Secrets of the Game Business (Game Development Series)

Let's look at the services that an agency provides to a developer, and at the corresponding costs.

Pros

• Location and travel. For a team that is not located in California, it can be difficult to work with publishers who want frequent contact with their developers, at least in the initial stages of the relationship. An agent located where the major publishers are located expedites this process for the developer. Even agents who are not located in California can still help the developer in this manner, since they will still save the developer from having to travel as frequently to see the publisher, letting them focus on what drives them: making games.

• Knowledge of publisher needs. We would all like to think that exceptionally fun gameplay can sell a demo, but publishers often look for key, hot features, depending on the current state of the market. A good agent will be aware of what features publishers are looking for. They will also know what types of games a publisher is looking for at any particular time, and will therefore be able to tailor the search to the publishers that are looking for your type of game.

• Contacts in the industry. A good agent has strong relationships with the right people at the major publishers.

• Negotiation. An agent is usually a skilled and practiced negotiator; this will come in handy not just during the initial contract negotiation, but also during the development cycle if some monetary dispute arises between the developer and publisher.

• Business knowledge. For an inexperienced team, an agent can bring general business development knowledge to the table.

Cons

• Commission. The agent takes a percentage of all income you receive from the publisher, as well as income from sequels or derivative works, and also potentially from the purchase of your studio.

• Negative publisher image. Publishers might think that a development contract is going to have an artificially inflated price if there is an agent involved, to account for their commission. They still tend to deal with agents, however, since it is a convenient way to find new teams.

• Potential loss of control. Typically, an agent does not interfere very much with the studio and its work. However, if the studio wants to control every aspect of development, including publisher relationships, then the presence of an agent might prove incompatible with the studio's objectives.

What to Look for in a Particular Agent

The ideal agent is strong in most (if not all) of the service areas listed in the preceding section. In addition, consider these factors:

• Attitude. Do you feel the agent is trustworthy? Can you easily get along with him? Remember that you will have to work in close partnership with this person, possibly for a long time.

• Experience. Many agents come from other parts of the industry. Some are former publisher or developer employees. The more experience, from as many diverse sources in the industry, the better the agent will be at helping you in general.

• Representation. How much time and how many people will the agency use to represent you to the fullest?

Analysis

Now that we've gone through some of the pros and cons, let's consider the situations where it would be most and least desirable to use an agent.

For an inexperienced team, one located far away from industry centers, or one without any significant expertise and/or interest in performing the work required by a sustained sales effort, it's probably worth the cost of going with an agent. Obviously, this is not to say that this team would have no chance to succeed without one, but the benefits of agent representation would likely outweigh the costs.

On the other hand, if the team is heavily experienced, it might be able to get a contract based solely on that experience. A good agent could still give this team feedback about the game and thus prevent the negative impressions that might arise from approaching a desirable publisher with an unpolished demo.

It is also worthwhile to study the monetary implications of the agent's presence, and whether they seem reasonable or not. Suppose that an agent secures a $2 million, two-year development contract for you, over the course of a nine-month negotiation process. (It can easily take up to six months to finalize a contract, in addition to the time required to prepare the pitch, visit publishers, and obtain a letter of intent.) If the agent's commission is 10% of the contract's value, you're paying them $200,000 for those nine months of work, but you're also paying for their contacts, the time you didn't have to spend traveling, and for that wonderful benefit, the part about not having to do the sales pitch yourself.

Further, you should consider how many people the agency will assign to your case: is it one person full time, or multiple specialists? Do not make the mistake of simply computing an hourly rate. Keep in mind the qualitative factors mentioned earlier before you use the cost analysis to make your final decision.