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July 31, 2008

Get Your Pigs in a Row!

Filed under: Game Law Articles — Tom B @ 3:09 pm

Isn’t That Supposed to be Ducks?

Well actually no. Allow me to explain. I often counsel developers on the importance of focusing on building a great game studio to make great games, instead of focusing on making a great game to build a great game studio. The reason for this is that if you build a solid studio your chances of getting to make that opus you yearn to create is much greater. It also allows you to eat, have a home and live in a similar fashion to other folks in society instead of emulating the starving artists of our romantic fantasies. Quite simply, being consumed by passion is wonderful, but it does not pay the rent…and often leads to madness.

I Know, You Still Don’t See Any Animals.

Let’s take a look at the issues that need to be considered in building a sustainable business model for your studio. One thing you need is the ability to have a coherent projection of revenues and operating expenses, commonly referred to as a budget. I personally hate spreadsheets. But spreadsheets are the language of budgets much like musical notes are the language of music. I suspect that many studio heads dislike spreadsheets as much as I do. But the successful ones know how to read and write in that obscure language of the budget.

The simple fact is that without a projected revenue and expense model it is very hard to determine if you are succeeding or even whether your studio is in survival or extinction mode. I am not advocating letting the budget “tail” wag the company business strategy “dog.” But you do need to know when you are succeeding and when you are not. And budgets are a better way to check than that the old reliable, “Can I make payroll?” model. And even a bad budget should deliver the news well in advance of a catastrophe - hopefully in time to adjust.

Still No Animals, But We are Getting Closer.

In everything but the most basic games, a team is required to build the game. And in the more sophisticated games, that team is not of a consistent size throughout the project. I am going to avoid the funding issue for purposes of this example and just look at the development process in isolation. The dev cycle goes through several more or less recognizable stages that we are all pretty familiar with…concept development, prototyping, full design documentation, vertical slice, asset generation, feature lock, testing, GM candidate and final rounds of tuning and debugging, acceptance and release. However, there are significant differences in terms of the studio’s month to month budget associated with this process. Moreover, understanding and planning for these budget fluctuations can be critical to the success or failure of the studio, especially if it is operating as a single project studio.

OK, Bring in the Animals.

First the snake. The snake represents the project leads. Those core team members involved in the initial design and prototyping stages of the project. You probably know who I mean on your team. This is a tight group of highly talented individuals who bring home the meat. (The rest is mostly sizzle.) For purposes of this example, let’s say this is a 5-man team. They will be involved in the project from conception through delivery. And whenever the going gets tough, these will be the “go to” guys. They will probably also be the last members of your team to touch the game before the final GM candidate is accepted. The snake…

Now we introduce the pig. The pig is the vast number of people involved in generating the multitude of assets that comprise the full game. The artists, level designers, animators, scripters, tool programmers and all the others who build the assets that fill out the game and add that all important sizzle. In effect, the pig delivers sustenance to the snake. How? By being eaten of course. And the development process is then revealed to be like that old National Geographic image that haunted so many children’s dreams. That small head and long thin body with the huge lump in the middle. The pig in the snake.

What About Putting Snakes in a Row?

Putting your snakes in a row sure seems a lot simpler. And isn’t simpler often better? Well yes. But unfortunately, putting your snakes in a row will not work. At least not if you intend to have your entire team in house. Sure, outsourcing the pig might do. But aside from the whole team approach and control issues, even the most efficient outsourcing creates a it of internal pigish overhead. And if you don’t outsource, feeding the pig while only the snake is working will drag your budget into hell and your studio with it. I have seen this occur over and over with even the most talented of developers. In fact, aside from issues that arise when trying to grow a studio into a larger organization, this issue may be the most difficult for any studio executive to successfully manage.

The problem is that the same key people needed to finish the game in the final stages are in crunch and in no position to be working on the prototype for the next project. Moreover, they will likely be unfit to do much of anything for a few weeks after crunch is over. The solution is having the foresight to put your pigs in a row, not your snakes. This demands that the snake’s head be redirected at some point in the development process of project A to start thinking about and actually working on project B.

When Pigs are in a Row.

If we assume that it takes between 6-9 months to land a fully contract a deal, then working backwards from there should give you an idea of what point in the current project work needs to be started on the next project so that you will have enough of the next project completed to get it picked up without there being a serious cash crunch in the space between the pigs…err…I mean projects. If it takes 6 months of designing, prototyping and documenting to get to the point to pitch the next game, then you need to get started on it about 12-15 months before the project GM delivery of your current project. Sure, that seems like a lot of time…but think it through and it is really not. Especially if you consider the alternative.

When snakes are in a row.

When your snakes are in a row your studio is only looking at one project at a time. This is great for THAT game. But can spell disaster for the studio. Remember what I said about building a great studio to make great games instead of making a great game to build a great studio? Here’s where that comes to life. And this is not mere conjecture on my part. I have seen this happen time after time. You finish your current game and it is great. So, the team takes a month off to celebrate a job well done and to recover. Then you the start the design and prototyping process and are lucky enough to get a deal a year later…if you are still in business (most are not). Unless that game you delivered has the legs to recoup and deliver revenue within 6 months, you’re DOA. And realistically, that is not going to happen. Even with a hit it takes longer than that to get to first royalty report, and 2 - 3 quarters to recoup. So, unless you have about 18 months of overhead in the bank when you deliver, your dream of having your own studio just died.

The Benefits of Good Pig Management.

Getting those pigs in a row will lead to a long and economically sound life for your studio. The pressures of living on the edge of economic disaster will lessen and, who knows, you may even be able to have some fun, have a life and enjoy making games. After all, that is what this is supposed to be about. Being fortunate enough to make a decent living doing what we love to do. As an added bonus, if you get your pigs in a row, you are on your way to a smooth transition from a single project studio to a multi-project studio in the bargain.

[No animals were harmed in the writing of this article.]

Til next time, GL & HF!

Tom Buscaglia
The Game Attorney © 2008

Man’s Best Friend Sometimes Bites!

Filed under: Game Law Articles — Tom B @ 2:15 pm

One of my clients sent me an engine license to review for him. He was considering a few options and asked me to review and revise the contract on one of the engines he was interested in. I took a look and, typical of most middleware licenses, the middleware developer was delivering the license with few, if any warranties. Well as much as I would prefer that my client get some decent level of comfort in the software he was considering licensing, I understood the issues and was pretty much OK with most of the language. I did however have a concern that if the engine code included some open source software inadvertently included, it might compromise the commercial viability of the game. So I added language into the license agreement that warranted that the engine did not contain any open source computer code that would limit or negatively impact the commercial viability of my client’s game. I didn’t expect this additional language would be a problem since the inclusion of any open source of code would significantly impair the commercial viability of their product as well.

The engine developer told my client that they could not agree to the added language though they assured my client that the engine code had already gone through a full open source audit and was clean. This raised the obvious question. If the code was clean, why not agree to the language? When asked this question by my client, the engine developer’s response was, “Our lawyer will not allow us to agree to this language.” So, my client did the only reasonable thing he could under the circumstances, he decided to use a different engine. And, the engine developer lost the deal. Assuming what the engine licensor was saying about the code audit was true, what the heck was he thinking? Obviously he was not thinking. He was just doing what his lawyer told him. I guess you could say that “the tail was waging the dog!”

Bad Dogs

This month’s Game Law column addresses a very touchy subject, especially for us lawyers, the training and care of your lawyer. I am a firm believer that just like a kid and a dog, every game studio should have its pet lawyer to keep it safe and secure. One to be your friend and companion . . . and when appropriate to bark and growl at those who try to do you harm. It is also a sad but true fact that, just like with dogs, not all lawyers are well behaved and, if not properly trained, can at times cause more harm than good. Just like any good dog, they need to be trained, disciplined and under control or they might just bite you!

Sure lawyers get plenty of legal training in law school and in their day to day practice. But too often they don’t know your desires or the games you work on as well as you do. And few understand the subtleties of our industry as much as the developers they represent. They are ingrained with a commitment to vigorously protect their client’s right to the fullest extent possible. In fact, it is a core element of their ethic. Oddly enough, it is this training and commitment that can often result in serious problems for the developers they represent.

Biting Your Team

One of the most common ways this occurs is in the relationship between the studio and its employees. Game development is a creative process based on intellectual capital. It requires the collaborative effort of many creative individuals. It is also in large part grounded in a culture that has non traditional values when compared to most other businesses. And although not everyone in the game industry is “of the gamer culture,” most of those who create the games are. Moreover, experience shows that often enlightened non traditional management models create the best environments for creating great games.

A well-meaning attorney experienced with traditional employment agreements working to protect his client’s studio to the maximum extent possible, will usually come up with an employee agreement that is offensive to both the sensibilities of the most talented developers and contrary to an enlightened management style. If the studio head just asks their lawyer for an employee agreement and does not describe the cultural and management goals of the studio, they will get a contract that will quite likely interfere with their ability to get and retain talent. The inclusion of non-competes and overly broad intellectual property ownership that extends outside of the scope of the studio’s project can often bruise or even break employee relationships and make it difficult or impossible to get top talent. This is especially sad if the studio ends up with a bad result because they just used an employee agreement without going over it with their attorney to make sure that it is consistent with their management style and goals. This is like just letting your dog run free. It’s sure to chew up some of your favorite shoes if you don’t discipline that critter as to what is, and is not, acceptable behavior on your household. Your studio is your house. You, not your pet, need to set the rules.

The Cost of a Good Puppy

Sure enough, lawyers are expensive. And taking the time to review their work to make sure that it comports with your desires and values takes time. And, like most developers, reading contracts can be a bit painful as well. But ultimately, the harm that an overly aggressive and untrained lawyer can do to the potential long term success of your studio makes this a required task and expense. Otherwise your relationships, both internal and external, can suffer. And the more you engage in meaningful discussions with counsel about your business goals and values, the more likely they will be to incorporate your vision into the ongoing work that they do for your company. The more you treat them like an unwanted hassle, the more likely they will be to simply do a quick hack job on your work and what you are spending on them will not get you what you want or need. Rest assured, the extra time and money you spend on your pet will be rewarded.

Care and Feeding

Often lawyers are strong assertive personality types. And frankly, that’s exactly what you want on your side when things get tough. But this can also create a problem if the studio head is less assertive, as is often the case in a creative business like ours. Communicate your vision and your passion for what you are doing to your lawyer. It will give them insight into your business and a way that nothing else will. It will ultimately make them a valuable asset to your management team, not just an unwanted expense. You should consider throwing them a bone every once in a while too. I always let my clients know that in addition to getting paid, I require a boxed copy of any projects that I am involved in and a mention in the credits. Thoughtful perks like that make for a loyal companion and it costs little or nothing to provide these sorts of “bones.”

You are the Master

Remember that your attorney should be your trusted counsel. But ultimately, the decisions are yours to make, not theirs. Take their counsel and value it. But do not just abdicate your decision making to their advice. It may be easier, but, as in the opening example above, it can lead to situations where your lawyer’s best advice may turn out to be bad advice in terms of your business goals and the manner in which you wish to manage your company or working relationships. If you don’t make the final decisions on these business matters, you may end up bruising your internal relationships with staff through an overly oppressive employee agreement or even losing business due to an unreasonable lack of flexibility, like that engine developer did.

A Good Pet is Worth the Effort

I’m not saying that you need to take your lawyer for a walk every day. But a little extra training and thoughtfulness will make for a loyal and long term relationship that will serve you and your studio well. Get them to understand the culture of the industry and your company. In the long run it will be well worth the extra time and money you spend in the process. You will end up with a loyal obedient companion who will not bite you, your employees or your business partners!

Til next time, GL & HF!

Tom Buscaglia
The Game Attorney © 2008

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