cost. It always works in the same way.

I still don't really understand this. Equally between studios? What if I'm a one-man Studio, and one of the other Studios has 10 people in it - will I pay 10 times as much into the Company as each of the people in the other Studio? What if my Studio is making artgames with a niche audience that probably won't sell very well, and another Studio is making a fortune with casual Facebook games - do both studios pay the same amount even though one is much more profitable than the other? Will the more profitable Studios be expected to subsidise the less profitable ones?

[I think all the marketing and stuff should be done after the game is done or almost done, as you're using the money from your workmates (the other Studios under your same roof) and you dont want them to waste their money.

This is a really bad marketing strategy, particularly for indie games. You need to be making as much noise as possible, as early as possible.

I think I might be missing the point completely, but right now I can't see why a Studio would join a Company like this. Umbrella companies might make sense for certain types of studios or developers (although generally speaking it seems to be more tax efficient for a studio to set up their own company), but Umbrella companies don't generally dictate that you have to work in a specific place, so that's a downside of this Company.
The Company doesn't seem to offer any help with publishing, either. Publishers pay the Studios to complete games, and then recoup their costs (plus profit) by taking a cut of the royalties, whereas this Company actually costs the Studios money during development, so the Studios will have to look elsewhere for funding to survive. The Company doesn't provide any budget for marketing, manufacture or distribution, aside from what the Studios themselves have paid into the Company.

[Aik]

How is this a better idea than hiring a marketing company once the game is finished?

Because right now I don't see any good reason for a studio to be part of the company until their project is nearly complete - they don't provide much of value until then. All through the rest of the development process, all the company is doing is sucking up your money without giving anything much in return.

It's seems kind of like a collective only with added disadvantages. Several studios pooling resources is good, but that can be done without constantly draining your money - have a look at what Iron Tower are doing. All the groups working under that banner have increased exposure because of it and access to the common pool of resources, but it's for mutual aid rather than for the profit of the overarching company. If they had to pay money to belong to it, I imagine the other development teams would drop back to being independent immediately.

[Triplefox]

This isn't a business model for "profitably making games", as it doesn't address customers.

It's coworking with a bunch of overencumbering stipulations attached. It idealizes away the interests of the middlemen who would be doing the marketing/biz stuff.

Coworking is OK. I wanted to try it at one time, but it's more expensive than working at home, and in the end, I've found that I like a lifestyle revolving around home + occasional jaunts out to meet someone and drink many coffees.


As for the idea of services for business/marketing tasks, you can do it like this: Find a trusted partner who can run the business side of things. In exchange for that, they have an in on product decisions. The difference between this and a publisher is that the publisher funds you, and just by being a big company has ample leverage to bully you, but the partner doesn't - they can only screw you over as much as any other individual. Set up a royalty/ownership agreement per product, rather than a company with shares - that makes it easier to walk away, and if the product agreement is legit, the company owner doesn't get any special advantages - the company is just a token used for legal purposes, but for that one product, all involved have to give their OK, which is exactly as it should be.

This is the agreement I am tentatively entering into on my current project - three ways with one company owner. I have great, experienced partners with a successful past working history, and we've carved out pretty clear roles for ourselves, so the collaboration feels like an even-handed one overall. It's social contracts before legal ones. The former are the ones that can reliably do good - legal and technical systems will be exploited. Doesn't matter if you're a great lawyer or coder