How can developers secure investments with a looming recession?

The video game industry is often described as recession proof. However, 2022 has already proven to be a turbulent year and this resilience is no longer assured.

At GI Live London’s investment and publishing panel, experts discussed how funding for video game companies is changing in times of economic uncertainty.

London Venture Partners senior analyst Harry Hamer pointed out that this time is different now that there are both free and premium gaming business models. He adds that gaming only had competition with film and television in the past.

“I think you’re going to have to think about players who spend a lot of money, at least compared to the free-to-play environment,” he explained. “Will this recession affect them negatively, will it reduce their spending more or less than, say, a premium game?

As a result, he says, investors think long term. Thus, it is understood that when studios present their game, the actual game presented may not be the final product.

“Even if there is a recession, it shouldn’t really affect what’s interesting five to ten years from now.”Harry Hamer, London Venture Partners

He adds: “Even if there is a recession, it shouldn’t really affect what’s interesting five to ten years from now.”

Curve Games VP of Partnerships Bobby Wertheim echoed that sentiment, describing the investment as something of a marathon. He noted that his funding focuses on games that provide player experiences that can evolve over time.

“I like working with studios that have a longer term vision and games become like a platform for the community that we’re creating together…” he said, adding that teams with a vision to long term of their title are what he considers to be “sure values”. .’

However, Curran Games Agency founder Cassia Curran offered a cautious outlook for studios looking for funding. She notes that they need to be prepared if a publisher supporting them goes bankrupt.

She pointed out that many new publishing houses have sprung up in recent years, but question their longevity. The impact would be significant, and Curran says it’s a scenario game makers should have in their business plans.

“On the publisher side, I kind of advise studios that are trying to find publishers or have had offers to be careful and think about what will happen if that publisher goes bankrupt in the next few years,” Curran said.

While Square Enix Collective producer Lauren Hunter has questioned the viability of funding studios that have recently been created during COVID-19. She explains that they may have difficulty approaching investors.

“They kind of go into that phase where they have something to share and present,” he explained. “Publishers may be looking for something more reliable in the market. It’s horrible to almost have to argue with these creative and passionate people. Where do you stand in the market?”

Hunter elaborated further, saying these studios really had to think about who would buy their game, especially with the recession looming. She adds that people will also be more conscientious with their time and money.

“How are you going to sell to a publisher that this is something people are going to invest their time and money in rather than a free or AAA title,” he explains.

On the publisher side, panelists discussed whether publisher support is still necessary for game companies, especially in a time when it’s easier than ever to self-publish on PC and mobile.

Wertheim noted that if a team is short on time, money, and has a game to release, it will cause a lot of problems. A publisher would provide developers with additional time and money to give them time to polish a game. Benefits would also include support such as marketing and additional resources after a title’s initial release.

“I think on many levels it helps to have an editor.”Bobby Wertheim, games of curves

“I’m married, I have two children, I want to make sure they continue to have a roof over their heads,” he explained. “Rather than putting all my eggs in this basket and taking all the risk myself, I think on many levels it helps to have an editor.”

Hunter explains that partnerships with publishers can also be beneficial outside of their business support roles. Some may also provide game development advice to help a title ship. Additionally, she points out that publishers can recognize if a studio has achievable development and post-launch goals.

“I think there’s a lot of industry expertise that an editor can bring in terms of coaching that’s not just financial,” she said.

Hamer says studios can put themselves in a better position by working with more established publishing labels. He encourages them to do their own research and to review each other’s work as well.

“See what their experience is like, almost like asking them to answer you – ‘Why should I come with you?’ It’s the same on the venture capital investment side,” he added.

“We try to allow the studios to have multiple shots on goal. Maybe if the first game doesn’t go through… [studios] are able to pivot with this game or go in a new direction, that’s something we’re working on with our studios.”

Curran recommends that developers research which editors work best for them on a case-by-case basis. For example, some partners have a good track record of launching a studio’s first title. There are others that can also help in the search for an advertising campaign. She adds that researching specialization would determine whether a company needs a publisher label or an investor.

“If your game is more of a community-focused title, you’ll also want to build a fanbase around your studio,” she explained. “You want to make multiple games in that specific niche or genre that you inhabit. I would say maybe now think about finding a publisher, getting project funding or an investor.

Curran notes that, depending on the specificity of the studio, it would be better to develop internal capabilities such as community management. This level of player feedback to the developer requires a more hands-on position, so a publisher could potentially get in the way.

She adds that given a team’s experience or goals, it’s possible to self-publish and be successful in that role.

The experts then tackled probably the biggest question for game companies; what do promoters need to convince investors to bet on them?

“In all honesty, the prototype or demo, the vertical slice, that’s the first major piece that’s compelling to release,” Curran replied.

She said it was crucial to have a fun game and to demonstrate that the team can achieve the intended goals. However, showcasing this capability is crucial, especially for a beginner studio.

“The question I always get from developers is how polished, extended and big should the prototype demo be?” she explained. “And that still varies a lot by studio.

“If you’re a first-time studio, you probably really want to have a full vertical slice.”Cassia Curran, Curran Gaming Agency

“So the more experience your studio has, the less advanced it is, you can get away with a less advanced prototype. Or if you’re a first-time studio, you probably really want to have a full vertical slice.”

She further explained, with so many games available, the best way to stand out is with a good prototype.

Hunter shared the same sentiment but urged developers to tweak their work before launching, especially if their project is more complex, like a competitive multiplayer game.

She explained that having a better technical understanding of the game makes development relatively simple. Whereas if a game has to be rebuilt from scratch, it would hurt the relationship with investors.

“You want to keep moving, so understanding all the complicated aspects of any type of game you release in advance is really good,” she added. “And having a good production plan is good too.”

Hamer explains that in terms of a demo, his group of investors doesn’t need it. Instead, it looks for why a potential investment is worth the bet.

He concluded: “We’re looking to maximize the benefits of whatever big, ambitious thing you’re heading for. Maybe it won’t be the big game that changes the industry, but really it’s just a pretty bad market. served, maybe a small niche but it’s going to be a great source of income for you and also for the publisher, so why not get started?”

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