3 Things to Know About Your Publisher

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Figure 1.1. Infogrames stock infor mation appears on its Web site's home page.

#1 What Being a Public Company Means

If your publisher is a publicly traded company, it makes predictions to Wall Street about how much revenue the publisher expects to earn each quarter. The stock price of the publisher can rise and fall depending on how close it comes to meeting (or exceeding ) that number.

The author would like to thank Jeff Hilbert of Digital Development Management ( www.digdevmgmt.com ) for his assistance in preparing the company illustration appearing at the head of every chapter.

Those quarterly revenue predictions are based on the assumption that X, Y, and Z games will be getting released in that quarterly "window." If you are the developer of game X, and your production schedule slips and game X doesn't go out, your publisher is left with what is known as a "revenue hole." In other words, if your game doesn't ship on time, the publisher won't earn the revenue on that game, and it may not meet its quarterly projections.

Time is money, literally. So when a company misses its quarterly projection, its share price can suffer. Even if the publisher will release game X in the next quarter and may make up the difference in its next quarter, there is a premium on predictability and on getting money today versus tomorrow. Furthermore, the market can only handle so many games at a time, so slotting more releases into a window may cannibalize sales away from the publisher's other games.

#2 What Dealing with the Console Manufacturer Means

As you may know, console manufacturers look to license fees (paid by publishers) for a large chunk of their profits. They also exercise significant influence over the games released on their platforms, which takes some control over the development and manufacturing process out of the publisher's hands. Pieces of the process owned by the console manufacturer:

• Console manufacturers usually must give their approval of the concept for a game.

• A manufacturer may choose to cancel a game at the QA stage, after significant development.

• They can also cancel the game in its final form (though this is rare), or tell the publisher to go back and change it.

• They actually manufacture the game. All of these approvals and processes take time, and a publisher has to factor those delays into its scheduling.

#3 What they Have to do to Get Onto a Shelf

In addition to other roles, the publisher provides the service of marketing and distributing the actual packaged product. Packaged product is usually sold to retailers directly or through a distributor ( sort of like a catalog where the retailers shop).

A retailer's help can make a big difference in a game's sales. For example, games placed at eye level on the shelf (children's or adults, as relevant) are more likely to grab a customer's attention than games placed at foot level. Retailers can include your game in their advertising circular, or place promotional posters in the store, or feature your game in a big display like an end-cap .

Furthermore, retail real estateoften collectively known as shelf space is a limited and very valuable asset. A retailer can only carry so many games on the shelves it has allotted for games. A publisher's job is to get as much of that shelf space as it can, at the most desirable level, along with any other retailer support it can negotiate.

How does a publisher get support from a retailer? Frequently, with cold hard cashwhether as MDF ("marketing development funds"), paying for advertising in the circulars, paying extra for premium space and end-caps, and so on.

This influence can only go so far. A retailer needs to get a certain return per square inch of shelf space per month. If a game isn't selling, the retailer can't afford to have it hogging up shelf space, so it sends back any product that doesn't "sell through" after a certain period of time, which seems to get shorter and shorter, or simply refuses to even stock titles it doesn't think will sell.

Figure 1.2. Wal-Mart sells 25% of all video games in the U.S. market.

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