Current Financial Issues

Current Financial Issues 

Within the gaming industry financial issues effects retailing, the milestones, budgets market, the products in the industry and services within the game and industry trends and show how game companies might be facing bankruptcy because maybe a game that they have released hasn’t been that successful and losing profits and has gone bust by spending all the companies money for that single game and hoping for it to be a big hit in the industry it just shows how tough the games industry are usually and how the public wants a certain game that they are interested in and finds it amusing by that you could gain profit if the game is really successful and it attracts a lot of people’s attention.

Retail Financial 

The retail consists of a developer, publisher, distributor, retailer and consumer as the game nears completion and reaches the milestone with the game being passed along to the publishers who will ensure the game is packaged and ready to be distributed to the retailers worldwide as the diagram passes from left to right the distributor will purchase a number of units from the publisher, who will ship and sell these to the retailer. In this model the publisher takes a large cut of the revenue and it’s only when the revenue exceeds the advances the publisher has given to the developer that the developer will start to see a return. The retail model is currently the most popular and viable business model in the games industry as it’s available to everyone regardless of whether or they have access to the internet.  The developer also receives advertising for their game from the retail stores. The downside to this model comes from used games sales which when the retailer buys back and re-sells the video game to the publisher and developer sees no return from this transaction and with the used game sales so popular in today’s market, they’re losing out on a lot of possible sales.

Online Financial 

The online business model consists a developer, advertiser, publisher on a website or point of download and consumer unlike the retail model there is no distributor or retail in a sense. All sales and deliveries are done through the website or the online store which benefits this too little to no manufacturing costs and very little distribution cost and the advertiser, the visitors makes the advertiser would receive money in return interactions between developer and publisher would remain similar between both models but however the online model would deliver the game to the website or the online store who would then deliver the producer to the consumer. As the consumer will purchase the product, the money is returned in the diagram from left to right. The website or the online store would take a cut to the cover the cost of server maintenance and make a small profit. The publisher again would take a large cut and the developer would start to see an income once the revenue began to exceed the advances made by the publisher. This business model has been made popular and has become a viable method of delivering games such as the xbox live, PlayStation network and valve’s steam. This model benefits from low manufacturing and distribution costs leading to greater profit margins for those who are involved. As the delivery is done by the via internet, this model is only available to a much smaller type of market.

Milestones

During the negotiation of the publishing agreement the milestone schedule will be drawn up outlining a set of milestones. The developer must meet in order to receive further advances of payment and not breach their publishing agreement. This document usually consists of around 8 to 15 milestones. Although the most milestone schedules will contain milestones relative to a type of game, there are a few standard deliverable that appear in all. The first of these would be the design document this document would contain the game story of the featuring like gameplay, technical specification and concept art. The delivery of a prototype is also another common milestone. This would be a rough demonstration of the game in its earliest playable form with placeholder often the project may not even be given the green light until the prototype has be delivered in the final 3 milestone are typically alpha beta and gold stages of development.

Budget

In the stages of development before the production begins, a developer will put forward their concept to a publish and the hope of receiving financial backing for the development of the game. The publishing agreement will usually stipulate that the advances paid to the developer must only be used for the development of the game, and not cover and overhead costs of the studio itself. As the developer may not see any return from the game until after completion this can put a great strain on the studio. Upon completion of the game will move to retail and the publisher will retain all of the games income until the income exceeds the advances paid to the developer. Once the advances have been repaid the developer will begin to receive from the games sales. However the publisher will still retain a large percentage of the income.

Market Trends

The video game industry is constantly changing as are the people who play and buy games, this is why market trends are mostly develop and published by following closely in order to help determine whether or not a game would be successful in today’s market and what will it features and mechanics consumers expect from a game or console. In order to do this the developers will look at both the hardware and software that’s currently being developed by its competitors as well as look at trends in other industries such as film, they is really changing affecting different types of game companies in the games industries. 

Products

Market trends in hardware play a particularly large part in the development and it updates a console. This has been made evident most recently due to Sony and Microsoft’s venture into motion based controllers after the unexpected success of the Nintendo Wii. Another example where this occurs in the rhythm based games is companies that specialized in manufacture of game controllers was inspired to create and seeing that potential for that development to begin and it might bring with it further titles for the public to be interested in that certain product.

Services

The market trends no longer pertain solely to the sales and the development of the hardware and software are taken into consideration when developing services such as Sony’s PlayStation Network, Microsoft Xbox Live or the Nintendo Wii’s these trends are currently seeing in these services which in the inclusion of social networks such as Twitter and Facebook as well as other additional media streaming sites like YouTube.