Assignment 2- james

Understanding the games industry- financial issues

Introduction

during this blog i will be talking about several financial issues of the games industry, and how a game destined for great success can actually end up to be a huge failure and what they could have done better to ensure that there game would not be a huge flop. As well as talking about this i shall be talking about games that have done really well and how they have done it.

Last year the games industry in the UK alone really took off as well as worldwide with things such as Esports getting a lot bigger and a lot more revenue coming in from the gaming industry alone. Statistics show that over the past three years the revenue from games being sold in the UK alone has increased slowly with each passing year. In 2015 alone the statistics show that the revenue from the game industry was reported to be worth around 4.2bn which was an increase of a total of 7.4% from the previous year that reported it was worth around 3.94bn. Currently the UK is rated as the 6th largest video market in the world in terms of revenue and sales, with other huge countries taking higher placings such as china and america being at the top of the list. Overall being 6th on the list for UK is actually quite an achievement as games arent judged to be as big here as other countries like america so it shows how much an impact the UK have on the games market in terms of sales.

Costs when making a game

Despite many people thinking that games are relatively easy and not that expensive to make it actually is with all of the behind the scene things that have to take place for every interaction to take place, such as the campaign within the game alone would cost quite a fair bit of money depending on what sort of voice actors you have and the sort of graphics you want to go for.
A list of all of the costs included when making a game-

• Production and development costs

first of all their would be all of the developers salaries that are included for them being part of creating the game, and they are obviously not going to work for free so you have to make sure you account for them when deciding how much of a budget you have when creating a game. Then there would be the voice acting as i previously mentioned which would cost more money else the story will not make sense, as well as if it is a multiplayer game there are usually smaller and small call outs or catchphrases throughout the maps or levels. As well as those two huge costs alone, you would also have to hire or pay for a soundtrack for your game which would  cost a lot especially to get all of the rights to use that song if you do use an already made song, if not you would have to hire a band or a singer in order to record a soundtrack for your game which would actually cost a lot of money. As i briefly touched on there you would also need licensing for everything that you use which would cost a fair amount but not as much as getting sued if you use copyrighted music and images.

• Marketing and promotions

Within making the game you would have too advertise your game extremely well in order to hype it up and get a lot more exposure for it, this can actually cost quite a fair amount. The main and most popular advertisement would be the television advertisements which is where you make an ad as good as you can expressing all of the good features in your game to try and lure people in, but this is actually very expensive because you would have to pay for what channel you want to be advertised on and what time frame you want to be in. Also there is print advertisements which has things like posters within it and you can do these pretty simply and it would not cost a lot you would just have to hire an artist to create you the best poster possible and pay for it to be placed within popular stores to get the maximum exposure possible. As well as there is online advertisements which are small trailers or a small picture on the side of the website or on a web page such as facebook, you can choose the website that you want your game to feature on and depending on how popular the website is and how long you want the advertisement to feature on there for, this would also make the price of the advertisement vary because a high calibre website like youtube would cost a fair amount to have an advertisement feature where as if it was a smaller website that doesn't get as many views and isn't as popular it would cost considerably less. Finally there would be events and launch parties in order to boost the games publicity and try get more more fans to come and see the game as it is developing over time. These events could be things such as E3 or gamescom where tons of gamers and developers go to see games as well as try get there own more out into the public eye. In order to get into the bigger types of events you would want a ton of gameplay or at least a small snippet for people to play and get a taster at the event, you could also have a video playing in the background which would show people walking by you game. there are also smaller events that would not require as much preparation but either way it will most likely cost quite a fair bit in order to get all of the posters, videos and everything working smoothly as well as transportation costs.

• Manufacturing and distribution

First of all regardless of what type of game you are making you will have a good idea of what type of product you will be sending it too such as console or arcade, both of these will cost quite a lot in order to make due to the excess amount you would need to make. In order to make a arcade machine game it would still cost you quite a lot of money even though they aren't as popular as they used to be and would result in money loss unless it was a huge success. The arcade cartridges cost so much to develop because they must be able to programme it into there current machines or you would have to make a whole new arcade machine purely for that one game and if you do that multiple times for several arcades and they aren't hugely successful you will already be at a money loss. Also the price is around the same for a console game due to the amount of risk you are taking on it, the risk factor comes in due to the amount of games that are already out for every console available so theres no guarantee your game will be success unless it is being published by a big named company. The main amount of cost with this game would be the amount of discs you would order in advance of the games release judging on how many you are predicting to sell.

• How can a game in production be funded?

The first thing that comes to most peoples mind when they even think of creating a game is how it is going to be funded due to most people not having a lot of money to spend on developing and creating a game from scratch. You can still fund the game you are creating yourself though, I wouldn't recommend this if you didn't have a bunch of money due to the amount the overall cost would be and there is no guarantee you will ever see a penny back from however much you spend on the game, it still as benefits if you do decide to go with this though however because you would not have to convince anyone or rely on anyone else to fund your game as you are doing it yourself as well as all of the profit that you make from the game will go mainly to you due to you doing everything and not having any third parties helping you finance it along the way. You could also take out a bank loan which could be very expensive depending on if you can pay it back within the time frame as well as it not being completely reliable due the fact if they do not think that your idea is going to be successful enough for them to get there money back plus tax over time they will not give you a penny. But if you are able to get a bank loan they will give you substantial amount that will help you a lot with the creation of the game and will most likely be enough to carry you over for quite a while depending on how long the game takes to make and how much you are spending on staff and things I have previously talked about. You could also get an investor if your ideas are enough to convince them that you game is worth making and will actually make them a large profit on what they have already gave you, but like the bank loan you would have to convince them and they are more than likely only going to give you the amount you need in small doses due to the risk factor and if they feel that the game is not going anywhere they can pull all of the money straight away whenever they want which is very bad., As well as when the game if actually on the market they will take a large cut f the money due to them being a big investor. But the main advantage of this would be that they would be helping you get bigger as they would also want to be making a profit from the game and want it to do as good as possible. And they will try and get you into events and give you honest feedback and regular funding if you require it. As well as you can have numerous investors so you can get a ton of money overall if you need it but in turn it would be hard to convince them to invest in the first place. Then finally you have crowd funding which is where you create a page online such as on a website like gofundme or on kickstarter. Both of these websites get a ton of money donated to worthy causes if people actually want to see the end product, kickstarter is the main one for games because I believe the main game on there that got the most funding purely from the public was star citizen with 23million dollars in total, but this is also risky because you cannot always rely on the public helping you and you never know if they will, but it would be very rewarding if they did because like I said prior you game get a huge amount of donations which would also kick up your popularity rating overall.

• The problem with being a small developer or creating a small indie game

The main problems when creating game when your a small developer would be the fact that it is very hard for you to get your game out into the public and make it extremely popular, this is mainly because there are tons of titles that are out for every gaming system and pretty much every genre has been covered by big named company's that have already made a name for themselves. Another problem within these two categories is that you wouldnt not already have an established audience supporting your game as well as it would be a lot harder for you to get a loan of the bank due to you having pretty much nothing other than an idea which would not always be enough in order to win them over.

• Conclusion

In conclusion i think there a lot of things to take in consideration when you are thinking about creating a game, and make sure that you are financially stable throughout the entire process of making it. Also there is a ton of risk involved in making a game too due to the fact that anything could go wrong, and there is no guarantee that your game is going to be a huge success with people. Overall i personally wont be creating a game anytime soon due to the amount of money required to even make a start as well as all of the costs within the production of it, also it is far too risky to partake in right now as i am not in a position where i can guarantee that i could create a game and still have money left over to live on within the process.