Game Agents: Show Me The Money? Part 2: Ups, Downs

In recent years, game budgets and team sizes have grown to the point where it's difficult for a new studio to gain a foothold in the industry. A team may be incredibly passionate and creative, but it is competing against the huge budgets of large developers and publishers. Consequently, some teams are turning to agents to help market their game to publishers. Developers often believe that employing an agent will let them focus on making the best game possible. In reality however, many hazards still exist.

From early 2001 to early 2003, I worked at a small start-up game development studio. Our team (comprising just four people) spent those two years developing technology and a game demo, while simultaneously talking with agents and trying to build contacts in the industry. We were self-funded and working on the game full time. We were well aware of the difficulties we faced as we tried to get our foot in the door with publishers, so we looked for an agent to pitch our game to publishers.

The experience corrected several misconceptions that we had about the role that agents play. If you're considering using an agent, the following list of misconceptions that were corrected for us might help you decide whether to use an agent. If you ultimately decide to use one, hopefully these lessons will help you get the most out of your relationship with that individual.

Misconceptions

1. The agent will focus on the business, so we can focus on development. Independent development studios are usually made up of a bunch of programmers and/or artists who have a passion for making games, and often they think they can make games better than the rest of the industry. But this passion is often single-minded in its focus in the beginning. It's not until later that the team realizes that to be successful, you not only make that great game, you also have to do a great job selling it to a publisher. When that is finally realized, developers often assume that an excellent demo can land an agent, who in turn will find a publisher. In theory, that will relieve the developer from having to do the work of pitching the game to a publisher.

But it's not quite that simple. An agent won't agree to represent a developer unless he truly believes in the team. Therefore, to get an agent, a developer has to complete many of the same tasks and produce much of the same material that would be required had the developer just pitched the publisher directly. That material includes team bios and/or resumes, a game treatment, projected budget information, potentially a business plan and a project schedule, and above all else, a mind-blowing demo.

Agents usually have great negotiating skills -- probably better than yours. That's why they got into that aspect of the business. But if you want to succeed, your negotiating skills have to be at least passable -- at a minimum, you need to negotiate a contract with your agent. It's also a good idea to have a solid understanding of the major issues that publishing contracts contain; there are some responsibilities inherent to running a game studio that you shouldn't outsource.

These duties and skills are not inconsequential, but it's important to realize that this is what an agent provides in return for 5-10% of your entire deal. If you set your expectations for the agent's work accordingly, you'll have a more productive relationship with that individual.

2. We'll get a bigger deal if we have an agent negotiate the contract. Agent or no agent, publishers won't pay top dollar to a team without an established reputation for developing games (especially on time and on budget). Publishers are incredibly risk averse, and look for every possible means of reducing their risk. If a publisher is willing to bet on an untested team, the company will probably restrict the budget and require a shorter production schedule (probably under 18 months). An agent won't magically convince a publisher that these risks don't exist - even if your demo and the agent's pitch blow them away, these risks still exist.

Note also that you're competing against other development studios around the globe, some of which have much lower production expenses. Tacking on the agent's fee makes your game that much more expensive and that much less competitive. For instance, if your total estimated budget is between $1-$1.5 million, an agent's fee (at 10%) would be between $100,000-$150,000. If the publisher can get a similar game developed by a team in another country for $100,000-$150,000 less, they may go that route instead.

3. An agent will take care of the legal hassles. Figuring out all the potential loopholes in a contract can be a pain, often enough to make you want to avoid the hassle. It's nice to believe that the agent will handle the details of your publishing contract for you. But even if you trust your agent to get you the best possible contract, there's still no substitute for having a lawyer look at it. And lest you forget, before you even get to that point, you need to sign a contract with the agent, and you'll probably also want a lawyer to look over that, too.

Agents (the good ones, anyway) deal with the publisher when disputes come up in the developer-publisher agreement. They should also check up on the publisher's accounting data to make sure both of you are getting paid the correct amount. But that doesn't relieve you of legal problems you might have with your agent. There are lots of ways a developer-agent contract could be structured that might negatively affect you, and you need to be aware of them. For example, agents often want publisher payments made directly to them, from which they will take their percentage and then distribute the remainder to you. You may not want this as a small company, as situations often arise where a payment delay of even a few days can cause a cash-flow problem. If payments do go through your agent, your contract must allow you access to the agent's accounting data to verify that the correct amounts were paid. If payments go directly to you, the agent will undoubtedly want the same provision. And this example would serve as just one paragraph in a several-page contract.

The bottom line is that you should have a lawyer in addition to an agent. If you're strapped for funds, make friends with a lawyer and try to get some free legal advice. The advice of a lawyer is indispensable.

4. An agent has contacts that a developer doesn't. The main benefit to the agent's contacts is time savings - it's faster to get your demo in front of a publisher if the agent has an established relationship with someone at that company. The agent knows who to talk to and what that person wants to hear, based on the types of games the publisher is seeking, and how much risk the publisher willing to take on a team it hasn't worked with before.

However, the number of game agents is still relatively small, and many agents have just a handful of well-placed contacts at publishing companies. The number of contacts often depends on their length of time working in the industry, and working specifically as an agent. There are only a small number of agencies that have contacts that will make a substantial difference in getting noticed by a publisher.

In addition, no matter how close the relationship between the publisher and agent, a publisher will never take an agent's word alone about a game and its development team. The publisher will want all the same material (game treatment, budget information, project schedule, and so on) that the agent initially required, and they'll base their decision on that information, plus additional research, and of course their own business needs.

Note that sometimes a publisher will react negatively to getting pitched by an agent. Publishers understand that the final price has the agent's fee tacked on, which means that about 10% of their development funds are not going towards the game's development. While that can be a negative factor for a publisher, it's not a deathblow, either; they'll still go through the same process to determine whether or not your game makes sense for them to publish.

Here is some important advice about making industry contacts: don't let the agent be a crutch for you in this area. There is no substitute for having your own network of contacts. Our industry may be growing, but it's still small enough to be affect by the "who you know" principle -- knowing the right person at the right time can make your life much easier. To expand your network, go to local IGDA chapter meetings. Most cities have organizations for budding entrepreneurs, and specifically technology-related entrepreneurial associations, where you might be able to meet potential investors, lawyers who work with venture capitalists and start-ups, and other people starting a business and going through similar problems (even if they're in a totally different industry). You never know who might want to invest in a game company, or know someone who could help you. Sure, it's a long shot, but if you're trying to get started in this industry, you're obviously not deterred by long shots.

5. An agent might be able to help us find contract game development work. This concept seems straightforward: while your company is working on its demo and technology, you can contract out your company's programming and art skills. You hear about game development work getting outsourced all the time, so your agent should be able to find some projects for you, right?

Unfortunately, the realities of outsourcing projects do not favor the use of agents. The first reason this is true has to do with the nature of these projects. When a publisher needs a contractor, it's usually because the work is too expensive to do in-house, or because a contractor can do it faster and with less risk involved. Because publishers want to reduce their risk in these situations, they rarely outsource projects to teams they haven't worked with before. And if they've worked with a team before, chances are that contacts have been made between the publisher and developer. There's less need for an agent in that sort of situation.

But let's assume that a publisher, one with which you successfully worked before, had more work to outsource. If that company approached (or was approached by) your agent, it's likely that the publisher would balk at having to pay your agent's fee. Why? Well, if the publisher is outsourcing the work, it's probably because it's cost-sensitive on this project. If that wasn't the case, the publisher would just do the work itself.

6. We're rock stars, so we need an agent. This misconception that agents are necessary is primarily based on our emotions. I think it's safe to say that as an independent developer considering an agent, your primary goal is making a game and establishing your company, not the warm fuzzies you get through acceptance by others.

There's no denying games are still marginalized as an entertainment medium. Every developer, at some level, would like to feel the sort of recognition given to bands, actors, even authors. Having an agent lends some subtle credibility to the work a developer does.

But our industry is still a far cry from a medium like writing, in which an agent is required before publishers will look at someone's work. Game publishers like to see that the team is dedicated to making all aspects of their company succeed. In the same way an indie can gain a publisher's respect by developing an engine from scratch, I believe that teams sometimes impress publishers with their business awareness when they pitch themselves.

7. It's easier to get a publisher with an agent. Several points I stated earlier may give a developer the notion that it's easier to get published by using an agent. While it's not necessarily more difficult, using an agent does not necessarily simplify the process of acquiring a game contract.

There are plenty of reasons why you might want an agent, but these are similar to reasons why you might want to outsource any other aspect of your game development. You could outsource the development of your game's audio engine in order to get it done faster, but it's likely that your team will also have to understand it since they will have to work with it. In the simplest terms, you're trading money (the agent's fee) for time. You save time because the agent has the industry contacts and experience pitching to publishers that you'd otherwise have to spend time acquiring.

Some agents might try to impress upon you the notion that they want to be your partner in establishing your company in the industry. While they may certainly be rewarded for helping you, they are not invested in your success in the same way you are. They serve multiple clients (who may have games that compete with yours), and until they devote significant time to getting you a publisher, they have not shown that they are dedicated to your success.

There Are No Shortcuts

If you're an independent developer struggling in today's game industry, knowing the business well enough to get your game published, combined with an awesome demo, is your only chance of survival. There are no shortcuts. An agent can save you time, but you still must be intimately familiar with the business aspects of the industry -- which of course takes time.

Agents will usually give you good feedback about what you're missing from your pitch or your demo, since they've seen many before. If you have the business savvy and a mind-blowing demo, but you want to conserve your resources and have someone else pitch your game to many publishers in a short period of time, consider using an agent. But the business-related knowledge and skills you'll forego by using an agent are a downside, as is the agent's fee.

Beset on all sides by costs and difficulties in getting a truly creative product to market, it's nice for a developer to think that somehow an agent will solve many of these challenges. Unfortunately, that's not always the case. To succeed, a developer must rely on his creativity and flexibility. Are you willing to do anything in order to get your game published, including learning business skills you'll need to survive? That's the sort of attitude that's required to become competitive in this industry when you have few resources at your disposal.

There's no question that agents have increased in popularity in the last few years. But that doesn't mean that they're a requirement to get published. Until regulations are codified to govern the activities of game agents (as is the case in Hollywood) and/or until publishers will only talk to agents, consider these common misconceptions before you decide whether to employ an agent.

I've encountered a number of game agents during my time, while working for both publishing companies and independent developers. It was while I worked as a producer at Psygnosis that games agents suddenly became important. As a company that managed both internal and external development teams, agents were inescapable. Later, as Development Director for a game company in Sweden, dealing with games agents became a way of life. (Although I still tried to avoid them much as possible -- I just wanted to make games!) So when it comes to game agents, I have mixed feelings. On one hand I distrust them, and on the other hand I need their services at times.

The bottom line is that agents are there to get you, the developr, a publishing deal. That in turn will make you - and the agent - money. And anything that can make you some money is worth talking about, right?

Perhaps my experience will give you a taste of what working with an agent can be like. In reality, there are good agents, indifferent ones and downright useless ones. Let's explore both ends of the spectrum, using two hypothetical situations (based on some personal experience) to illustrate the good and bad points of working with an agent.

The Shining Star

Your phone rings. Anticipating an irate publisher who's expecting miracles but paying peanuts (and usually two months late), you tentatively pick up the receiver. It's Agent White.

Once the greetings are out of the way, White pitches the idea of developing a racing game. White knows you've done a number of racing games before, and thinks it might just work with your current technology. The IP license belongs to an undisclosed publisher, but according to the excited agent, the deal is hot.

White is no game guru; the publisher simply tasked him to find a developer for its game concept. He called you because your team has developed similar games before. On top of that, the two of you get along fairly well, having been in occasional contact over the past few months to "keep options open". While the proposal is a little nebulous, at least it sounds interesting. You sign the mutual NDA that you never quite got around to completing when you last spoke to White, and fax it over to him.

Next it's time for you to discuss what White will get out of the scenario. Your team can't afford to lose this deal, yet you don't want to pay an agent, either. Unfortunately there's not much choice: you've got half your team developing half-baked demos and White potentially has something alive and kicking. Let the negotiations begin.

In my experience, the average fee an agent commands is about 10% of the advances for the development of a project. But your mileage may vary, depending on your negotiation skills. Remember during negotiations with your agent that he/she wants the deal, too, so don't be afraid to stick to your guns. White wants the deal and has the opportunity, but you have the development expertise, references, technology and a dash of charm which can ultimately seal the deal.

Bearing in mind that agent White is one of the good guys, he's prepared to invest more than just a phone call and a word in the right ear to do this deal. As such, the parameters for White's role in the forthcoming publisher negotiations need to be sorted out. Since it's your team that's developing the demo for the publisher, you insist that agent White construct pitch materials based on the concept, arrange the publisher meetings, cover his own expenses, conduct any necessary follow-up meetings and coordinate payments with you. White, being the good guy that he is, agrees.

Once the deal is signed (we're thinking positive), your payments are paid by your publisher upon completion of milestone deliverables. Later, when the publisher pays you late, it's White's professionalism combined with your solid relationship with him that prevents the situation from escalating.

And then there's the other side of the coin.

The Not-So-Shining Star

Let's call this guy "Agent Black".

You sense a distinct lack of initiative from Black, but unfortunately there's little revenue coming into your company. You're trying to sell a game based on a demo and concept document, but you don't have any takers yet. The game is a platformer which, although it's an unproven genre within the walls of your company, is intriguing and unique enough to warrant interest from a publisher.

You reach that dreaded moment when you decide to call Agent Black. You explain to him that you have sales materials and a hungry team (literally) and you need to find a publisher to help continue the development. Black obliges and accepts the mission, due partly to the solid materials you've shown him, and partly due to the large wad of cash that he will receive if he's successful. You had to offer a plum deal. You need his help desperately.

The deal you've constructed for Black is slightly different than the one you negotiated with Agent White. This one uses a sliding scale in which Black is paid 10% up to $1 million of publisher funding, which diminishes gradually to 5% up to $3 million, and sticks at 5% at amounts over $3 million. All of Black's payments are attached to your team's milestone payments, of course.

Black is rubbing his hands. You've given him strong material and, being of the less scrupulous sort, he knows you are desperate to sell and therefore less effort will be required from him during publisher negotiations.

A couple of days later, Black tells you he has arranged some meetings with key people (many of whom he met over beers at various industry parties). Everyone attends the meetings (but Black sometimes stumbles in late) and you do all the talking and hard work.

Months later, a deal is signed. When that happens, Black gets a significant portion of your revenue for his services, which in this case amounted to some introductory phone calls. You were over a barrel when you called Black, and now you're contractually obliged to pay him a percentage of your development cash. Now you're now kicking yourself, because you don't know how you'll fund the project given your projected income and the the man-months of salary the project will require.

On the one hand, without Black you wouldn't have had the deal. On the other hand, there's something very wrong with forking out all that money for what you got in return. Those are the breaks, I'm afraid.

Lessons Learned

These hypothetical scenarios, while simple, illustrate that there are good and bad agents. As such, it's imperative to find someone who knows the decision makers at publishing companies, who will genuinely act on your behalf, and who will work hard for you.

Diving a little deeper, here are more words of advice. First, never entrust an agent with all of your projects. Make agent-related decisions on project-by-project basis. Assess the marketplace, publisher requirements and such, before deciding whether to tackle matters alone. A development studio needs to fight the perception that it's wholly attached to an agent since publishers, like developers, would ultimately prefer to deal directly with developers.

If you don't have an extensive network in the game industry, an agent can help you change that. That being the case, make the most of this service and piggyback on the agent's efforts to begin developing your own network. Once the agent makes the introduction, do what you can to nurture your own relationship with these decision makers. Realize that the agent doesn't own your relationship with the publisher once the introduction has been made.

Stand up for yourself. You might ultimately pay half a million dollars to this person, so expect value for money. If you were paying a salaried employee that much over two years, you'd expect them to constantly be on their toes, doing the best damn job in the world.

Communicate with your agent. You know your game better than anyone, so work closely with your agent to make sure he or she understands its unique selling points and the game mechanics. The agent should also know what you need out of a deal: terms in writing to assure your profitability, a realistic delivery schedule, and the creation of a high-quality game. Be as explicit as you can without being impractical in your NDAs and contracts.

If you aren't happy with the service you're getting from your agent, say so. You want to meet key industry people, decision makers, and publishers with spaces in their forthcoming catalogue. If necessary, give an agent a timeframe - a window of opportunity - to sell your game. Failure to do so could mean an end to the arrangement for this particular game, but don't burn bridges for the future.

Negotiate that 10% down as low as you can. This is a business arrangement, so naturally the less you pay, the more you can make. It's easy to get stuck on "industry standard" fees. There is an average percentage that agents receive but it's not a given.

Talk to other developers about their experiences with agents. You may not get detailed information (due to NDA constraints), but you can gather enough information to figure out reasonable prices for certain agents, find out who's good and bad, learn from others' experiences, and so on.

Finally, build a sales channel for yourself. You have to schmooze, you have to have a good product and you need staff to back up your aspirations. Understand that schmoozing is appreciated by the publisher to some degree, too: a publisher would rather put its product development funds towards the game than pay a middle man. As I'm sure you would, too.

In the Spring of 2000, the six-man crew of Silverback Entertainment descended upon E3 in search of a publisher for our first title. We had been working on a science fiction action/role-playing game called Harbinger for a little under a year, and we were excited by the prospect of showing our work to publishers. We weren't naïve enough to believe we would actually walk away with a deal, but we figured that with enough persistence we could make a few good contacts, and work on building relationships from there.

That year we had only set up two meetings before the show: one with a large RPG web site, and the other was with a game agent. The agent had seen our recently launched web site, and was very interested in seeing our game in action. We were told to meet him at the booth his company was sharing in the bowels of the Los Angeles Convention Center. We showed up fifteen minutes early for recon purposes, but his company's name was nowhere to be found at the designated booth. We lingered around, and soon enough our contact made his appearance. After locating a power outlet and a card table, we fired up our laptop and started showing off the game. Less than five minutes into the demonstration, he awkwardly admitted that he was from the business division, and didn't really play games. He sent off for his "gamer guy" and the demo proceeded with a lot of smiles, nods and promises to mail a copy of the demo to him after the show. This initial meeting left us a little off balance, however.

Nevertheless, we were still determined to set up publisher meetings at the show. This proved much more easily said than done, though. We lugged the laptop from booth to booth, trying to make contacts at every big and small publisher of PC games that we could find. We talked to everyone, but in the end, we only managed to line up two real meetings, and one of those was with a person we knew prior to the show that worked for a dying publisher. While both of these meetings were better than our first one, they ended in an almost identical manner: smiles, nodding heads, and a request to mail them a demo after E3 was over. We also managed to collect a handful of business cards for producers to get in touch with later.

In 2001 we came to E3 much more prepared. Our team had grown from six to eight people, our demo was much bigger and it was beginning to look like a finished game. In the months leading up to E3, we spent a lot more time promoting Harbinger on the Internet in order to build public awareness of the game and our team. Most important, we followed up on every contact we made at E3 the previous year, and had a full schedule of meetings before arriving at the show. One of those meetings looked extremely promising, and the crew was cautiously optimistic.

As usual, the meetings started out a little rough. The first person we were supposed to meet told us to show up "any time after eleven", but when we arrived we spent nearly an hour lingering around her booth, waiting for a slot in her schedule to open up. The whole time art director Steve Macomber and I watched a stream of women stroll in and out of the booth's office, speculating which one was our contact. We were surprised to learn that our contact, Heidi, was actually small German man.

After that, we were off to our meeting with the Big Publisher. The meeting was a dream: she gave us food, laughed at our stupid jokes, and she genuinely loved the game. We agreed to send her a copy, and she pressed to set meetings every fortnight after the show.

After this meeting, we were walking on air. After two years of hard work and a string of rocky meetings, it looked like we were finally going to sign a deal. Not only were we going to have a publishing deal, but we were going to have a publishing deal with one of the biggest companies on our wish list. Things were looking up, and the Silverback team returned to Arizona with spirits high.

Ironically, the only meeting we missed that year was with an agency called Representing Entertainers and Developers (RED). We knew RED, based in Los Angeles, had a solid reputation. Unfortunately, there was a mixup at the show and out meeting fell through. Instead, we got in touch with them after the show, apologized for the the mix-up, and they asked us to send them a copy of our game. We mailed one, but truth be told, I figured that was the end of the story with them.

In the months that followed, our big publishing deal gradually fizzled away. No more meetings every fortnight; in fact, there were no meetings at all. The woman we spoke with at E3 was let go and, for all intents and purposes, we were back to square one. Yet work on the game proceeded, and we resolved to go back to E3 in 2002 with a nearly finished game. Then the phone rang.

It was Jeff Brunner from RED. He had found our game in a pile of unread mail, started playing it, and was having fun. Most important, he strongly felt it was something he could sell. That day we signed an agreement with him, and we were happy to give him ten percent of whatever deal he could put together just to put the publisher shopping in more competent hands.

Jeff was relentless. We sent him an updated version of the game, and he shopped it tirelessly. Not only did he do all the legwork, he also provided our team with valuable feedback from the publishers he met with. We had a number of offers, but he kept pressing until he could find a deal that would make everyone happy.

At the 2002 Game Developers Conference, Jeff set up a number of meetings with publishers that wouldn't even look at us before. In the end, we signed a worldwide publishing deal for Harbinger with DreamCatcher Interactive. In addition to this deal, he set up a separate deal for Russian-speaking territories with Akella.

At E3 the same year, we didn't have to lug a laptop from booth to booth collecting business cards. Instead, we were showing Harbinger for DreamCatcher Interactive, and giving interviews to the press. Less than a year later, in February 2003, Harbinger was on store shelves.

With a small team like ours, making games is very difficult work. But we learned that the right agent can be an invaluable asset in bringing your game to market.