Developers Deserve Residual Royalties

"A man does not plant a tree for himself, he plants it for posterity" - Alexander Smith

I was reading Simon Roth's (@SimoRoth) recent blog post about "Games that no longer support their Creators". This got me to thinking about how the future our our industy might evolve. 

My first reaction to Simon's post jarred an interesting memory from the dark recesses about royalties and publishing from the Music Industry. When the brilliant Don McLean was asked in the 80's about what his biggest song "American Pie" meant to him, his response was:

"It means never having to work again for the rest of my life."

My mind then flashed to a recent Kotaku post that listed all the Game Studios who have closed since 2006. 

Add to all of this the growing, ready access to classic evergreen titles whether they be Donkey Kong or the infinite resurrections of Tetris. These franchises continue to make money while many of the developers responsible no longer have any financial connection or benefit from them.

This must stop.

What we need is an employment contract structure that normalizes the business dealings between publishers, studios and talent. If you're a talent, you will be entitled to a specific percentage (however small or divisible) of the profits that a game product generates. This percentage must be a permanent benefit to you as a talent. This benefit goes with you if you move on to another studio or if you go on to form your own company.

This structure will be contractual and understood right from the beginning of your employment with a studio. If the game dies on the vine, you get nothing but your earnings for the effort. If the game comes back 20 years later, even after you have died, your heirs are allowed to claim your due residuals. 

Sound crazy? That's exactly what happens in the Screen Actors Guild. 

Here's one of my favorite sections of the SAG FAQ:

Will my heirs receive residuals?

Yes. All residuals will continue to flow to designated heirs as long as the TV or movie product continues to generate revenue for the producer. Remember, it’s an heir’s responsibility to keep his/her mailing address up to date with SAG. Heirs can also visit the unclaimed residuals section of the website at www.sag.org.

Developers can't expect this change to just happen on its own. Furthermore, I think that we need an organization to manage this new relationship in our Industry. We need our own equivalent to the Screen Actors Guild! 

When SAG was formed, there was an argument that it would ruin the Film Industry. Many refused to join SAG and of course there were the Blacklist Years as well...

But look at today. SAG is just part of the backdrop and the Film and Television Industries have done just fine, while still managing to pay scale as well as decades of residuals for syndication.

We've already built an industry on the crushed backs of the developers who came before us. As it sits, they get nothing going forward. When will we begin to show the self respect that publishers will never give us? What will it take for us to make this next step? 

Games on Facebook. What's Changed?

Some time ago I expressed a good deal of frustration about Facebook's ongoing policy changes. I've revisited the subject and had some updated thoughts. 

Operation Developer Love

If you roll back two years, development on Facebook was very much the Wild West. Policies came out of the blue and we often poorly explained. This had the net effect of confusing and frustrating developers by pushing platform changes that simply left developers to discover that they had a busted application. 

In August of this year, Facebook announced Operation Developer Love where they committed to giving a full 90 days advance notice to platform breaking changes. From my perspective, this was the public statement of a number of internal changes Facebook had been working on for months. Considering how much 90 days translates to in "Internet Years", I think this is a natural maturation and is very much appreciated by developers. 

A Partner For the Long Run

Things move so quickly on the Internet that it’s hard to remember when Facebook was a question mark with regards to its long-term viability. Consider that Farmville was launched in the middle of 2009 and it rose to prominence by August of 2009 when it announced "...1 Million Daily Active Users per week on average."

Once we get to the point where we make a major mental shift in the way we perceive technology and its influence on our lives, it becomes difficult to remember much of anything that happened before. Facebook has established it's user base, it's defined itself as a media company and it's diligently working to rival Google in regards to Search by walling off media on the Internet.

Facebook is here to stay, so lets get on with making great content. 

Developers

The previous points in this post pale with regards to the importance of having insightful developers involved. The challenge that kept many developers away from Facebook was the business model of Social Games made popular by Zynga, Playdom and EA. Have you ever seen a developer's face sour when Farmville was mentioned?  As stability has come along and people have learned the platform, the time has come for people to drop the "Facebook Games" stigma and focus on making Great "Games on Facebook".  

I would particularly call out Spry Fox for Triple Town and Heart Shaped Games for Hero Generations as perfect examples of making content that I actively want to play (in contrast to many other Facebook games - remember the difference). Triple Town is a reinvention of the Match 3 genre. It's highly replayable and doesn't expect me to come back in 30 minutes to harvest a crop. Hero Generations is a fantastic generational RPG that focuses on building fame and then passing on positive traits to your descendants. Hero Generations was a finalist at the IndieCade show this year. 

Triple Town and Hero Generations are great examples of the kind of content I want to see on Facebook and Google+. It's the kind of content that developers can be proud of. 

In the end, Facebook is a distribution platform.  What you distributed and what you define as meaningful content is completely up to you. 

The Iwata Defence

Nintendo President Satoru Iwata provided a candid, thought provoking keynote at GDC 25. At the same time Iwata-san was presenting, Steve Jobs was right across the street announcing the iPad 2. Setting the stage for a major dustup, various sides have been taken on Iwata s presentation. A healthy number of pundits have declared the demise of not just console gaming, but also it s legendary innovative powerhouse, Nintendo.

This blog post about why Iwata was right.

Let s review Iwata s key concerns:

Craftsmanship
...Developers have gained alot, but lost something. One major loss is craftsmanship...This is not a criticism of people, but rather the situations in which they operate. No matter how much talent a team has, the needed flexibility may not be available.

Iwata called our collective attention to the fact that our profit centered focus has cost us in the area most developers would consider most critical - Our Craftsmanship. Initially, I felt this was a scathing criticism coming from Nintendo. They are known for hellish schedules, but also a firm commitment to ship only when ready. Ironically, other First party publishers only reserve this luxury for their super high end AAA titles. I have long thought that they let things go because they fear to stand up to their AAA developers. I wish that attitude trickled down further down the food chain.

Talent Development - ...This era of specialization makes it much more difficult for a single individual to sense the personality of a game. ... If people cannot tell what other team members are doing, where will the next master game designer come from?

Like a dagger flung from the dark night, this one point tells us how we ve set ourselves up for long term failure as an Industry by refusing to develop our talent beyond their core skillsets. This is partially set up by the circumstances that triggered his earlier comments on Craftsmanship. Regardless of what our job opportunities are, we need to make sure that we refresh and extend our professional skills beyond the core job we re doing on the line. The best companies are the ones who will encourage this and not just drive you to death with an intent of laying you off after the game ships.
I m eyeing you Rockstar.

Is maintaining high value games a high priority or not?
The business is dividing in a way that threatens continued employment. Developers hours will be too long and stress too high, but always a way to make a living. Will that be the case going forward? Game Development is drowning...

This last point caught the most attention by folks from outside of the console industry. Iwata is concerned about the way in which Social Networks and Mobile platforms view games and the impact that this perception is having on the business opportunity of game development.

Iwata pointed out that Social Networks and Mobile platforms only view games as content to plug into their content offering. They want a massive amount of quantity and have no cares for the Craftsmanship nor the prospective benefits to the game developers who produce the content for them.

The argument that console manufacturers have created and benefited from a walled garden for years is a fair one...but be realistic. iPhone and Facebook are not open platforms. The reason Iwata said that ...quantity makes the money flow... is because these platforms gain momentum based on the adoption and userbase that they generate from it. The quantity of games has nothing to do with the quality or craftsmanship of what s been created.

...What we produce is value - we should protect that value. All is not lost...

I think Iwata is asking us to show some self respect here and to resist whoring ourselves for the chance at a quick buck. The race to the bottom does this on so many levels.

This quantity over quality focus is also having a huge impact on the long term viability of the game business as a whole. To demonstrate this, I ll use a great example from the iPhone as referenced by one of its most successful developers.

Neil Young from ngmoco presented at the Interactive Age Summit early in the week of GDC 25. One of the most important thoughts he presented was the first failure of ngmoco, how critical it was and why they ended up selling for $400+million rather than dying on the spot. What was this brilliant insight? This magnificent failure? The realization that creating a company of consequence on the paid App store was impossible. (chew on that for a second)
He further posited that ...ngmoco would have to have two Top 5 apps in the App Store, 365 days a year to generate 10 million in annual revenues... That is not a company of consequence.

Take this insight and reflect it against what Iwata said. For small developers 10mm seems like great revenue, but for investors who are funding these numerous startups, that won t cut it. This is not to mention the near impossibility of the task year over year. This is precisely what Iwata is saying to us. It s not a criticism on the games themselves as being low quality per se, it s a reflection on the way we re redefining the business relationship with our players. I am positive that this will have a range of good implications. Definitely something for further investigation.

In conclusion, Iwata did not call Social and Mobile gaming a fad, he simply asked us to not lose our focus and to continue to work dilligently making the best games we can.

3 Reasons why console gaming isn't "dying"

At SXSWi today, Rovio's Peter Vesterbacka intimated several odd ideas during a panel on Social Gaming.

One such of these ideas is that console games are "dying". Frankly, it's a pretty absurd comment as mobile and social games are actually causing an expansion in the market...but in dealing with buzzwords here are

Three reasons Why Console Gaming isn't Dying:

1. Kinect - Microsoft's Kinect motion-sensing camera for the Xbox 360 has been named the fastest-selling consumer electronics device in history. Rushing out the door at a Guinness Record setting 133,333 units a day in its first two months as well as preventing MS from accelerating an Xbox refresh.

2. IP - All but a handful of the top Intellectual Properties in gaming are on Exclusively on Consoles. Even with all the popularity of Farmville and Angry Birds factored in, there is no comparison to the brands in place on consoles. When (and only when) this relationship inverts, there will be some merit to the "death knell" for consoles.

3. Netflix - Netflix is on all of the major consoles. This seems unrelated, but it's critical. The more time spent on the device, the more likely they are to engage in alternative activities or purchases.

Some extra Food for thought:

U.S Console Sales through January 2011:

34.5 million Wii units sold

25.8 million Xbox 360

15.7 PlayStation 3

Developers, Developers, Developers....

Remember this guy?

This is the guy who used to chant "Developers, Developers, Developers". We laugh/ed at Balmer because we game devs didn't want anything to do with those guys.They were nerdy in a crowd of nerds and always seemed to miss the point on what was cool. (Xbox excluded)

Microsoft has this funny way of playing Texas Holdem with you and their cards are face up. You might laugh when they shove all in with two aces showing while you fold, but you should actually be thankful.

Why? Well because companies like Microsoft play with their hands face up and perhaps not surprisingly, Silicon Valley companies (and others) are sharp enough to keep the cards a bit more hidden...for now.

Know these guys?

In the Valley, there are a great many students of Jobs. It's almost a plain fact that if Steve Jobs says that Apple isn't working on something, or that they have zero interest in a particular line of business, that it's down there in the pipe...no matter how many iterations are left in a product cycle.

 Where am I going with this?

I wanted to take a moment to call out the general populace of developers as blind fools! Each of the three previous Platform examples needed developers to come in and help prove their business model. Each platform promises: "Awesome Revenue Shares!" "Best APIs/Development Environments!" "Become part of the Disruption you're reading about on TechCrunch!"

Heard this story?

Quickly, some small developer is touted out as the norm when they made $25K in one day's sales of random content. OMG! That could have been me!! Where do I sign up?

Now, If you've spent any time in the game industry, you've seen countless fads come and go. Fortunes will definitely be made. The Game is certainly changed, but its almost NEVER changed by the run of the mill guy who's moonlighting on his IT day job because he didn't ever get a career in games.

Developers are literally SOLD the pot of gold awaiting us by platform companies.

Somehow we keep forgetting that these new platforms need developers to prove their business cases. They need us to help create these self fulfilling prophecies they have told investors and customers. They need US to make their fortunes..and when they have the lock in, the rules change. The power structure inverts and if you're not one of the lucky early adopters who built enough success to be important...it's over.

Here are the versions of this story that I can recall in my days in the industry. I'm sure I forgot some. Please post in the comments if you think of any I'm missing:

* The first Mobile Revolution (PocketPC/Palm) - Gonna be big!
* Casual Games! - Broke down to PopCap and then a bunch of content aggregators.
* Flash Advergames!/Flash Games curation in general.
* XBLA Indie slots. That sealed up pretty quick no? At least we got Geometry Wars
* Apple iPhone - We'll all be rich!
* Droid!
* Facebook! ZOMG!

 So when these fads come around, who really makes the money? Guys like Mark Pincus:***

Ask yourself why? Well guys like Mark come into games around a fad to PROVE a business can be built while everyone else is not paying attention. Mark isn't trying to change the world or leave his indelible mark on gaming, he's trying to make money... That's why he's doing just that while he helps redefine the rules that the rest of devs on Facebook have to play by right alongside Zuck.

By the time you've heard the Siren's Song, the game is almost over. The platform is just about mature. Developers pouring in on the Gold Rush...but there will be precious few to win the day.

The lesson here is about commitment. If you're not fully "I burned my boats" committed, you have as much chance of getting rich of these platforms as you do winning the lottery. Wake up. Have Fun. Most importantly, be realistic.

 ***Note: I am not a Pincus apologist. I'm strictly commenting on his business model, not the quality of his games or his company.