How does the publisher/developer pay system work exactly?

[Baresark]

A question for everyone, and I would appreciate a good answer, something sourced:

How does the publisher/developer pay relationship work?

I ask this for a few reasons. From my own experiences, it would be a pre-contracted amount. So, in that line of thought, after a game is released, the developer may do updates, patches, and game balancing for some more money, but the bulk of what a developer makes is payed out already. Meaning that buying the game first hand does not really matter all the much to the developer. This also essentially means the studio can contract it's future work out for greater money if it makes games that sell well or less money if the games they make do not do well.

The other side is that the Developer does not get paid if the game does not sell well, because they haven't received enough money to be successful. So, the studios get disbanded and punished in any manner of ways. Studios such as ones that made Vampire the Masquerade: Bloodlines have gone under presumably for this reason.

I have to admit to everyone (some of you already know) that I am reasonably sure it's the first method. That is why there is time limits placed on game studios to put out a reasonable/finished product. And if you return to my game example, they were shut down by the publisher because they made a product that yielded a negative investment, which is just good business.

Plenty of other forumites say it's the other way, but I am completely unable to find any information on this. And I don't accept "common knowledge" as an answer, simply because a great portion of the time, "common knowledge" is in error.

 

[Baresark]

Source?

 

[Baresark]

Yeah, there is no source, I thought as much. We assume, but no one knows. I'm still going to keep assuming it follows other business models, and not this made up one where the developer gets scraps based on sales from "greedy" publishers.

 

[random_bars]

The developer pitches their game to publishers. Whichever publisher picks it up gives the developers a set amount of money over a certain period with which to make the game. On release of the game, the publishers recoup that cost, hopefully at a profit, through sales of the game, will a very small portion of each game sale going to the developers as a sort of bonus.

 

[Owyn_Merrilin]

The developer pitches their game to publishers. Whichever publisher picks it up gives the developers a set amount of money over a certain period with which to make the game. On release of the game, the publishers recoup that cost, hopefully at a profit, through sales of the game, will a very small portion of each game sale going to the developers as a sort of bonus.

This. The figure that always gets quoted as the cost to make a game is what they pay the devs. If a game sells exceptionally well and the contract stipulates it, the devs might get a bonus, but no royalties. It's strictly work for hire, and a pretty standard software industry arrangement.

A good example of this is Duke Nukem Forever. 3D Realms was given money to make the game, which they kept pissing away on things other than development. Nobody on the team went hungry in the 10+ years they were working on the game, because they were being paid to make it, even though it hadn't been released yet. When they were fired, they stopped getting paid to make it, but I doubt they would have been given much more money even if Gearbox hadn't needed to come in and finish it before release.

 

[Dirty Hipsters]

I would guess that there is no standard model, and that it just depends on the contract that the developer and the publisher make. The more lucrative the dev the more power they would have to make demands on how they will eventually be paid.

In most cases though I believe that studios get a certain bulk sum in advance to make the game and pay the devs for their work throughout production, and then get paid a certain percentage of the total game sales. At least that's what it seems like from the way most game devs talk about game sales.

 

[Baresark]

So we are all basically in agreement then. It's a contracted amount of money, with a potential for more if the game does well, thanks all.

 

[Total LOLige]

So we are all basically in agreement then. It's a contracted amount of money, with a potential for more if the game does well, thanks all.

I'd assume so. I'm pretty sure with books the writer is paid when they deliver a finished product, however there could be a bonus if the book/game sells well.