Category Archives: Business

Entry-Level Production Wages, Part 2

The last time I wrote about the subject of relatively low entry-level wages for producers, some very knowledgeable readers made the following arguments in support of the status quo:

  1. Production is a role that demands experience. Entry-level producers are not capable of making a “significant enough” contribution to a game’s development to justify higher wages.
  2. There are tons of people willing to do anything to become producers; why pay when you don’t have to?
  3. Academic degrees (even game and/or engineering-centric degrees) are nice, but ultimately irrelevant without multi-year project experience. “You can’t teach production skills.”

There’s something to be said for every one of these arguments. Nevertheless, I’m going to do my best to express a logical alternative point of view. Does this mean I think wages for entry-level producers should skyrocket? Not necessarily, no. But it does mean I think there’s room for nuance — that the industry’s current blanket approach to entry-level production isn’t appropriate for every case and candidate.

Read the full editorial here!…

What Does Top Entry-Level Talent Cost Nowadays?

I’ve been chatting with a few undergraduate MIT students who already have full-time offers from video game companies. Most had summer internships with one of the large publishers, and all appear to have worked on video game-related projects, in and/or out of class. I thought some of you might be curious to know what those offers look like.

Students who applied for engineering jobs seem to be getting offers in the 70s — in some cases, the high 70s. The same students got offers approximately 10K higher from companies in other industries; i.e. Oracle, Microsoft, etc. So the gap between game company offers and non-game company offers appears to be narrowing for engineers. In general, I was amazed at how high the offers were!

On the other hand, students who applied for production jobs (even students with a double major in computer science) seem to be getting offers in the 30s. I find this to be completely bizarre. I mean, yes, I understand the laws of supply and demand (there are more wanna-be producers and designers than well-trained engineers). And yes, production skills are harder to learn outside of the work environment. But are talented entry-level producers really worth only half the equivalent engineer? Even when they have the same academic training? (After all, a solid grasp of programming is useful to both producers and designers, not just engineers!)

I think this exposes one of the industry’s most fundamental flaws. Producers are expected to keep game development on schedule and under budget. They are expected to act as the bridge between the various development groups, the mouthpiece to the outside world, and the interface to marketing and sales. They facilitate (and in many cases participate in) the creative design process. In other words, producers are the oil that keeps the machine running smoothly — indeed, keeps it running period. If entry-level salaries are any indication of how much (or how little) the industry values its producers, it’s no wonder so many games run over schedule and over budget!

Update: many people have asked where the job offers came from, since location obviously affects salary. I haven’t had a chance to reconnect with every student I initially spoke with, but it appears the majority of the offers were from studios in California and Seattle.

2nd Update: As promised in the comment thread, I’ve posted a followup editorial (which has been reprinted with permission by Next Generation.

Questioning the Value of Game Design Degrees

Gamesblog has posted an editorial questioning the value of a video game design degree. Part of me really wants to take this seriously (since at least some of the many design programs springing up worldwide must undoubtedly be half-baked). Unfortunately, this editorial doesn’t do the question justice at all.

Let’s start with the first argument (paraphrased): innovative designers come from different disciplines, and therefore have a fresh perspective. That’s certainly true in many cases. But wait: last I checked, a college degree was useful for expanding one’s horizons. Does a game design degree prevent students from concurrently taking courses in philosophy, art, psychology, or computer science? More to the point, couldn’t a good design course encourage interdisciplinary study? Ours certainly does. Many MIT CMS undergrads double major in computer science, and/or sprinkle film and TV studies, creative writing, and marketing courses into their schedules. Our design courses often require students to explore a range of design considerations, including business, engineering, social, and cultural issues. The idea that a game design degree precludes a broad perspective is simply laughable.

The author also notes that none of his long-term game designer pals have game-related degrees. Really? Maybe that’s because game design degrees didn’t exist until just a few years ago. Maybe we should eliminate all biochemistry degrees, since early biochemists enjoyed more “fundamental” educations.

Lastly, the author claims that “in most creative industries, people from the outside have the brightest ideas…” I don’t know what to make of this. Are creative writing majors automatically less likely to write a good book than other people? Are film studies majors less likely to produce an innovative movie? The author commends the value of these programs with one hand, but effectively denigrates them (and all programs like them) with the other. You’d be hard pressed to find many people who think that film studies programs have somehow sucked the creativity out of Hollywood, so I’m not sure why game design programs should be any different.

A better editorial might have questioned design programs that fail to incorporate computer science, film studies, creative writing, etc. It might have explored the importance of practical design experience (I feel that any program worth its salt strongly encourages students to take summer internships with game companies, and builds practical, long-term game development projects into the design curriculum.) It might have raised questions about game design theory, which is still a rather nascent thing, and therefore somewhat difficult to teach. These would have been interesting things to discuss.

“The Continued Growth of Gaming”

I just sat in on the “Continued Growth of Gaming” panel at the MBA Media and Entertainment Conference in New York. Moderator: Cyrus Beagley (Engagement Manager, McKinsey Entertainment Practice). Speakers on the panel: Greg Costikyan (Founder, Manifesto Games), Chris Di Cesare (Director of Marketing, Xbox), Nique Fajors (VP of Brand Management, Atari), Frederic Markus (President, eRelevant Games), Joseph Varet (Sr. Director of Biz Dev & Strategy, MTV Networks). I managed to catch most of what was said, except in the case of Greg Costikyan, who speaks two to three times faster than most normal human beings.

Topics discussed: What makes a franchise successful, MTV’s role in the video game industry, innovation, the attractiveness of various game markets, and some questions for Microsoft about portables and shortages.

Read the full transcript here.

Activision’s College Recruiting Pitch

This past week a great group of folks from Activision flew in to connect with and interview students at MIT. We hosted Kate Paneno (Activision HQ), Tim Stellmach (Vicarious Visions), Robert Morgan (Shaba), and Michael Vance (Treyarch). You can learn a lot about a company (and its industry) from the way it pitches itself to potential hires, so I thought I’d share a few details with you.

Activision kicked off its main presentation with the following points: 1) Work for us, and you’ll never need to worry about receiving a paycheck on time. 2) For all practical purposes, you work for a given studio — not for Activision. HQ simply does its best to help you find the studio that’s right for you. [Interpretation: “want stability plus a small, entrepreneurial environment? Have your cake and eat it, too.”]

The next part of the presentation: What is life like in the game industry? 1) All your colleagues are passionate about what they do. 2) Your friends and family will be mystified and/or jealous. 3) There is “crunch-time”, but it’s by no means perpetual. Quote: “you’ll put in good hours, but you’ll feel good about it, and it won’t last forever.” [Nothing unexpected here, though I’m always curious to hear a company’s particular take on crunch-time.]

The remainder of the presentation focused on the tasks associated with production, engineering, and design. In each case, it was made clear that occupational challenges were non-trivial. Producers “herd cats” and serve as a project’s “lymphatic system”. Engineers solve complex problems in real-time, under serious resource constraints, within new and unfamiliar environments. Designers wrestle with conflicting project goals and constantly revisit and revise their designs. [Interpretation: fanboys beware. Game development is not always fun, and definitely not easy.]

All in all, no surprises here. The team from Activision was candid and refreshingly eager to court students for all positions, not just engineering. (The way some companies behave, you’d think an education is barely useful to entry-level designers and producers. This attitude has become more rare in recent years, but it hasn’t vanished.) The challenges facing independent developers remain exploitable by large publishers. Crunch-time is still a hot topic, and Activision certainly isn’t disavowing it entirely. I’ll have to ask some students how they feel about that, especially since some developers, like Blue Fang, are promoting 40-50 hour work-week policies.

Lastly, my thanks to the Activision folks for their visit.  ðŸ™‚

Ubisoft and EA Fight Over Non-Compete Clauses

Via Gamasutra, news of a squabble between EA and Ubisoft over the latter’s habit of asking employees to sign one-year non-competition agreements. Says EA: “In the spirit of creative freedom, economic emancipation and workers’ rights, EA has in fact accepted the application of an employee who had been working at Ubi Soft…”

A bit bizarre hearing the industry’s 800-pound gorilla complain about competitive practices. (Was EA acting “in the spirit of creative freedom” when it inked an exclusive agreement with the NFL, torpedoing any franchise that competes with Madden in the process?) Irony is alive and well.

Note to future Ubisoft employees: a non-competition clause (like most things in an employment offer) is negotiable. Ubisoft has the legal right to request that you temporarily restrict your future employment opportunties following termination of your relationship with Ubisoft… and you have the right to request a higher salary, bigger bonus, and/or a significant guaranteed severence package (etc) in exchange for sacrificing some of your precious liberty. Capitalism cuts both ways. 😉

Alienware Launches Game Download Service

Via Next Gen, Alienware (maker of gaming PCs) has launched a digital download store for games. Similar stores and services are becoming increasingly common, though this is (to my knowledge) the first hardcore offering made by a company outside the entertainment/media industry. A very interesting attempt by Alienware to build a closer relationship with its customers (and make some extra cash in the process).

I was particularly impressed by the availability of recently-released, popular games such as FEAR, Civ 4, and King Kong. You don’t normally see titles like those offered by a digital 3rd party portal.

And speaking of digital distribution, I stumbled onto the Game xStream service, a competitor to Valve’s Steam that one-ups it by enabling gameplay within minutes of initiating a download. The service attracted press several months back, and just raked in a second round of funding.

PS. Unrelated news of interest: someone’s selling real products (PC hardware) for virtual bucks in Second Life, and E3 appears to be forbidding scantily-clad booth-babes this year.

The Rise of Used Video Game Trading Networks

Kotaku has spotted a new trading network for used video games. At iTradeVideoGames, you sell your used games to other users for virtual currency, which can then be used to buy other games. iTVG charges a small fixed commission on each trade. That (and shipping fees) are the only cost. I’ve noticed several competing networks, all of which seem relatively new; for example, the Game Trading Zone and Nintari.net.

iTVG’s pitch is that it enables you to capture the full market value of your used video games by cutting out the retailer. This assumes a sufficiently large and active user base (which the network may develop over time, but which it seems to lack as of now). It also assumes that corrosive forces (fraud, pirated copies, etc) don’t overly infect the market during its early stages of development.

Furthermore, iTVG’s value-capture claims are not unique. Ebay effectively offers the same thing right now by connecting a great many buyers and sellers, and by featuring a reliable, established reputation system. You may get “less” currency (in this case, real dollars) for each game you sell, but each game you buy costs less as well. Ultimately, with a bit of caution, you can effectively “trade” games via Ebay and lose little value in the process.

The main differences between Ebay and iTVG are as follows: By taking real money out of the equation, iTVG might make skittish users feel more comfortable. (It certainly makes trading simpler by eliminating the process of collecting payment.) In general, iTVG is more focused and streamlined. Finally, iTVG reduces transaction friction by offering lower commissions and eliminating payment fees, which ultimately benefits the end user. Whether this is enough to attract a critical mass of active traders remains to be seen.

PS. I mentioned a few ideas for reducing the incentive to trade games in a previous editorial. One more: how about making it clear to customers that once or twice a year (timed perhaps with major holidays), new & interesting expansion content will be made free for download? For example, a new game level or feature? Nothing rivaling the typical retail expansion pack, but just enough to keep customers engaged, discourage game resale, and maintain excitement till the expansion and/or sequel is released. (Multiplayer-centric games have less problem with resale in general, but even they can take advantage of this strategy.)

Pre-Owned Game Sales Strikes a Nerve

More industry grumbling about the impact of used video game sales by major retailers. UK publishers are making vague threats to “do something about it.”

First, let’s be clear: this problem is not unique to games. Most durable physical products have an after-market; many even have dedicated resellers. Think about used book stores, second-hand furniture outlets, etc. Can you imagine IKEA complaining about the resale of its furniture?

To defend their position, some game industry veterans are claiming two distinctions: 1) games require technical support, which costs money to provide, and, 2) primary retailers in other industries don’t support pre-owned trade (i.e. Barnes and Noble does not sell pre-owned books.)

Both of these defenses fail upon cursory inspection. While PC games may carry a notable tech support burden, console games aren’t quite so troublesome. More to the point, electronic goods (such as stereos and computers) are often resold and carry an arguably greater tech support burden! The consumer electronics industry manages this problem with a nifty little thing called a time-limited warranty.

As for primary retailers supporting pre-owned trade … how about Amazon? You can buy most anything used or new, right from the same page. And how is this even relevant? You think people can’t find used games if they really want to? Is eBay a well-kept secret?

Let’s not forget that one of the primary drivers behind the pre-owned game market is price. Specifically, the high price of new games. What’s a guy with $30 in his pocket to do? Maybe instead of griping, game publishers should consider offering a few more decent, lower-priced games. (It would help expand the game market, too). And if compelling online services that enhance gameplay (and extend the life of the game) are introduced, consumers might never be willing to sell their copy in the first place.

It would be great if all users felt so thankful for games that they were willing to buy them first-hand. I personally make a point of doing so in order to support the game industry. But enough wishful thinking. People feel entitled to buy and sell used goods. If game publishers clamp down on the practice, they risk offending the mass market in the same way that music publishers managed to. “Those who fail to learn from history…”

Rant finished. Some related information: Best Buy started evaluating pre-owned game sales back in September (probably because EB reported over 40% of its profit from the category.) Also, see GamerDad’s I’ll Resell If I Want To. Mark Reins (Epic) wants retailers to share resale profits with developers — and the incentive he’s offering is…? (“It’s better for the industry as a whole” probably won’t impress retailers.)

Sega and EA Announce Digital Distribution Services

In the last couple of days, EA and Sega have both announced PC game digital distribution (DD) services. Content available for download appears to be extremely limited initially, but that should change.

When Valve took the DD plunge with Steam, many people called it suicide. Retail still accounts for the vast majority of games sold in the US (Walmart alone claims 25% of the market), and some predicted that retailers would punish Valve by permanently shunning its games.

Valve did take some lumps from its publisher, Vivendi, and lost some retail placement in the process, but the apocalypse never came. Now DD services are springing up everywhere, such as Turner’s GameTap and Verizon’s Game Network. The question is no longer “will retailers accept DD” but “what DD models will work best?” All-you-can-eat subscriptions to a library of games? One-time, one-game lump sum fees (as in the current retail model)? Episodic content?

Ultimately, game retail isn’t going away, just as Barnes and Noble didn’t go away. A huge percetage of games are purchased by parents who wander around stores like Walmart wanting to buy a gift for their kids. Those parents aren’t switching to digital distribution anytime soon. And people who want control over the content on their hard-drive may be turned off by anti-piracy systems in DD.