| Video game publishers are companies that publish video games that they have either developed internally or have had developed by a
video game developer. Most video game publishers also
produce and publish computer games, but the term "video game publisher"
is often used generically to refer to companies that publish interactive games regardless
of the target platform.
Overview
As with book publishers, video game publishers are responsible for their
product's manufacturing and marketing, including market research and all aspects
of advertising. They usually finance the game 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 license that the game may utilize; 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. Large publishers
may 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 usually finances development, they usually try to manage development risk with a staff of producers or project managers to monitor the progress of the developer, 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.
Business risks
As businesses go, video game publishing is risky:
- The Christmas selling season accounts for about half of the industry's yearly
sales of video and computer games, leading to a concentrated glut of high-quality competition every year in every game category,
all in the fourth quarter of the year.
- Product slippage is very common due to the uncertain schedules of software development. Every publisher has suffered a "false
launch", in which the development staff assures the company that game development will be completed by date x, and a
marketing launch is planned around that date, including advertising commitments,
and then after all the advertising is paid for, the development staff announces that the game will actually be ready by date
x plus four months. When the game finally appears, the effects among consumers of the marketing launch—excitement
and "buzz" over the release of the game and an intent to purchase—have dissipated, and lackluster interest leads to weak
sales. These problems are compounded if the game is supposed to ship for the Christmas selling season, but actually slips into
the subsequent year.
- There is a consensus in the industry that it has increasingly become more "hit driven" over the past decade, with masses of
consumers buying the game that is best in quality and best-marketed in each game genre, and, by comparison, very few buying any
other games in that genre. This has led to much larger game development budgets, as every game publisher tries to ensure that its
game is #1 in its category.
- 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 required all publishers to pay a royalty
for every game manufactured to run on their console. 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 not 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 eat that cost.
Investor interest
Video game publishers who are publicly traded on stock markets are not
known as a successful group. Interest from investors varies with time. At present, Electronic Arts is the only third-party publisher present in the S&P 500 diversified list of large U.S. corporations. Interest from outside investors was high during two
notable periods:
- In the early 1990s when the introduction of CD-ROM computer drives caused a great deal of hype about
a multimedia revolution that would bring interactive entertainment to the
masses. All Hollywood movie
studios formed "interactive" divisions to leverage their intellectual property in film in this booming new media. Most of these divisions later folded after
expensively producing several games that were heavy in "full-motion video" content, but light in the quality of gameplay.
- In the dot-com days of the late 1990s when technology companies in general were
surrounded by hype, and when statistics were first published noting
that in the United States, revenue from the sales of video and computer games had for the first time exceeded revenue from
film box-office receipts. Notably, however, video game publishers did not experience the
fleeting skyrocketing of stock prices that many dot-com companies saw, probably
because video game publishing was seen as a more mature industry whose prospects were fairly well understood, as opposed to the
typical exciting dot-com business model with unknown, possibly sky-high prospects.
Selected video game publishers
The top 20 video and computer game publishers, ranked by Game Developer Magazine in September 2003 in order of
estimated game sales revenue:
- Electronic Arts
- Sony Computer Entertainment (console manufacturer)
- Nintendo (console manufacturer)
- Activision
- Vivendi Universal Games (including Universal Interactive,
Sierra Entertainment, and Blizzard Entertainment)
- Take Two Interactive
- Atari (formerly Infogrames) (see
also Notable former video game publishers, below)
- Konami
- Microsoft (console manufacturer)
- Sega (former console manufacturer)
- Square Enix
- Ubisoft
- THQ
- Capcom
- Bandai
- Namco
- Acclaim
- Koei
- Eidos Interactive
- Midway Games
Other video game publishers
Notable former publishers
Some of these publishers went out of business; others were purchased or merged with a larger company, and no longer do
business under this name, or they exist in name only as a brand.
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