Pre-production and Communication techniques

Money, Finance and Budgeting

Lesson Aims:• All of you will know about funding in the games

industry

• Most of you will be able to discuss the benefits and drawbacks of different types of funding

• Some of you will be able to criticize funding for a specific type of game.

What is the highest selling game?• Wii Sports with 82.69 million copies sold

How has the developments of games over the last 10 years made funding and success more difficult?

• More workforce needed to support the developments

• New technology and techniques• More time needed to create games• More competition

All of this means more money is needed to fund a game and there is a higher risk of failure!

How many games are financially successful?

How many games are financially successful?

• Financially, the games industry is a very risky businuess. Only the top 5% of games released make a profit,

• due to the high costs involved in making a game, a failed game can often mean a small developer declaring bankruptcy,

• while the larger companies report huge losses

• 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.

Self Funded• Self funding requires a sum of

money being put forward by the developer.

• This could be sourced through sponsorships, loans, or private investment.

• What are the benefits and drawbacks of this type of funding?

Publishing deals• A deal is made between the games

developer and publisher• The developer creates the game • The publisher funds development and

provides other services• Developer receives share of total

revenue (royalty)

• Benefits and drawbacks of this option?

Publishing Deals• Advantages:• Higher budgets• Financial security• Access to contacts • Builds reputation easier• Other services included (distribution, etc)

• Disadvantages:• IP ownership might belong to the publisher• Sequel rights might belong to the publisher• Distribution rights and other platform releases might be

decided by the publisher

Crowd Funding • Collection of small amounts of money from lots of

individuals

• Usually generated through kickstarter style projects and other development funds.

• What do you think the benefits and drawbacks of crowd funding are?

• What types of games would be better suited to this type of funding and why?

With Crowd funding….• It is the individual or company that is developing the

game that receives funding so it is not backed by a publisher.

• Benefits include:- Creative freedom- Owning the intellectual property- Larger % profit from sales- Manage your own time

Disadvantages include:- Not able to afford advertising- High cost of publishing, legal and software- Loosing motivation- No publisher support/ difficult to get the game out- Can’t pay for talent.

In your report write about:• Types of funding available for games

(self funding, crowd funding, private investment, publishing deals)

• Which areas of games production would need funding and why? (equipment, transport, talent, crew, materials, facility hire, clearances)

• Which type of funding would be best suited to your type of production?