Dumb Money, Smart Money: Funding and Publishing Options for Independent Game Developers

Til$ng Point Confiden$al

FUNDING AND PUBLISHING

OPTIONS FOR INDEPENDENT DEVELOPERS

DUMB MONEY SMART MONEY

JULY 2014


WHO AM I? GIORDANO BRUNO CONTESTABILE VP Product Management & Revenue, Tilting Point

Previously seen at PopCap and EA Executive Producer, Bejeweled franchise Mobile Product and Business Strategy Asia Pacific Operations

Mobile gaming since 2002 SMS / WAP / J2ME / BREW and other horrors Happier since 2008 (App Store launch date) Twittering away @giordanobc

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New generation mobile partner for top independent game developers

WHO ARE WE? TM

Focus on mobile and tablet platforms

Full service: •  Funding

•  Product management

•  Production support

•  Marketing & user acquisition

•  Tech platform

•  Insight, analysis and research

•  Reach

•  Scale

Sounds interesting? [email protected]

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An innovative platformer from 1337+Senri with cutting-edge graphics, starring a lovable, unique main character

4 Tim Cook’s Keynote at WWDC 2014

Unveiling of Android TV at Google I/O

On stage at the ADA Ceremony


Tower offense and defense game with a collectible card game twist from Uber Entertainment

Featured by Apple in 120 countries

“Toy Rush could be the game I’ve always wanted.” 148Apps

“This game looks seriously awesome… Marvelous.” Touch Arcade

“Toy Rush is a game I’ve been waiting desperately for.” App Invasion

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LET’S GET STARTED ENOUGH ABOUT US


IN THE OLD DAYS… Publishers were needed because of:

Very high cost of development

Retail distribution very important, and very expensive

Large marketing budgets required

Console platforms mostly closed to smaller companies

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AS A RESULT Publishers held sway, and terms weren’t favorable to developers

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NO OR LIMITED IP OWNERSHIP

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HIGH COST STRUCTURES AND LOW ROYALTIES Resulting in low chance of receiving any over lifetime of product

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LIMITED CREATIVE CONTROL

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APPROVAL PROCESS OFTEN ARBITRARY

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FREQUENT CRUNCHES And “death marches”

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WHAT HAS CHANGED?

(WHAT WAS THE TILTING POINT !?)

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No physical distribution infrastructure needed

Platform barrier of entry effectively eliminated

Performance-driven marketing lowering overall costs

Indie developers can reach mass audiences directly

WHAT CHANGED? DIGITAL DISTRIBUTION PLATFORMS HAVE REVOLUTIONIZED THE MARKET

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Cheaper and more accessible engines Smaller teams Shorter development cycles Unlimited upside

WHAT CHANGED? MAKING GAMES FOR DIGITAL

PLATFORM CAN BE MUCH MORE AFFORDABLE

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WHAT CHANGED? AUDIENCE HAS BECOME

SIGNIFICANTLY LARGER AND BROADER

100M FROM

“GAMERS” 2B TO

“PEOPLE THAT PLAY GAMES”

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The work doesn’t end with a big launch

In fact, that’s just the beginning

WHAT CHANGED? GAMES ARE NOW SERVICES

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BUT GOING ALONE IS STILL DAUNTING

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PRODUCTION VALUES AND COSTS ARE RISING

GOING ALONE IS DAUNTING

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$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

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$4.50

$5.00

Jan

-12

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-12

Mar-

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Ap

r-12

May

-12

Jun

-12

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Au

g-1

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No

v-1

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-13

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-13

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-14

Average Cost Per Install

Android CPI

iOS CPI

Facebook CPI

MARKETING BUDGETS & USER ACQUISITION COSTS ARE RISING


Source: EEDAR, 2014

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MORE AND MORE GAMES RELEASED EVERY MONTH


Number of game submissions by

month on the iOS App Store

0

1000

2000

3000

4000

5000

6000

7000

8000

20

08

-06

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-08

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-12

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-10

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-12

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14-0

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1.2 MILLION GAMES IN THE iOS APP STORE

200K LAUNCHED IN THE PAST 6 MONTHS

Source: Tilting Point / 148Apps

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MAKING GAMES IS NOT JUST ABOUT MAKING GAMES


Domain knowledge is required in:

CONSUMER INSIGHTS | MARKETING | USER ACQUISITION ANALYTICS | MONETIZATION | QA | ETC.

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WHAT TO LOOK FOR IN A PUBLISHING DEAL?

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Now that the playing field is tilted in the developer’s favor, what should you be asking for?


WHAT TO ASK FOR Depending on factors such as level of completion of the game and investment from the partner:

Full or partial financing

Control of the IP

Creative control

Product management and production support

Platform relationship management

Marketing and user acquisition budget & execution

Ongoing live operations funding

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WHAT ARE YOUR OPTIONS?

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WHAT ARE YOUR OPTIONS?

BOOTSTRAPPING

VCs AND ANGELS

CROWDFUNDING

PLATFORMS

INCUBATORS & ACCELERATORS

PARTNERS (EVOLVED FROM PUBLISHERS)

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PROS No external pressure

Complete creative control

No dilution

Availability of affordable tech

CONS Limits scope of project

Lack of access to external know-how

Hard to be noticed with low / no marketing budget

MOST SUITABLE FOR Wealthy people or very frugal people

Small teams with a distinctive game that can be developed on a low budget and find its own audience

BOOTSTRAPPING

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PROS No dilution

Creative control (but careful about upsetting your backers!)

Crowdfunding campaigns are also marketing opportunities

Niche projects can get funded

CONS Difficult to be noticed: most crowd funding campaigns don’t gain traction

Obligation to deliver on backers’ rewards

No support from “investors” beyond funding (and often a lot of nagging)

MOST SUITABLE FOR Anyone that has made a cult game in the ’80s or ’90s

Experienced teams that know how to budget for and how to deliver a game

Niche games that can find a very enthusiastic audience

CROWDFUNDING

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PROS Office space

Some funding (often limited)

Mentorship

Introductions to investors, platforms and publishers

CONS Equity dilution, often disproportionate to contribution

Limited timeframe: teams have to find their way after a certain amount of time

Not all programs are equally useful & reputable

MOST SUITABLE FOR Teams with little or no experience in the industry needing a lot of guidance and support

INCUBATORS & ACCELERATORS

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PROS Access to sizeable funds

Access to other investors, talent and resources

CONS Strong dilution

Loss of control

Most VCs don’t have domain expertise and don’t understand games

MOST SUITABLE FOR Very experienced teams with an understanding of the business side of games

Companies with significant traction that want to get to the next level

VCs & ANGELS

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PROS Strong production and marketing support through the whole development cycle

Guaranteed promotion on the platform without cost to the developer

CONS Limitations on where the game can be published, (either temporarily or permanently)

Giving up control of IP is often a requirement, although this is changing

Strong involvement of the platform partner in creative decisions & production cycle

Exposure in change of strategy or staffing in the platform partner

MOST SUITABLE FOR AAA games

Uber-cool indie games that make the platforms look good at E3 while they peddle their shooters

Teams that have the experience, processes and patience needed to deal with a closely involved partner

PLATFORMS

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PROS Full-service support (development, marketing, operations, business)

Funding without losing ownership and creative control

Allows developers to focus on making great games while their partner handles everything else

CONS Too awesome? LOL J/K (?!)

Attractive deal terms only accessible to experienced teams with very high-quality games

MOST SUITABLE FOR Successful teams looking to tackle more ambitious projects

Commercially-minded teams looking to build franchises and brands

PARTNERS EVOLVED FROM PUBLISHERS

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CONCLUSIONS

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Best partner depends on genre, platform, scope, team and goals

ONE SIZE FITS ALL DOESN’T APPLY

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In today’s market, developers have more options and more negotiating power

POWER SHIFT

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Creative control and not relinquishing IP ownership are key to building a long-term business

CREATIVE CONTROL

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You will be working with your partner at least through the game’s lifecycle - better enjoy their company

A GOOD FIT IS EVERYTHING

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Managing all aspects of a business is harder Most developers need partners

MAKING A GAME IS HARD

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QUESTIONS? www.tiltingpoint.com

[email protected]

twitter - @tiltingpoint

[email protected]

twitter - @giordanobc GIORDANO CONTESTABILE

Images: Slide 1 - Volkswagen ad, slide 6 - Lance Runner ad, slide 7 – KFC ad, slide 8 - 6BEstudio for Top Destinos, slide 9 – Harvey Nichols ad, slide 10 – Platinum FMD, slide 11 – Dulux ad, slide 12 – Garyckarntzen, slide 13 - Hu Zheng, slide 14 – Canal Plus ad, slide 15 – Curli ad, slide 16 - Paperboat Creative, slide 17 – Hino ad, slide 18 - Vichy Catalan, slide 19 - Gregor Collienne, slide 24 – Platinum FMD, slide 25 – Naolito, , slide 27 - Ramy on DeviantArt, slide 34 - Radio for Heads ad, slide 35 - Carioca Studio for TNT ad, slide 36 – Philips ad, slide 37 – Shutterstock, slide38 - Kevin Richardson, slide 39 - Koen Demuynck. Sources unknown for all uncredited images.

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