Video game publisher
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A video game publisher is a company that publishes video games that have been developed either internally by the publisher or externally by a video game developer.
They often finance the development, sometimes by paying a video game developer (the publisher calls this external development) and sometimes by paying an internal staff of developers called a studio. The large video game publishers also distribute the games they publish, while some smaller publishers instead hire distribution companies (or larger video game publishers) to distribute the games they publish. Other functions usually performed by the publisher include deciding on and paying for any licenses that are used by the game; paying for localization; layout, printing, and possibly the writing of the user manual; and the creation of graphic design elements such as the box design. Some large publishers with vertical structure also own publishing subsidiaries (labels).
Large publishers also attempt to boost efficiency across all internal and external development teams by providing services such as sound design and code packages for commonly needed functionality. Because the publisher often finances development, they usually try to manage development risk along with a staff of producers or project managers to monitor the developer's progress, critique ongoing development, and assist as necessary. Most video games created by an external video game developer are paid for with periodic advances on royalties. These advances are paid when the developer reaches certain stages of development, called milestones.
In recent years, the rise of digital distribution platforms such as Steam and console-based online stores has somewhat reduced the impact of seasonal sales cycles, allowing publishers to release titles throughout the year rather than focusing solely on the holiday period.
- The industry has become increasingly "hit-driven" over the past decade, meaning that a small number of best-selling titles account for a large share of total revenue.
Consumers tend to purchase the most heavily marketed titles rather than those of highest quality, resulting in fewer sales for other games within the same genre. This dynamic has contributed to rising development budgets, as publishers compete to dominate key market segments. It has also encouraged the prioritization of sequels to successful franchises over new intellectual properties, a trend for which publishers such as Activision Blizzard and Electronic Arts have faced criticism.
- Current generation consoles have more advanced graphic capabilities than previous consoles. Taking advantage of those capabilities requires a larger team-size than games on earlier, simpler consoles. In order to compete with the best games on these consoles, there are more characters to animate; all characters must be modeled with a higher level of detail; more textures must be created; the entire art pipeline must be made more complex to allow the creation of normal maps and more complex programming code is required to simulate physics in the game world, and to render everything as precisely and quickly as possible. On this generation of consoles, games commonly require budgets of US$15 million to $20 million. Activision's Spider-Man 3, for example, cost US$35 million to develop, not counting the cost of marketing and sales. Every game financed is, then, a large gamble, and pressure to succeed is high.
- Contrasting with the big budget titles increased expense of "front-line" console games is the casual game market, in which smaller, simpler games are published for PCs and as downloadable console games. Also, Nintendo's Wii console, though debuting in the same generation as the PlayStation 3 and the Xbox 360, requires a smaller development budget, as innovation on the Wii is centered around the use of the Wii Remote and not around the graphics pipeline.
- When publishing for game consoles, game publishers take on the burden of a great deal of inventory risk. All significant console manufacturers since Nintendo with its NES (1985) have monopolized the manufacture of every game made for their console and have required all publishers to pay a royalty for every game so manufactured. This royalty must be paid at the time of manufacturing, as opposed to royalty payments in almost all other industries, where royalties are paid upon actual sales of the product—and, importantly, are payable for games that did not sell to a consumer. So, if a game publisher orders one million copies of its game, but half of them do not sell, the publisher has already paid the full console manufacturer royalty on one million copies of the game and has to absorb that cost.