Game Agents: Show Me The Money? Part 1: Introduction, Interview

Author: by Matthew Karch

Editor's Note: This week Gamasutra is publishing a series of articles about game agents. Like their counterparts in Hollywood, agents in the game industry represent the "talent" - game developers - and negotiate publishing and distribution deals for their clients. In return, the agents take a cut of the deal.

The number of agents in the game industry is increasing, and their influence is growing. There are many factors behind this: the consolidation among the publishers has increased the power of those that remain; there are more independent developers looking for publishers; Hollywood's business practices are infiltrating the game industry as more film/game deals like "Spider-Man" and "The Matrix" are being struck; and the growing ranks of agents are promoting their services to developers.

However, one factor that differentiates the game industry from Hollywood is the fact that actors have established several unions that regulate their agents. SAG (Screen Actors Guild), AFTRA (American Federation of Television and Radio Artists) and AEA (Actors Equity Association, for theater actors) "franchise" agents, which is essentially a stamp of approval that tells actors that the agents abide by the union's rules. That helps ensure a consistent level of service for the union membership (see http://www.sag.org/news/member_advisory-agents.html for an example of an advisory that SAG issued last year to its membership) . There is currently no analog to for such a regulatory body in game development, so a deal with an agent goes awry, there are fewer options for recourse. One option could be the formation of a game union for game developers, or perhaps an independent organization like the IGDA (International Game Developers Association).

The series this week begins with an introduction to game agents and an interview with Zombie's co-founder and co-CEO, Mark Long. Long first began working with a game agent nine years ago, and is a proponent of their services. On Wednesday, we'll present the ups and downs of working with agents, from three developers' perspectives. Finally, on Friday we'll conclude with two articles written from the agent's point of view.

For listings of game agents on Gamasutra, go to Companies>Business & Legal>Agents, or [click here].

Game development is a multi-faceted discipline that requires skills in a large number of areas. Most third party teams seek out the most qualified talent available for the artistic, design and engineering positions. One area that is often overlooked is business development. Oftentimes the lead artist, designer or engineer will double as the business development specialist for the developer. While this may be a convenient choice for a team that is focused solely on making good games, it is usually a poor decision for teams that want to profit from their development efforts. In order to ensure that a developer makes sound business decisions and that its interests in negotiations with publishers are protected, it is imperative that teams are represented by an individual with business savvy and experience in negotiating development contracts. While this may sound like common sense, you would be surprised how few teams employ qualified business personnel to manage their affairs.

One smart way to handle the issue of business development is to work with an agent. While it is possible (and for some teams with the proper personnel preferable) to handle business development in-house, working with an experienced agent can mean the difference between success and failure for a game developer. My viewpoint on this issue is based on my personal experience as a developer that has successfully worked with an agent. Yet I know of other third-party developers who have worked with agents in the past and which have had similarly successful experiences.

There are many advantages to working with a qualified agent, from the design and creation phase to the contract negotiation phase to actual development. Agents can play a large role in helping developers come up with ideas that will sell. Because agents are in constant contact with the business development representatives from publishers, they often have a good sense of what types of games are in demand. This does not mean that an agent will create your design for you; rather, the agent can help to put you on the right track.

Once your design and prototype are in place, your agent can help you to find the right publisher for your title. The advantages here are obvious. Agents often have substantial contacts in the major publishing houses. They also will have a sense of which publisher will be right for your particular product. Thus, they can get you in front of the right people for your game. Agents can also assist in preparing you for your presentation by telling you what to focus on during your pitch.

Another key advantage to working with an agent is during the contract negotiations phase. Not only is a skilled agent likely to ensure that your rights are protected in the contract, but they are also likely to be able to get better advances and royalties than you could do on your own. The primary reason for this is that agents can maintain objectivity in the process. While a developer may be anxious to get the deal inked and move on, the agent will ensure that the developer does not sign anything that is likely to backfire if the development process does not go as smoothly as anticipated.

When a deal has been signed and development is underway, the agent still plays a vital role in the process. Agents can be turned to for advice when disagreements or misunderstandings arise in the development process. Not only can they provide you with competent advice in terms of your dealings with the publisher, but they can refer you to other teams that they represent who have encountered similar issues in the past. Thus, the agent can help put out fires during the development process and to ensure that everything runs smoothly from start to finish.

The primary "con" in working with an agent is that you are likely to forfeit anywhere from 7.5%-12% of the advance and royalties to the agent. While this may seem like a lot of money, in many cases an agent's work will earn more for the developer than the amount spent on his services. Another "con" is that agency deals are usually long-term commitments, ranging from three to seven years. Once again, this is not likely to be a problem if you are careful in choosing your agent and in negotiating a "best efforts" clause into your agency contract.

Of course, all of the benefits of working with an agent are based on the assumption that that individual has the contacts, experience and know-how to represent your company. It is also important to know that the agent is not overwhelmed with clients at the moment and that will have time to dedicate to your team. The best way to ensure that your agent is qualified is to get an agency bio, check out the agent's references and find out which games the agent has played a part in placing. It may also be possible to sign on with the agent for a trial period to make sure that the relationship makes sense from both sides. Obviously actions speak louder than words - research your agent's accomplishments before signing any long-term representation agreement.

From personal experience, the relationship our team has with our agency, Interactive Studio Management, has been extraordinary. They put our company, Saber Interactive, on the map and have been extremely helpful in all of the aspects of business development discussed above. Even though I have a law degree and I've been running my own business for the past six years, I would never think of working in the game development field without an agent. Their knowledge of the market, contacts, negotiating experience, objectivity and dedication to helping us produce and profit from great games. That's been a key element to our success over the past few years.

Mark Long is a co-founder and the co-CEO of Zombie. Over the past nine years at his company, Long has been the executive producer of Delta Force: Task Force Dagger, the SPEC OPS series, Jail Break, Rainbow 6: Covert Ops, Atlantis, Shrapnel, Super Bubble Pop, Bodyglove's Bluewater Hunter, Spearhead, DisneyQuest's "Cyber Space Mountain" attraction, ZPC, Activision's Zork Nemesis, Locus, and Ice & Fire. Long has worked with agents for years, and that being the case, he has a good perspective on them.

When did you start working with a game agent, and why?

We were an early adopter of agents, starting with the William Morris Agency in 1994. I always believed that the same agency business model that exists for books, music, television and film will establish itself in games. But it hasn't happened yet!

What is the value of working with a game agent?

The best way to think of an agent is as a contracted business development director. A part-time rainmaker for your studio. He or she is out there looking for your next gig, allowing you to concentrate on delivering your current title.

What should a developer consider when shopping around for an agent? Are
there things to look for, or to avoid?

Well, shopping for an agency is a pretty simple task right now, since only a handful exist. Avoid anyone just starting out, since relationships with publishers are key to an agency's success. Ask for a client list. Look for a successful track record in your market segment -- value, console, PC, online, first- or third-party games. An agency can't help you if all their contacts are value publishers and you're an Xbox house.

Currently it seems that the primary role of game agents is to introduce developers to publishers, and help land a favorable publishing deal for the developer. Do you think that role will, or should, expand going forward?

That's true. That's why I recommend that developers consider at an agent's role as business development. Game agencies, for the most part, don't provide the same services that traditional media agencies do. The biggest shortcoming is in contract negotiations. Most game agents lack this expertise. But to be fair, I think this is due to publisher's current resistance towards the agency model. Agents are treated like headhunters right now [by publishers]. They're considered a necessary evil when publishers need help sourcing a developer. But for the most part, publishers believe it's a buyer's market. Why do they need agencies when they're inundated with developers pitching them concepts and demonstrating prototypes? The answer is they don't right now. But that's about to change.

Every publisher I've spoken to this year has said the same thing: they're going to put fewer games into production with much higher production values. Realistic budgets and schedules -- great news! But their requirements for a developer's capabilities just went through the roof. Triple-A titles need triple-A studios to deliver them. And that's only a fraction of developer community. So the market just got much more competitive.

Add to that the production standards required of the next generation of hardware. We are rapidly converging with the visual and audio standards of feature film: high definition resolution, 16:9 aspect ratio, Dolby 5.1. The new standard is cinematic, and many developers are not staffed to produce that. But the ones that are will be in demand. And that's what will change the agency model.

Qualified developers will be in demand and both publishers and those developers will turn to agencies to broker the more competitive emerging market. I don't think this will happen overnight, by the way. Five to seven years, minimum. Basically the cycle of the next two hardware generations.

What should a developer have in place in order to attract the attention of an agent? Is it merely the "talent" that the agent is representing, or is it necessary to have a nearly complete game?

Like the publishers, agencies are in a buyer's market. They're only going to take on clients that can make them money. I think agents are looking for two things: mature studios with platform or genre expertise, or a new developer with a nearly complete game.

A majority of agency business is sourcing a developer for specific requirements. A studio that can port a PC title to PS2, expertise in military games, that kind of thing. Publishers rely on the agency to vet developers for these requirements (like a headhunter vets candidates of a specific position).

A nearly complete game is an easy sell. Technical and schedule risk are eliminated for the Publisher and the agency helps the, probably, new developer secure the best deal.

The role of an agent is well established in the film industry. Do you think that the rise of agents in the game industry indicates that our industry is headed in that direction?

Inexorably, we're headed that way. How can we not be if the game industry is bigger than theatrical film?

Do you know the story of United Artists? In 1917, the biggest movie talent - Charlie Chaplin, Douglas Fairbanks, DW Griffith and Mary Pickford - founded UA. Their motivations were creative control and fair distribution of profits. At the time, studios contracted stars and directors for a set number of pictures a year. The studio dictated what pictures they made and paid them a flat rate, no matter how much a movie made. Chaplin et al. announced UA, and the head of RKO pictures remarked that day that "... the lunatics were running the insane asylum." Some insanity: UA is still here and RKO is long gone.

Image Comics is the same story - the defection of top talent from Marvel that upended the comic industry in the '80s. The equivalent will happen, I'm sure, to the game industry. But instead of forming a new publisher, game designer/developers will restructure royalties and IP rights with the help of agencies. And that will result in the ascendancy of games next stars (Note they won't be the first. There are game stars now, if unheralded. John Carmack created a billion dollar genre. Alexi Pajitnov designed the ubiquitous Tetris. And Sam Houser, the GTA producer/designer, will probably outsell the movie Titanic.)

Game agents today typically represent developers to publishers. Do you foresee agents working the opposite direction -- working for publishers to find appropriate development teams?

Technically they already do - an agent's fee is paid out of the publisher's advance to the developer.

When considering an agent, what's your feeling on using an indie agent versus an established agency like ICM or William Morris? Can an indie expect to even get a call back from someone at ICM or WM, or do the agencies only go after "big fish"?

ICM, CAA, William Morris, and others like that are only establishing their game divisions now. And they're not working in the way that you would assume. ICM, for example, is "packaging" game developers with feature film projects in the same way they package actors and directors.

The agency acquires the rights to a story and assigns a writer to develop a treatment. At the same time, they may - if the story is appropriate - solicit a developer to produce an equivalent game treatment. If the concepts are compelling enough, they may attract the interest of feature film producers, who will option the rights for further development - a script and game design. If a studio eventually bites, the film goes into production and hopefully the game as well. The success of The Matrix (the co-developed film and game) is the optimal model to date.

We may see movie studios fund game development in the future if this model works. The ROI on a million seller PS2 title with a $50 retail has the studios interested already.

Do you think that Capital Entertainment Group's business model (securing private funding, active involvement in the development process, and shopping games to publishers in exchange for a cut of the revenue) is a viable competitor to traditional talent agents?

This is another feature film model being applied to the game industry. Producers like Jerry Bruckheimer (Black Hawk Down) and Mark Gordon (Saving Private Ryan) work this way. They develop and fund the production of feature films and the studios provide the marketing and distribution. The producers receive the lion's share of the receipts in exchange for taking on all the risk.

There's only a handful of producers that do this. They have investors too, and as long as they keep making hits, their investors will stay with them. And ultimately CEG's ability to pick hit games for development will determine their success. The jury is out on them until they start shipping titles, but if CEG demonstrates the same ability to produce hits, more investors will step up and they'll become a powerhouse. The trick is picking and producing hits. If it was easy, it would have happened a long time ago.