Game Developer (1/3): Will you go alone or choose a Publisher?

As a Game developer you simply have to choose… how will you launch a great game and reach the audience? What will be the impact on profitability if you decide to partner up with a Publisher? Can you achieve that scale when you go solo?

.credits: T.L.J.Broekhuizen

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Imagine that your team of game developers has just finalized a new game, "Space Explorer," an open-world adventure featuring space battles and exploration missions. This would be the 10th addition to your company's existing portfolio of games.

However, a lack of critical resources and a tight budget could limit the game's potential success. On the other hand, partnering with a reputable publisher, known for several best-selling games, could guarantee a large user base and provide additional promotion, but they, of course, want a share of the profit.

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So, what would you choose?

Go it alone or partner with a publisher?

Alone

Publisher

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Alone

Pros

• Full Control: Retain complete control over your product, including creative direction, distribution, marketing, and pricing.

• Higher Revenue Share: Keep all the profits since there is no need to share revenue with a publisher.

• Flexibility: Make quick decisions without needing approval from a partner.

• Independence: Avoid dependency on a partner, reducing the risk of opportunistic exploitation and dependency on critical resources controlled by a larger entity.

Cons

• Limited Resources: Lack access to specialized complementary assets such as financial capital, marketing skills, proprietary distribution channels, and media relationships.

• Market Knowledge: Potential lack of market knowledge and experience in contracting downstream value chain activities.

• High Costs: Bear all the costs related to marketing, distribution, and promotion.

• Visibility Challenges: Difficulty in gaining visibility and trust in the market without the endorsement of a reputable publisher.

• Risk of Lower Financial Performance: Potentially lower absolute financial and market performance due to lack of specialized resources and expertise.

Publisher

Pros

• Access to Resources: Gain access to specialized complementary assets, including financial capital, marketing expertise, distribution networks, and industry contacts.

• Market Knowledge: Leverage the publisher's market knowledge and experience to navigate contracting and downstream activities effectively.

• Promotion and Visibility: Benefit from the publisher’s established relationships with media and gatekeepers, enhancing visibility and market trust.

• Synergistic Value Creation: Create greater absolute financial performance through synergistic effects by combining operations with the publisher.

• Risk Mitigation: Reduce the risk of financial failure by sharing the financial burden with the publisher.

Cons

• Revenue Sharing: Need to share a significant portion of the revenue with the publisher.

• Loss of Control: Surrender some control over the product, including creative direction and strategic decisions.

• Contractual Risks: Risk of entering unfavorable contracts due to lack of experience, potentially surrendering significant revenue streams.

• Dependence on Publisher: Risk of becoming overly dependent on the publisher, which can lead to opportunistic exploitation and reduced control over critical resources.

• Performance Risks: Risk that the publisher may not fully commit to promoting and distributing the product as expected, leading to suboptimal market performance.

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References

1. Broekhuizen, T. L. J., Lampel, J., & Rietveld, J. (2013). New horizons or a strategic mirage? Artist-led-distribution versus alliance strategy in the video game industry. Research Policy, 42(4), 954-964.