The Big Three Questions of Starting a Game Company

"Let's go start a video game company". And with those words, the dreams of innumerable game developers were ground into a thin tar-like paste.

It's not that starting a game company is impossible. Far from it - in this age of iPhone apps and social games, it's well within the reach of a lot of game developers. But that's not what most developers mean when they say they want to start a game company. They want to make a $20 million AAA console title or launch a $40 million MMO.

And to do either of those, you'll need more money than you've got stashed in your 401K.

You're going to need to get outside money. The kind that comes from venture capitalists, angel investors, publishers - and a whole lot of hustle.

But let's assume you've got the hustle and drive. Assuming that, the next step is figuring out your answers to the Big Three Questions. These are the crucial questions that any potential investor is going ask you (assuming this investor isn't, say, your Mom)

What are the Big Three Questions you have to answer?

Question One: what experience do you have?
There are really only two good answers here.

First, you can have a track record of solid performance across a range of industry recognized companies. You've shipped games and held some confidence inspiring titles with words such as "Lead", "Director" or "Executive" in them (or even better, "VP"). And these posts have been held at a host of companies whose names rhyme with "Lizard" or "Lubisoft" or have an excessive use of vowels.

The other option is you worked on a smash title.

Not just a solid seller - we're talking a Barry Bonds knock-it-into-the-bleachers home run. A huge mega-hit. It'd ideally a game that's a household name. The more well known, the lower on the hierarchy you can be. If it shipped five million units, being a member of the team is gold. If it shipped 10 million, being the contract QA tester is enough. If it was Modern Warfare 2, I'm pretty sure the guy who delivered the crunch pizzas can get a development deal.

Question Two: what team can you put together?
Unless you're an army of one, you need a team to make a game - and investors care about a lot about that team.

This is not a hypothetical "oh, I'm sure I can find the right people at GDC conference" type of question. It's a "you have their phone numbers and enough blackmail photos to ensure they'll stay through shipping your first title" type of question.

Your ideal is that you have a team which just shipped a big title that did well and they all want to jump ship, start a new company and essentially re-make that exact game  - only better (and depositing the checks in a different bank account). A team that's proven to work together and ship product is worth its weight in gold.

But you're also going to want adult supervision. A lot development folks bring creative, technical or production disciplines to the equation. And those are crucial, no doubt. But you also want somebody who not only owns a suit - but is comfortable wearing it while going over a powerpoint with financial projections.

In other words, you need somebody who knows the business side. Somebody who has experience in the arcane world of financials and corporate structures and the other dark arts derived from malevolent tomes.

And if your investors don't seem overly concerned that you lack a hard-nosed business type on your team? It's like the old poker adage: if you can't spot the sucker at the table - then its you.

Question Three: what is your actual game idea?
This is where a lot of game developers start - but its actually pretty far down on the list. And it's about more than a game idea. Yes, you probably want to have a good game idea. A stellar one even. But honestly, the game idea isn't likely to be the most important thing.

Most investors want to hear about how your idea makes money. They want a business plan, even if it boils down to "When we made this game before, it sold 3.5 million units - and so we're going to do that again".

Publishers will care a bit more about you having a game idea. They'll be more insightful - and ask tougher questions. They're also a lot more likely to demand a working prototype. Other investors will be more concerned about a business model. To get them excited, you'll want a novel spin. A couple years ago, it was say to say the magic words "MMO". Today, you want to say "social gaming". Next year - it'll probably be 3D geo-located super-whiz-bangery.

Investor-types will forgive a certain ambiguity with a game in favor of a compelling business model. And they'll be less insightful into the flaws of a particular game idea - but they'll respond to eye candy. Publishers like eye candy too - but they're more likely to forgive some roughness in favor of game that sounds compelling. But they're also much more likely to play Back Seat Designer and question your every decision. I seriously doubt anybody could have pitched Mafia Wars or Farmville - they would have been laughed out of the mahagony lined conference room by sensible game executives.

So after you supply good answers to the Big Three Questions, what else do you need?

The leadership skills of Hannibal, the showmanship of PT Barnum and the charm of the Devil himself.

Oh, and more of those blackmail photos don't hurt either.

- Sean Dugan is convinced that in many cases, a picture is worth a thousand words. Or a thousand dollars. 

image by Marco Bellucci under Creative Commons License

1 comment:

  1. It's interesting that, in recent years, the "magic words" that get the money-entities all excited to invest tend to be things that are really bad for the industry, and often for the individual game companies as well.
    Take "MMO" for example: the tradition of saying "make a game just like previously successful game X" works pretty well for standard PC and console games; it's a selling point: "if you liked game X, you'll love game Y." But for MMOs that model breaks so very badly; for MMOs, it's "if you liked game X, well... you'll continue playing game X." Add to that the enormous expense of making an MMO. So you end up with the disasters of the post-WoW years, in which company after company went belly-up wasting huge sums of money to make a game just like "World of Warcraft." The irony is that I'm sure there *is* plenty of money still to be had still in MMO-land, it just requires games that *aren't like WoW at all.* [I'm sure the cognitive dissonance involved here would cause marketing heads to explode.] The other problem, of course, is that [traditional] MMOs are so time-intensive that if you play an MMO, you don't have time to play anything else. The more people who play MMOs, the more the industry as a whole suffers.
    "Social gaming" doesn't seem much better - it's inherently small and casual. It doesn't support large dev teams or cultivate the skills needed to develop cutting-edge AAA titles. (No one is going to be talking about DirectX 11 mesh tessellation from displacement maps in the social game space...)
    As for that "3D geo-located super-whiz-bangery," well, that's going to be a complete disaster. The cross-platform whats-its are just going to immediately throw a spanner in those plans.

    And "the leadership skills of Hannibal, the showmanship of PT Barnum and the charm of the Devil himself"? My experience (mostly third-hand) indicates that having the last two usually suffice, and in fact are often confused with the first. For starting a company, anyways... surviving is another matter entirely.