Schafer: Publishers Don't See "Financial Reward" in PC Games

[Therumancer]

The rebuttal is one sentence: how else do you expect a multi-million dollar project like a video game to get funded?

Yes, creative industries do take a hit from the fact that they are profit driven. The other option is that the media -does not get made.- A backer thinks, "Show me the profit, and a reason to back your project, or GTFO." Either video games act like companies striving to make money, or the industry will be limited to what bedroom programmers do in their spare time.

Well, for starters I don't think that games really need these huge budgets to begin with. In proportion to that money the cost of materials and office space is minimal. The big cost is of course human resources, and for all arguements made, the increasing prices are going towards the people more than anything. The gaming industry has given itself unreasonable expectations of what the employees should be getting paid for their work, despite outcries from "industry insiders" that they aren't making that much money.

To put things into perspective, companies like Square-Enix are claiming that they couldn't make a game with the content of say "Final Fantasy VII" today, because all of those enviroments would be too expensive to generate. What changed? It basically comes down to
the people involved and the paydays they expect.

I don't think we're looking at an all or nothing equasion between big business and bedroom coders. After all the industry grew up slowly, and in there was a decent middle ground where I think the game industry should ultimatly be sitting.

The game industry was ALWAYS profit driven, don't misunderstand what I'm saying. People seem to think that if I bash the way things are now and the corperate mentality that I'm making some claim for socialized gaming or something crazy like that. The issue is that with the current climate the issue is no longer whether a game is going to make a profit, but how big that profit is going to be. The gaming industry managed to operate for a long time as a more creative institution where the idea was to profit, as opposed to see how much money can be squeezed out of the consumers as quickly and efficiently as possible.

With no offense to Mr. Gecko from "Wall Street" there is such a thing as being too greedy, and I think the gaming industry has gotten to that point. Nothing wrong with seeking a profit and making money, but there is a point at which your going too far.

 

[viranimus]

Yeah can we have another veiled "Piracy is bad, m`kay" comment?

And I agree, Shaffer is a tad bit overrated anyway. Between Psychonauts and Costume quests propensity to extoll the virtues of "childlike innocence" I really cant be compelled to play anything with his name on it. Not that either were bad games, just really put me off.

Im somewhat in the back of my mind waiting for the day to come when someone makes pedophillic allegations toward Shaffer.

 

[thedoclc]

*snip*

Well, for starters I don't think that games really need these huge budgets to begin with. In proportion to that money the cost of materials and office space is minimal. The big cost is of course human resources, and for all arguements made, the increasing prices are going towards the people more than anything. The gaming industry has given itself unreasonable expectations of what the employees should be getting paid for their work, despite outcries from "industry insiders" that they aren't making that much money.

To put things into perspective, companies like Square-Enix are claiming that they couldn't make a game with the content of say "Final Fantasy VII" today, because all of those enviroments would be too expensive to generate. What changed? It basically comes down to
the people involved and the paydays they expect.

I don't think we're looking at an all or nothing equasion between big business and bedroom coders. After all the industry grew up slowly, and in there was a decent middle ground where I think the game industry should ultimatly be sitting.

The game industry was ALWAYS profit driven, don't misunderstand what I'm saying. People seem to think that if I bash the way things are now and the corperate mentality that I'm making some claim for socialized gaming or something crazy like that. The issue is that with the current climate the issue is no longer whether a game is going to make a profit, but how big that profit is going to be. The gaming industry managed to operate for a long time as a more creative institution where the idea was to profit, as opposed to see how much money can be squeezed out of the consumers as quickly and efficiently as possible.

With no offense to Mr. Gecko from "Wall Street" there is such a thing as being too greedy, and I think the gaming industry has gotten to that point. Nothing wrong with seeking a profit and making money, but there is a point at which your going too far.

Very interesting; we've stopped attacking the investors and starting attacking the pay of the workers, which is quite unusual in an anti-capitalism argument. Incidentally, we're now off-topic, since the original post was about developers and publishers, not programmers.

Now, there's a certain irony in the Wall Street example. See, Mr. Stone may argue in the most contrived way against capitalism, but what did he do? He billed the picture as an Oliver Stone film. He then paid the exorbitant pay expected for A-list Hollywood talent, such as Michael Douglas, Darryl Hannah, Charlie Sheen, and Martin Sheen. Now, I'm sure Mr. Stone could have bought cheaper talent, yet he brought in top-tier stars and ponied up for them. Sure enough, their star power and skills helped make the film a critical and financial success. He acted just like a good capitalist who is in a monopolistically competitive market. Incidentally, Michael Douglas' 'Greed is good' speech was widely considered the high point in the movie, where the villain Gordon Gecko breaks out of the moralistic preaching of the movie to make a much better point than Oliver Stone's movie did. On TV Tropes, it's one of the best examples of, ?Straw Man has a Point.?

Onto the wages. Video game programmers are skilled employees. They have a certain amount of market power in labor markets. If they were being overpaid, there would be a surplus of them which would drive down the wages. If they were underpaid for their skills, they'd change industries. If a company thought it was overpaying these employees, they'd just cut those wages and still be able to buy the talent they need. Except when unions are overly protected (which happens in some cases), the wages are set according to the market for those skills.

?The issue is that with the current climate the issue is no longer whether a game is going to make a profit, but how big that profit is going to be.? Um, yes. This is every for profit industry ever. This is NOT a new development. See, a business that funds a 20 million project to make only a half million in profit will lose its investors due to failing to make a normal profit (see previous arguments). There are slag-heaps of old consoles and games which bit the dust because they did not make enough profit.

?The gaming industry managed to operate for a long time as a more creative institution where the idea was to profit, as opposed to see how much money can be squeezed out of the consumers as quickly and efficiently as possible.? This wasn't true in the Pong era. There were dozens of competing Pong machines humped into market as soon as possible. This wasn't true in the Atari era. The Atari craze led to a proliferation of systems based on cashing in, with most of these systems absolutely sucking until the 1983 video game crash. This wasn't true in the NES era, where Nintendo made massive economic profits while dominating the 8-bit era by controlling licensing to its benefit. This wasn't true in the 16-bit era, when gamers were split primarily between the SNES and the Genesis, and lightened restrictions by Nintendo and Sega led to a proliferation of absolutely craptastic games. To shorten this paragraph: this wasn't true -ever- in the industry. It is also a mix of weasel-words, a false dichotomy, and a straw man. And, incidentally, mainstream titles are at one of their cheapest points in the history of video games once you adjust for inflation. I used to pay $50 USD for an NES game back when gasoline was less than a dollar a gallon and luxury cars were about $10,000.

?After all the industry grew up slowly, and in there was a decent middle ground where I think the game industry should ultimatly be sitting.? First, the industry exploded as soon as Pong made it to the home screen and arcades were practical. There were dozens of competing Pong machines. It never grew slowly. Second, at what cost in quality? Today, any of the top-tier projects takes millions of man-hours of code work in order to produce. I want my Mass Effect 2, my Half-Life 2, my GoW, and so on. I am not alone. I demand this level of production and so do other gamers. This means games will remain massive, multi-million dollar productions. I disagree with Square's statement that games with the content of FF VII cannot be produced now; -Square- may not be putting it out now, but I'd most certainly say EA-Bioware, Valve, and other publishers sure are putting out just as large a set of content.

 

[Therumancer]

Very interesting; we've stopped attacking the investors and starting attacking the pay of the workers, which is quite unusual in an anti-capitalism argument. Incidentally, we're now off-topic, since the original post was about developers and publishers, not programmers.

.

Right from the beginning you cause a lot of problems with the rest of your arguements because I am not argueing against capitolism at all, and the rest of your arguement is based around the idea that I am.

See, what your missing here is that there is a differance between Capitolism, and greed. Capitolism can also exist within constraints, it's not an all or nothing equasion. I used "Wall Street" as an example not because it's anti-capitolist, but because it used an example that was so over the top as to be ridiculous, however in an ironic twist your looking at situations, likt this one, where things have gotten that ridiculous.

Workers can be greedy too, and again, your missing the point that I'm criticizing the industry as a whole for being greedy and exploiting the consumers, not for seeking a profit.

You also seem to misunderstand how the gaming industry works in terms of the publisher/developer relationship. Magazines like Game Informer have gone into it.

It can work in multiple ways. Typically you have someone with a bunch of money that goes to a gaming company either with an idea that they think will make money, or to get the people in the company to make a game that they think will see a return on their investment. It's the developers that set the development costs based on what they get paid. They don't wait until after the release to make money, in reality when a product comes out they have already gotten their cut via wages and salaries. Thus if a game developer tells a publisher "this game is going to cost 100 million dollars to develop" that means that the majority of that 100 million is going into the pockets of the guys making the game. Pass or fail, the developers have already gotten paid. Incidently the risk in things like this is that a game is going to turn into "Duke Nukem Forever" where a team might say collect 30 million dollars, pay themselves with it to live off of, and ultimatly produce nothing (and since they already lived off the money, good luck getting it back).

Another method by which it works is that a game developer will borrow money from a producer to make a game that they think will see a profit, with the hopes of making enough money to cover the loan and interest and make money besides. The thing is though that the amount of money being borrowed includes the wages and salaries these guys want to pay themselves. Thus they are borrowing money based on what they want to pay themselves. If they borrow say a hundred million dollars, the majority of that money is getting split between the development team as their expected paydays.

Then of course you've got the game corperations where development houses wind up being owned by one central group of investors that assign them projects. This comes down to contract and again how much money those developers were supposed to be paid. It's also why you have situations like the "Infinity Ward" raid where the devs were promised huge bonuses for finishing a game, and were raided by thugs so the head office didn't have to pay the agreed monies.

The point here being that despite all the industry insiders talking about how all these game developers live hand to mouth and so on, it's far more likely that these guys are massively overpaid and extremely greedy. It's the amount of money that the code monkeys demand that increases and thus raises the development costs of games. This is why companies like Squeenix couldn't afford to do a "Final Fantasy VII" nowadays, because all of the people doing the graphics for those enviroments demand (and are promised) so much money that they couldn't assemble the team. Graphics artists being a form of "code monkey". Yes, guys in game development teams have degrees and have gone to school to learn computers, but people in many industries have done the same and don't wind up demanding fees that amount to tens or hundreds of millions of dollars per project.

THAT is why I point fingers at the workers.

Also you seem to be ignoring what I said about a middle ground. The industry did indeed go through a time period in say the 1990s where development budgets were less, and the industry was able to be substantially more creative. The increase in technology is more or less irrelevent, a graphics artist is a graphics artist, it's just differant tools. Heck in many cases it might be the same guys doing the work, it's just that they've decided that today they deserve five, or ten times what they used to be getting, that's why a company like Squeenix couldn't afford to pay the same basic team even with a much larger development budget in proportion to what they had then.

I look at articles like the one Maxim ran "Why game programmers drive Ferraris" or something like that (it was mentioned here on The Escapist). While Maxim is not always the most reliable source on the specific details, I think it kind of hit the issue on the head.

The demands of game programmers leads to the higher budgets, which leads to more money being demanded from consumers, and increasing attempts to gouge consumers as the programmers continue to demand more and more money for their services. The sheer cost of development also discourages risk.

Now, I am not saying we should be enslaving game programmers, running companies like "Scumsoft" from "Space Quest 3" or anything (though admittedly in some of my more angry moments the basic idea does have some appeal ). I simply think the industry needs to be less greedy, and honestly one of the only ways we consumers can cause that is not to buy products from certain companies with exploitive DLC policies or who express certain attitudes. Eventually the industry will tighten it's belt to go after what profits they can get, and developers will work for less money to stay in work or simply be replaced by those who will.

Understand that there is a differance between Capitolism and unfettered Capitolism. The US has laws to force competition, prevent the operation of cartels, and the establishment of monpolies and other things. The idea is that it's okay to seek a profit and own your property, but to also prevent a few greedy jerks for ruining it for everyone.

 

[thedoclc]

*snip*

Right from the beginning you cause a lot of problems with the rest of your arguements because I am not argueing against capitolism at all, and the rest of your arguement is based around the idea that I am.

See, what your missing here is that there is a differance between Capitolism, and greed. Capitolism can also exist within constraints, it's not an all or nothing equasion. I used "Wall Street" as an example not because it's anti-capitolist, but because it used an example that was so over the top as to be ridiculous, however in an ironic twist your looking at situations, likt this one, where things have gotten that ridiculous.

Workers can be greedy too, and again, your missing the point that I'm criticizing the industry as a whole for being greedy and exploiting the consumers, not for seeking a profit.

You also seem to misunderstand how the gaming industry works in terms of the publisher/developer relationship. Magazines like Game Informer have gone into it.

It can work in multiple ways. Typically you have someone with a bunch of money that goes to a gaming company either with an idea that they think will make money, or to get the people in the company to make a game that they think will see a return on their investment. It's the developers that set the development costs based on what they get paid. They don't wait until after the release to make money, in reality when a product comes out they have already gotten their cut via wages and salaries. Thus if a game developer tells a publisher "this game is going to cost 100 million dollars to develop" that means that the majority of that 100 million is going into the pockets of the guys making the game. Pass or fail, the developers have already gotten paid. Incidently the risk in things like this is that a game is going to turn into "Duke Nukem Forever" where a team might say collect 30 million dollars, pay themselves with it to live off of, and ultimatly produce nothing (and since they already lived off the money, good luck getting it back).

Another method by which it works is that a game developer will borrow money from a producer to make a game that they think will see a profit, with the hopes of making enough money to cover the loan and interest and make money besides. The thing is though that the amount of money being borrowed includes the wages and salaries these guys want to pay themselves. Thus they are borrowing money based on what they want to pay themselves. If they borrow say a hundred million dollars, the majority of that money is getting split between the development team as their expected paydays.

Then of course you've got the game corperations where development houses wind up being owned by one central group of investors that assign them projects. This comes down to contract and again how much money those developers were supposed to be paid. It's also why you have situations like the "Infinity Ward" raid where the devs were promised huge bonuses for finishing a game, and were raided by thugs so the head office didn't have to pay the agreed monies.

The point here being that despite all the industry insiders talking about how all these game developers live hand to mouth and so on, it's far more likely that these guys are massively overpaid and extremely greedy. It's the amount of money that the code monkeys demand that increases and thus raises the development costs of games. This is why companies like Squeenix couldn't afford to do a "Final Fantasy VII" nowadays, because all of the people doing the graphics for those enviroments demand (and are promised) so much money that they couldn't assemble the team. Graphics artists being a form of "code monkey". Yes, guys in game development teams have degrees and have gone to school to learn computers, but people in many industries have done the same and don't wind up demanding fees that amount to tens or hundreds of millions of dollars per project.

THAT is why I point fingers at the workers.

Also you seem to be ignoring what I said about a middle ground. The industry did indeed go through a time period in say the 1990s where development budgets were less, and the industry was able to be substantially more creative. The increase in technology is more or less irrelevent, a graphics artist is a graphics artist, it's just differant tools. Heck in many cases it might be the same guys doing the work, it's just that they've decided that today they deserve five, or ten times what they used to be getting, that's why a company like Squeenix couldn't afford to pay the same basic team even with a much larger development budget in proportion to what they had then.

I look at articles like the one Maxim ran "Why game programmers drive Ferraris" or something like that (it was mentioned here on The Escapist). While Maxim is not always the most reliable source on the specific details, I think it kind of hit the issue on the head.

The demands of game programmers leads to the higher budgets, which leads to more money being demanded from consumers, and increasing attempts to gouge consumers as the programmers continue to demand more and more money for their services. The sheer cost of development also discourages risk.

Now, I am not saying we should be enslaving game programmers, running companies like "Scumsoft" from "Space Quest 3" or anything (though admittedly in some of my more angry moments the basic idea does have some appeal ). I simply think the industry needs to be less greedy, and honestly one of the only ways we consumers can cause that is not to buy products from certain companies with exploitive DLC policies or who express certain attitudes. Eventually the industry will tighten it's belt to go after what profits they can get, and developers will work for less money to stay in work or simply be replaced by those who will.

Understand that there is a differance between Capitolism and unfettered Capitolism. The US has laws to force competition, prevent the operation of cartels, and the establishment of monpolies and other things. The idea is that it's okay to seek a profit and own your property, but to also prevent a few greedy jerks for ruining it for everyone.

Please don't cut an argument down into a straw man.

Greed is a vice, and capitalism is an economic system. Thanks. I'm not dumb.

No, I have NOT missed your point. Your point is invalidated because you have missed the simple idea that laborers exist in a labor market, each acting as a seller. Thus, any capitalist is going to see there is a market clearing point for any particular skills. Laborers will naturally attempt to get the maximum amount of compensation for their skills; are you seriously claiming workers would turn down a raise at work just because they felt their compensation was already high enough? And how, exactly, are you qualified to say they are overpaid when the market price for their skills is determined not by your opinions, but the amount of workers with that skill and the amount of employers who want workers with those skills?

?You also seem to misunderstand how the gaming industry works in terms of the publisher/developer relationship.? Actually, you changed topics. The original post was about publishers.

?(and since they already lived off the money, good luck getting it back).? The publisher should have had a better contract; it's not too difficult to sue for return of investment money in a case like this. In this case, the suit was dismissed with prejudice, which means that neither party can bring suit again. The terms of the settlement are not being released. However, a lawsuit for breach of contract for failing to produce a product is not at all unusual in many industries.

?Yes, guys in game development teams have degrees and have gone to school to learn computers, but people in many industries have done the same and don't wind up demanding fees that amount to tens or hundreds of millions of dollars per project.? Pointing at the cost for a project and saying that proves the workers are overpaid is incorrect. By analogy, the hospital just built near my house cost well a few billion; shall I assume the illegales the contractors hired were overpaid just because the project had a high cost? The same fallacy applies to the point you made.

?Also you seem to be ignoring what I said about a middle ground.? No, I didn't ignore. I refuted. In addition, you've stated, ?Oh, there's a middle ground!? but failed to address how it could actually be achieved. And strange; the claim is that games in the 90's had -lower- development costs, but they -cost more- back then. A typical new SNES game back then cost $50. Adjusting according to the Consumer Price Index, the most widely-used inflation measure in the US, that's $69.71 today. How odd that games with a much lower amount of content and much lower production cost wound up costing -more- than games today. Hot properties could cost even more; I paid $80 a piece for MKII and FFIII (yes, III back then).

?The demands of game programmers leads to the higher budgets, which leads to more money being demanded from consumers, and increasing attempts to gouge consumers as the programmers continue to demand more and more money for their services. The sheer cost of development also discourages risk.? Please look up price-gouging. Video games are produced under a monopolistically competitive market, and while development costs are high at about $20 million, $20 mil is not an unusual amount for a start-up. Given how prices drop quickly for unpopular games, how there is a large and annoying used games market, and how even extremely popular titles drop in price within a few months after release, you're -really- going to have a hard time justifying calling that gouging or uncompetitive.

?I simply think the industry needs to be less greedy, and honestly one of the only ways we consumers can cause that is not to buy products from certain companies with exploitive DLC policies or who express certain attitudes. Eventually the industry will tighten it's belt to go after what profits they can get, and developers will work for less money to stay in work or simply be replaced by those who will.? You've confused -your demand- with aggregate demand. You are turned off by these prices. The aggregate are willing to pay them. Just because the market price of a good is somewhere you don't want to buy it does not mean the market is exploiting anyone; it just means you're not at that level on the demand curve. For example, I'd like an iPad, but I don't like one enough to pay the current asking price. Apple isn't being stupid by failing to lower the price; they're going to sell iPads at a price point which maximizes their profits (which is exactly what a firm should do ? do you know what the word capitalism means?) As competitors enter this market, it will change from a monopoly to a monopolistically competitive market (please, please look the term up) and prices will be forced down. When this happens, I'll think about making a purchase.

?Understand that there is a differance between Capitolism and unfettered Capitolism.? Please...it's capitAlism. And you can safely assume someone who tries to explain things like the differEnce between normal profits and economic profits knows that there is a differEnce between laissez-faire capitalism (correct term) and a mixed economy (which I -do- advocate; again, straw man.) Video games -are- produced in a monopolistically competitive market (again, look it up before you hit reply and say I'm wrong) which are FAR afield from running into any of the US' laws. You've argued AGAINST letting the market set the price for a good and for a laborer. That -is- arguing against the usual means of price and wage determination in a capitalist system. You've argued for mass action to lower a price, failing to understand that the price itself was set by a market clearing point. Just let it drop.

 

[Therumancer]

Please don't cut an argument down into a straw man.

Just let it drop.

Yes, that's probably not a bad idea since this isn't going to go anywhere good. We disagree on a lot of fundemental issues, and it has a good chance it's going to get a lot more personal than it should.

 

[Triforceformer]

Wasn't Brutal Legend kind of a let down? I never read one positive review of it. Another asshole going the "It's the fan's fault" route instead of having the balls to admit the truth.

Not really a letdown. I and many others had alot of fun with it, with the game having sold 1.4 million copies as of February 2011. Most every single citeable professional/"professional" reviewer enjoyed the game. You would only be really disappointed if you followed EA's marketing only, which focused on the exact opposite of what the game really was. Rather than focus on how Brutal Legend was making console RTS fun yet still strategic, and had a beautifully realized metal-motif, EA focused on "JackBlackJackBlackJackBlack rockstars METALLLLLLL!".

Tim was always very honest about the game when he got the chance to talk about it. And if you listened to Tim, chances are you got something very enjoyable and worth the money. But because of what it went through, you also knew that Double Fine could and would have done with it if they had the chance. My post on Page 11 of the recent Extra Credits episode goes into more detail about how I fell regarding all of this.