Category Archives: Game History

In Celebration of Game Dev Independence

Almost every student entering my game production class as well as just about everyone else who asks me questions about game development has dreams of becoming an “indie developer”.  But very few understand what the term means, because they also have ambitions of creating “AAA games.  So, one this day, when we Americans are celebrating the anniversary of the day that the United States declared its independence from England, I thought I would write about what it means to be an independent developer.

Independent video games (commonly called indie games) are video games created by individual developers or small teams generally without video game publisher financial support.  Now, why would that be attractive to a developer.  Well, nobody gives or lends money without also exercising some level of control to help make sure that they will earn their money back.  And so, by accepting a publisher’s financing, a game developer was giving up control over their game.

For many years game developers had no option other than to make a deal with a publisher like Activision or Electronic Arts, because they had the distribution networks for getting games onto the retail shelves of Electronic Boutique, Game Stop, Best Buy, and WalMart.  Small game developers just didn’t have the sales force and clout to go to the store buyers independently.  Instead,  they approached a game publisher, and it was the publisher what games were worthy of their investment, passing on games that they judged to be too different from what they were used to selling.  Once the deal was signed, the publisher was very careful to safeguard their investment by closely monitoring the game’s development, demanding changes that they thought would make the game more salable, even if those changes conflicted with the developer’s vision.  And if the developer refused, the publisher would withhold the next development payment and even threaten to cancel the project entirely.

How did game developers come to escape such tyranny?   It happened in what I will call The Steam Age.

The Steam to which I am referring is the digital distribution platform developed by Valve Corporation and released in 2003.  Before developing Steam, Valve had experienced problems updating its online games, such as Counter-Strike; providing patches would result in most of the online user base disconnecting for several days. Valve decided to create a platform that would update games automatically and carry out stronger anti-piracy and anti-cheat measures. Valve also recognized that at least 75% of their users had access to high-speed Internet connections, which would only grow with planned Internet expansion in the following years, and recognized that they could deliver game content faster to players than through retail channels.

Valve began negotiating contracts with several publishers and independent developers to release their products through its Steam distribution platform.  Many indie developers saw Steam as an opportunity to reach their players directly without publisher interference, and by early 2011, Forbes reported that Steam sales constituted 50 to 70% of the $4 billion market for downloaded PC games and that Steam offered game producers gross margins of 70% of purchase price, compared with 30% at retail.

Of course, Steam was not the only digital distribution alternative to the big game publishers.  Other digital distribution services that followed. The years after 2004 saw the rise of many digital distribution services on the PC, such as Amazon Digital Services, Desura, GameStop, Games for Windows – Live, Impulse, Steam, Origin, Direct2Drive,, and GamersGate.  Other alternatives include game portals like Addicting Games, Kongregate, Mind Jolt, Games2Girls, and many others.  Mobile game developers also found a way to around the game buyers at Verizon, Sprint, and T-Mobile when Apple launched the App Store for its iPhone, soon followed by Google Play for Android phones.

However, distribution was not the only reason game developers went hat-in-hand to publishers.  Games cost money to make, so without a publisher to act as the bank, how can an indie dev get money?  Well, here are some ways to fund projects:

  • žDay Job: Many game developers work a regular job during the day and do game development on nights and weekends.
  • žCredit Cards: Fund your game development through the plastic in your wallet.  Game developer Voldi Way told me that he lived off his credit cards for two years getting his indie game studio, WayForward Technologies, started and now its been successfully in business for over twenty-five years.
  • žFriends, Family & Fools: It seems that most of the potential clients who contact my consulting business want to develop a game based on money they’ve convinced friends and families to invest.  Why “fools”?  Games are a terrible investment, because most games never earn their development money back in revenues.  Hit games are the exception that everyone here’s about, not the rule.
  • žFestivals & Contest Prizes:  There are a number of game events that offer cash prizes for the best game.  The problem is, there are far more entries than winners.
  • žAngel Investors & Venture Capitalists: is an affluent individual who provides capital for a business start-up, usually in exchange ownership equity in your company.  Venture capitalists are similar, except that they are companies that invest other people’s money in start-ups.  The problem with both is that they are less interested in the quality of your game than in the value of your company, which their goal is to sell for a profit.
  • žIncubators & Accelerators: An accelerator works with startups for a short and specific amount of time, usually from 90 days to four months, offering a specific amount of capital, usually somewhere around $20,000. In exchange for capital and guidance, accelerators usually need anywhere from 3 to 8 or more percent ownership of your company.  Incubators focus less on quick growth and have no specific goal in mind for your company other than to become successful at the right pace. In fact, the goal of some incubators may be to prepare your company for an accelerator program. Incubators take little to no equity in your company, and can afford to because they do not give upfront capital like accelerators. Many incubators are funded by grants through universities, allowing them to give their services without taking a cut of your company.
  • žGovernment Programs: There are a number of governments eager to improve their country’s or state’s technological sector and will offer money through grants to software development, including games.  The trick is writing a good grant proposal, which is an art in itself and may require some professional assistance.

Once you get enough funding to start up your company, then there is all the business of actually running a company: renting office space, acquiring business licenses, purchasing equipment, hiring staff, getting insurance, setting up internet and other utilities, paying taxes, and all the other accounting, office management, and human resources tasks.

Developing a game is difficult and expensive.  You need to face the fact that you are not going to be building a AAA game like God of War or Call of Duty: these are the games that have the largest budgets and highest productions values.  Instead, aim for simple and small.  Now, that doesn’t necessarily mean poor quality, and it’s better to offer an hour of great fun than forty hours of mediocre gameplay.

In addition to developing your game, you need to advertise it and build an audience.  Don’t simply think, “If I build it, they will come.”You also need to be ready for the fact that your first game won’t be all that great.  It might take you several tries to develop a decent game, and even longer before you actually have a money-maker.  For example, Rovio developed 51 games and almost called it quits before coming up with Angry Birds.

And that’s why we should celebrate indie game development.  Despite all the difficulties and obstacles, indie developers still manage to create great games like Angry Birds, Super Meat Boy, and Minecraft.  It is thanks to these tireless freedom fighters who give the rest of us something different to play instead of the umpteenth sequel to the same ole, same ole.  Indie devs, I salute you!



How Game Publisher Electronic Arts Got Started

A user of the question-and-answer site Quora recently asked me how the game publisher Electronic Arts its start. Although I’ve never worked directly for Electronic Arts, I was co-owner of a company, Electric Transit, that was Electronic Arts’ first affiliated label publisher, and I did work for EA founder Trip Hawkins later as one of his employees at The 3DO Company. So, I figured that gave me enough expertise to answer the question, and here is the answer I gave.

Electronic Arts founder Trip Hawkins got the idea to start a company publishing computer games while he was a student at Stanford University in 1977. He told his idea to like-minded fellow Stanford student Bing Gordon but estimated that the home computer market wouldn’t be large enough to make such a company viable for another five years.

Sure enough, in February 1982, Trip Hawkins arranged a meeting with Don Valentine of Sequoia Capital to discuss financing his new venture, which he called Amazing Software. Valentine encouraged Hawkins to leave his position as Director of Marketing & Strategy at Apple Computer and allowed Hawkins use of Sequoia Capital’s spare office space to start the company.

On May 28, Trip Hawkins incorporated and established the company with a personal investment of an estimated $200,000. Seven months later in December, Hawkins secured $2 million of venture capital from Sequoia Capital, Kleiner Perkins Caufield & Byers, and Sevin Rosen Funds.

For more than seven months, Hawkins refined his business plan. With aid from his first employee (with whom he worked in marketing at Apple), Rich Melmon, the original plan was written, mostly by Hawkins, on an Apple II in Sequoia Capital’s office in August 1982. During that time, Hawkins also employed two of his former staff from Apple, Dave Evans and Pat Marriott, as producers, and a Stanford MBA classmate, Jeff Burton from Atari for international business development. The business plan was again refined in September and reissued on October 8, 1982

Between September and November, employee headcount rose to 11, including Tim Mott, David Maynard, Steve Hayes, and his friend from Stanford, Bing Gordon, whom he brought on as Chief Creative Officer

Having outgrown the office space provided by Sequoia Capital, the company relocated to a San Mateo office that overlooked the San Francisco Airport landing path. Headcount rose rapidly in 1983, including employees from Apple, Atari, Xerox PARC, and VisiCorp, and Hawkins got Apple’s Steve Wozniak to agree to sit on the board of directors.

After deciding that “Amazing Software” was too pretentious a name for the company, the employees held a meeting that lasted late into the night to come up with a new name, and they selected “Electronic Arts.”

Hawkins wanted to treat software as an art form and called his developers, “software artists.” He decided to model his publishing company after the music publishing industry, and so contracted music producers to instruct his game producers — including Don Daglow, Richard Hilleman, Stewart Bonn, David Gardner, and Nancy Fong — in how to recruit, work with, and promote talent. Electronic Arts game its game developers in its marketing and packaging materials, and modeled its packaging after album covers because Hawkins thought that a record album style would both save costs and convey an artistic feeling.

Years later, as I was driving him to the airport when we were both at The 3DO Company, Hawkins told me about how he was the inventor of the term “producer” for the liaison between a game publisher and a game studio, as well as the term “director” for the person who directly manages the development team. And as much as he promoted the concept of game developers as artists, he told me that every game ever made originated from one of his ideas. I don’t know if he was kidding me or not, but true story!

Electronic Arts, or “EA” as the company was also known, quickly became the biggest game publisher, and has maintained it dominance in the industry for 35 years, even after the departure of Hawkins in 1991 to head up The 3DO Company, as well as Bing Gordon and many of its original executive and producers. As many success stories as there have been in Silicon Valley, Trip Hawkins’ original success with Electronic Arts has to rank as among the greatest.