Recently I had the pleasure to explain a few basic game publishing concepts to a several investors who didn’t have a lot of game industry experience but were eager to learn. I thought this knowledge could serve other new comers as well.
Q: What is game publishing and how it evolved?
Game publishing history starts in the days where the only way to distribute a game was through retail chains. Very much like book publishing or the music industry the gaming industry started with an offline distribution model. In the days, the core functions that game publishers fulfilled were funding the risk and getting the game to users. In the days of online games, users started downloading games and playing online rather than buying them at stores but the role of publishers still revolved around bringing the users and funding the game production. The big change started in the the days of facebook games and mobile games.
Q: What led to the change in the role of game publishers?
The emergence of Facebook gaming and mobile gaming changed the way people discover and find games and centralized it. In this world the game distribution channels are accessible directly to the developers and the function of bringing the users to the games is now provided by Apple, Google and Facebook. In a sense, they are providing a big part of publishers’ historic role. Another big change is that developing games became a lot easier and cheaper than it used to be in the past. With more and more game productions being self funded, publishers started waiting for the games to be finished before deciding to allocate funding. In other words, publishers stopped funding the risky part of game development.
Q: What is the publisher role today?
With the two core functions gone, publishers needed to re-invent themselves. Their role evolved into a mix of:
- Production guidance based on best practices and experience
- Improving App Store placement and ASO
- Funding a test budget for user acquisition
- Tracking game performance and benchmarking
- Providing monetization tools
The main difference is that these functions are not as exclusive as they once used to be.
Q: What does IP mean in the gaming industry?
Unlike other technology industry where IP (Intellectual Property) usually means a proprietary piece of technology that would normally be patented. In the gaming industry IP normally means a set of characters, art work, gameplay and trademarks that users developed strong emotional bond with. In a recent example, Rovio developed a great piece of IP around Angry Birds and was able to transfer it to physical merchandise and sequels.
Q: What is 2nd party publishing?
To understand that, let’s first answer understand what is 1st party publishing. 1st party publishing is when a company is publishing their own game. This is the model used by Zynga, King.com and Supercell with their games. 2nd party publishing is when a publisher designs a game around newly generated IP or existing IP. The contracted studio is mainly in charge of programming the game. One area where 2nd party publishing deals are common is game porting. In game porting, the publisher already developed the game for one platform and is now taking it to new ones by outsourcing the development.
Q: What is 3rd party publishing?
In 3rd party publishing deals a studio comes up with a unique set of IP: great art work, innovative gameplay and lovable characters. The publisher’s role is smaller in this type of deals and is a mix of the things mentioned above (tools, funding, production advice, …). There are two types of deals in this model. Co-development and publishing only. In co-development, the publisher is committing to the project in advance and is funding it through it’s riskiest phases. In addition, the publisher helps with the game production and guides the development. In a publishing only deal, the publisher would usually take a fully developed game and will make a test to see how the game performs. In other words, the publisher will cross-promote the game or put some budget for user acquisition but only the minimal amount required to determine if the game is a hit or not. Some publishers will do this in bulk and will perform this kind of testing with dozens of games to find one that will show good results and then promote it aggressively. The co-development model is considered a much better model for game studios, however, they are more rare and usually requires good relationships with publishers as well as track record of game development. Many young studios engage in a 3rd party publishing deals to start building those assets so they can later on win co-development projects and 2nd party engagements.