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February 2003
Just
who the heck is Jay you say?
 Q:
I have a question concerning money transfer in
publishing deals. Suppose my company sells our game for
1 million US$ and a 20% royalty. We sign this deal in
August 2003. How much money would be coming in at what
time? I want to make financial projections on the
profitability of the company and it is hard without any
examples. How much of the 1 million is paid upon
signature, how much advance on royalty if any, and so
forth?
A: The payments will
usually be split out over the course of the project,
based on monthly milestones you will submit to the
publisher. Typically with a $1 million dollar budget you
would aim for receiving $200,000 of that on signature,
but no less than $100,000. The rest will be divided up
evenly across the life of the development project. A
publisher will usually want to weight some of that money
more heavily on the end of the development to ensure the
title is finished. For example: In a sixteen month
development project -
Signature - $150,000
Month 1 - $46,666
Month 2 - $46,666
Month 3 - $46,666
Month 4 - $46,666
Month 5 - $46,666
Month 6 - $46,666
Month 7 - $46,666
Month 8 - $46,666
Month 9 - $46,666
Month 10 - $46,666
Month 11 - $46,666
Month 12 - $46,666
Month 13 - $46,666
Month 14 - $46,666
Month 15 - $46,666
Month 16 (Gold Master) - $150,000
All of that money is usually considered as an advance
against royalties. Therefore, when the sum of your
royalties (at 20%) exceeds the $1 million they advanced
to you, you will begin seeing a royalty check.
Q:
Just about every gamer I know wants to make their own
game. There are a number of free SDKs out there for
making just about any kind of game at any level of
experience. For an amateur strapped for cash, what would
you recommend as the best tools that would allow the
beginner to make a decent 3D game? I'm not worried about
making money right now, I just want the experience.
A: I would start by
using some of the level editors that come with games.
Unreal Tournament 2k gave gamers an excellent
starting point for creating games. I would build up
design and level building experience by using the tools
included with that game. From there you may want to
invest in a copy of 3D Studio Max to build your own
objects or weapons. You always want to make sure that
you are learning on software that will be relevant to
you in the future and by building levels and conversions
for existing games you can get feedback from the player
community on your work as well. Who knows, it may lead
to a job!
Need more Jay?
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Who
is Jay?
Jay Powell is an
agent at Octagon
Entertainment, a full service agency catering to the
needs of game developers, specializing in the creation
of domestic and international opportunities for game
financing and publishing and finding opportunities in
other medias. Jay has arranged and negotiated numerous
deals in Europe and North America for Octagon's clients.
He has also proven a key evaluator of projects, having
secured some of Octagon's most successful games. With
gaming experience in excess of fifteen years, Jay's
industry insight has been immensely beneficial to
Octagon's clients and publishing partners. Jay's
experience has allowed Octagon to create and maintain a
property evaluation and acceptance methodology that
exceeds the standards and expectations of the
interactive industry. Now, Jay brings his knowledge and
experience to you.
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