Welcome to the Delta State

Author: by Donato Piccinno

Editor's Note: In consultant-speak, the term "Delta State" defines that area in business development between the initial concept and the multi-million dollar success story. Fresh off blazing the trail through Delta State for a client, Consultant Donato Piccinno offers Gamasutra readers a template for pre-production planning. This article can be read in conjunction with a Microsoft Project file which features timelines, graphs, and more.

[Download the Project File]

My background is 4 years in systems development and consultancy for a global management consultancy firm. So, what I am doing writing an article for Gamasutra? Since I was a child, I've played computer games. Now I'm 27, and my wife refers to my PlayStation and PC as "the other woman".

My work involves project management and consultancy for developing business systems which need heavy doses of creativity and innovation. During my research into the game development process, I met a gentleman in the process of starting his own game development studio. After begging to see his plans, I was rewarded with a glimpse into the secret world of starting a game development studio. The first thing that screamed at me when reading these particular plans, frequenting the game design news groups, surfing web sites and reading numerous publications is the tremendous creative energy. Everyone wants to be the next id, Bullfrog, Westwood, 3D Realms, Core or Squaresoft. Why? Because these companies all have something in common: they are all successful game development studios. But to become a successful game development studio, you have to become a successful business.

The foundation for starting any business is a goal and a strategy to achieve that goal. A game developer starts with an idea for a game or a concept in what's known as the "current state". The developer's goal is to see the final version of the game published and become a hit. This is known as the "future state". By having a clear vision of the future state the developer is better positioned to plot a path from the current state to the future state. The area between the developer's concept and a multi-million dollar seller is the "delta state". It is in the delta state that the developer builds the future state. Therefore a developer will have more of a chance of becoming a viable business if the developer can recognize all the activities that build a path through delta state to the future state.

After numerous conversations with our potentially successful studio I freely offered my services to plot a path through this company's particular delta state. My goal was to derive a template for a planning process that any studio could use before they moved into production. The theory was to understand the goal which meant we could identify a strategy. The main benefit of the process was to avoid chasing rainbows. Low quality games appear on shelves and deadlines are missed because the path through the delta state never quite reached the intended goal.

The whole process took about ten days and was intended to form the basis of a business plan. However, it became obvious that the process could be used by any studio. The final deliverable is the Assessment Report, and it includes a formal project plan. The report identifies the goal of the studio and a strategy for achieving that particular the goal. The project plan was produced using Microsoft Project, as it has the advantage of generating cost and planning reports from which lessons can be learned before starting the project. Phase 4 Assessment is based on a technique called "Impact Assessment" which is used in the world of management consultancy.

The case I outline below study involves Widget Games, a fictitious company wanting to produce a successful game (500,000+ unit sales for PC CD-ROM) in two years. The person responsible for the implementing the Assessment is also the person responsible for the design and technical teams, which is typically the producer.

Overview

The purpose of this document is to provide a review of the Widget Games Ltd. project plan and form the basis of the business plan. Please refer to Appendix A for the project plan.

This report contains the following sections:

Widget Games Mission Statement and Project Scope

To found a leading studio to produce excellent games of a particular genre. The purpose of this project is to meet Widget Games's short term goal which is to produce a game in 18-24 months.

Phase: Human Resourcing

Purpose

The purpose of this phase is to ensure that the people who are going to deliver Widget Games' short term goal are placed before the project can move to the next phase. The whole project is dependent on getting the maximum productivity from the human resources. Phase II is broken down into the following sub projects:

Senior Recruitment - Lead Designer (LD, milestone, no. 12)

This is the person who is going to conceptualize and provide structure to ideas. This person is also responsible for running the design team therefore the Lead Designer must have leadership experience of a team no less than 4 people. The Lead Designer's design skills are tangible and can be measured. However, leadership skills are intangible and the Lead Designer is definitely not a manager. It is recommended that the priority of the Lead Designer is to create the environment for the design activity within the project to be successful. To do this the Lead Designer will need to have a strong belief in empowerment, delegation skills, be a team player, believe in the project and be prepared to take accountability for the design activity within the project.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that the Lead Designer needs to be in place by 5/1/98.

Senior Recruitment - Lead Programmer(LP, milestone, no. 13)

This is the person who is going to turn ideas into code. This person is also responsible for running the development team therefore the Lead Programmer must have leadership experience of a team no less than 6 people. The Lead Programmer's development skills are tangible and can be measured. However, leadership skills are intangible and the Lead Programmer is definitely not a manager. It is recommended that the priority of the Lead Programmer is to create the environment for the development activity within the project to be successful. To do this the Lead Programmer will need to have a strong belief in empowerment, delegation skills, be a team player, believe in the project and be prepared to take accountability for the development activity within the project.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that the Lead Programmer needs to be in place by 5/1/98.

Senior Recruitment - Recruitment Brief (Task, duration 2 days, no. 14)

The recruitment brief is a task which involves the Lead Programmer and Lead Designer. The purpose of the task is to ensure that both team leaders understand their role within the plan and within the short term and long term goals of Widget Games. Both team leaders will be responsible for the recruitment of their respective teams therefore they need to understand what Widget Games will require from its employees.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 5/4/98 and finishes 5/5/98.

Recruitment - Development Team Recruitment Plan (Task, duration 5 days, no. 16)

The development team recruitment plan is a task which involves the Lead Programmer. The purpose of the task is to plan the recruitment of the development team. The plan will need to address the following in detail: n what technical skills do Widget Games require ? n what potential are Widget Games looking for in its development team? n what people skills are Widget Games looking for in its development team? n the production of a job description for each role n how are Widget Games going to sell the role to potential candidates? n how are Widget Games going to attract the caliber of candidate they require?

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 5/6/98 and finishes 5/12/98. The plan is to be ready for review 5/13/98.

Recruitment - Design Team Recruitment Plan (Task, duration 5 days, no. 18)

The design team recruitment plan is a task which involves the Lead Designer. The purpose of the task is to plan the recruitment of the design team. The plan will need to address the following in detail: n what design skills do Widget Games require? n what potential are Widget Games looking for in its design team? n what people skills are Widget Games looking for in its design team? n the production of a job description for each role n how are Widget Games going to sell the role to potential candidates? n how are Widget Games going to attract the caliber of candidate they require?

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 5/6/98 and finishes 5/12/98. The plan is to be ready for review 5/13/98.

Recruitment - Recruitment Plan Review (Task, duration 3 days, no. 20)

The recruitment plan review is a task which involves the Lead Designer and Lead Programmer. The purpose of the task is to review the individual recruitment plans. The Lead Programmer and Lead Designer will ascertain what they require from their counterpart. These sessions are known as a feedback sessions. For Widget Games to achieve a competitive advantage a synergy needs to be created between the two teams. Development and design cannot work in isolation as it is an iterative process that is based on a symbiotic relationship between development and design.

The Lead Designer needs to state how the development team can help the design team to be successful. The Lead Programmer needs to state how the design team can help the development team to be successful. This feedback is then incorporated into the job descriptions. Creative value can be achieved by recruiting a team with a hybrid of skills. For example, a developer who understands the design process or a designer who understands the development process. A truly multi skilled team will be far more productive than islands of skills which require more hands on management to get the synergy between two sets of skills.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 5/14/98 and finishes 5/18/98. The plan is to be ready for review 5/19/98.

Recruitment - Development Team Recruitment (Task, duration 32 days, no 22)

The development team recruitment task involves the Lead Developer. The purpose of this task is to execute the development team recruitment plan.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 5/19/98 and finishes 6/26/98. The following resources will be delivered via the recruitment plan: n 2 x artificial intelligence programmers (AI, milestone, no. 23); n 2 x general programmers (GP, milestone, no. 24); n 1 x information technology assistant (ITA, milestone, no. 25).

For Widget Games to meet its short term objective in line with the current plan. It is recommended that these resources need to be in place by 6/26/98.

Recruitment - Design Team Recruitment (Task, duration 32 days, no 26)

The design team recruitment task involves the Lead Designer. The purpose of this task is to execute the design team recruitment plan.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 5/19/98 and finishes 6/26/98. The following resources will be delivered via the recruitment plan:

For Widget Games to meet its short term objective in line with the current plan. It is recommended that the Lead Designer needs to be in place by 5/1/98.

Induction - Team Brief (Task, duration 2 days, no 29)

The induction task involves the whole team. The purpose of this task is to achieve the following: n to ensure the whole team understands the long term goals of Widget Games; n to ensure the whole team understands the short term goals of Widget Games; n to ensure the whole team understands their role in the achievement of Widget Games goals; n to ensure the whole team understands the expectations of Widget Games in terms of professionalism and attitude.

This exercise is one of the most important stages of the project. It is an opportunity for Widget Games to instill a sense of loyalty, commitment and drive into the team. These qualities mean the difference between a mediocre team and an excellent team.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 6/29/98 and finishes 6/30/98.

Induction - Development Team Brief (Task, duration 2 days, no 30)

The induction task involves the development team and executed by the Lead Programmer. The purpose of this task is to achieve the following:

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 7/1/98 and finishes 7/2/98.

Induction - Design Team Brief (Task, duration 2 days, no 31)

The induction task involves the design team and executed by the Lead Designer. The purpose of this task is to achieve the following:

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 7/1/98 and finishes 7/2//98.

Decision To Move Into Phase III (milestone, no. 32)

This is the point where Widget Games review the Human Resources Phase to ensure that the objectives of this Phase have been satisfied. By moving into the next Phase without meeting the objectives of this Phase the project becomes more risky. This review provides Widget Games with the opportunity to identify the risks and issues before moving forward to the next Phase.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that the decision to move into the next Phase needs to be in place by 7/3/98.

Phase II Status Report (milestone, no.33)

This status report provides a record for those who become involved in the project at a later date. If you are person who is informed about what has been going on you will make better informed decisions about what you are going to do. People who fall into this category will be new potential Publishers and the team. This point is also used to review the impact of slippage on the overall plan before it becomes a real problem. Therefore Widget Games will be in a better position to plan for the future.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that the Phase II status report needs to be in place by 7/3/98.

Phase: Design

Purpose

The purpose of this phase is to ensure that the design of the game is clear and can provide a vision of what the production stage is to achieve. At this stage the design of the game is in the hearts and minds of the team. Each team member will have his own vision of what the game is about. It is the point where Widget Games should iron out all design discrepancies.

Within any team it is 'a difference of opinion' which will cause conflict. Conflict can be constructive when it provides a source of motivation and moves the project in the right direction. Conflict is destructive when it prevents the team from moving in the right direction. The problem with conflict is that it is difficult to control without authority which adds fuel to the flames. However, most creative conflict always starts with an exchange of ideas. This is constructive but it becomes destructive when one party uses authority to impose an opinion on the other.

A difference of opinion within a creative team normally revolves around 'how the game should be produced' and 'what the game should look like' in terms of content and gameplay. If the whole team has the same vision of 'how the game should be produced' and 'what the game should look like' then the potential for conflict will be reduced. The objective of the design is to capture that common vision so the team have a set of agreed goal posts to aim for and a set of rules to play by.

Game Design - Game Design (Task, duration 22 days, no. 37)

The game design involves the design team and is executed by the Lead Designer. The purpose of the task is to produce the following components of the game design:

For Widget Games to meet its short term objective in line with the current plan. It is recommended that these milestones need to be in place by 7/31/98.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 7/6/98 and finishes 7/31/98.

Game Design - Technical Design (Task, duration 22 days, no. 42)

The technical design involves the development team and is executed by the Lead Programmer. The development team should endeavour to design the technical aspect of the final product by ensuring that the technical component can realise the design of the game.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 7/6/98 and finishes 7/31/98.

Game Design - Design Review (Task, duration 11 days, no. 44)

The design review involves the Lead Programmer and Lead Designer. The purpose of this task is to ensure the game design is feasible within the project timescale. Widget Games should also use this as an opportunity to ensure that the final vision of the game is strong enough to communicate creative direction to the team.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 8/3/98 and finishes 8/14/98.

Decision To Move Into Phase IV (milestone, no. 45)

This is the point where Widget Games review this Phase to ensure that the objectives of Phase III have been satisfied. By moving into Phase IV without meeting the objectives of Phase III the project becomes more risky. This review provides Widget Games with the opportunity to identify the risks and issues before moving forward to Phase VI.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that the decision to move into the next Phase needs to be in place by 8/14/98.

Phase Status Report

This status report provides a record for those who become involved in the project at a later date. If you are person who is informed about what has been going on you will make better informed decisions about what you are going to do. People who fall into this category will be potential Publishers and the team. This point is also used to review the impact of slippage on the overall plan before it becomes a real problem. Therefore Widget Games will be in a better position to plan for the future.

This report will also keep the team aware of Widget Games's intentions. The report should state what the team has done well and what needs to be improved in terms of team performance.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that the Phase III status report needs to be in place by 8/14/98.

Phase: Production

Purpose

The purpose of this phase is to produce the final product that is going satisfy Widget Games's short term goal . The whole project is dependent on delivering the final product to time, budget and quality. Phase IV is broken down into the following sub projects:

Development - Graphics & Sequences (Task, duration 382 days, no. 50)

The graphics and sequences involves the design team and is led by the Lead Designer. The purpose of this task is to deliver the following:

This task includes the resolution of observations raised during the quality assurance exercise. The design team's core competence is adding creative value to the final product. This core competence is not used by the design team if their role switches to product testing. Time spent testing is less time spent adding creative value to the final product.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 8/17/98 and finishes 11/26/98.

Development - AI Code & 3D Engine (Task, duration 485 days, no. 51)

The graphics and sequences involves the development team and is led by the Lead Programmer. The purpose of this task is to deliver the following: n Version 1.0 of the game ready for Quality Assurance (milestone, no. 53) set for completion 5/28/99. This includes the incorporation of all graphics and intro sequences into the product; n Prototype to be used for the Marketing Exercise (milestone, no. 52) set for completion 2/26/99.

This task also includes the resolution of observations raised during the quality assurance exercise. The development team's core competence is adding creative value to the final product. This core competence is not used by the development team if their role switches to product testing. Time spent testing is less time spent adding creative value to the final product.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 8/17/98 and finishes 3/31/2000.

Quality Assurance - Test Planning (Task, duration 44 days, no. 58)

This exercise is one of the most critical within the development process. It is advised that Widget Games recruit a 2 man testing team. Most software houses would use the development team for the exercise of quality assurance. The purpose of quality assurance is to ensure that the product performs in line with the expectation of Widget Games. Therefore by moving the development team to a testing role Widget Games will reduce the activity of adding creative value to Widget Games's final product.

The purpose of this exercise is to plan the testing of the product to identify the issues which reduce the quality of the product in terms of gameplay. Part of this exercise should also include the establishment of mechanism to control, monitor and learn from software observations. Software observations are raised (an observation records an issue identified during testing) because the process which produced the product was not properly executed. Therefore Widget Games can learn from this exercise which parts of the process would need re-engineering to improve the quality of Widget Games's future products.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 4/6/99 and finishes 5/28/99. The test plan is to be complete 5/28/99 (milestone, no. 59).

Quality Assurance - First Wave Testing (Task, duration 71 days, no. 60)

The purpose of this exercise is to iron out the issues to ensure the product is viable. A viable product is one which will survive the transition from development to a potential publishing agreement. The quality assurance team will begin testing when version 1.0 of the product is available.

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 6/1/99 and finishes 8/26/99. The milestone is to ensure the product is ready for beta testing 8/27/99 (milestone, no. 61).

Quality Assurance - Beta Testing (Task, duration 71 days, no. 60)

The purpose of this exercise is to iron out the issues to ensure the product can be tuned by exposing the product to a section of the games playing public. This exercise serves two purposes:

For Widget Games to meet its short term objective in line with the current plan. It is recommended that this task commences 9/1/99 and finishes 12/23/99.

Marketing

The purpose of the marketing exercise is to create the environment for the product to move from development to a publishing and distribution agreement. The marketing exercise contains these milestones:

The purpose of the marketing plan is to plan and execute the activity which is going to get the attention of potential Publishers. For example, press releases, demo's, mail merge and exhibitions. Widget Games should use this exercise to establish what they want from a publishing agreement (Does the agreement provide the means for Widget Games to meet its long term goal ?) before entering negotiations and signing any contractual agreement.

During the execution of the marketing plan Widget Games will hopefully generate potential enquires. These enquiries will feed into options for negotiation. These are the options available to Widget Games with a view to signing a publishing agreement. If Widget Games can generate numerous potential publishing agreements then Widget Games has a stronger position at the negotiation table. For example, if only one publishing agreement is on the table then Widget Games has minimal room for maneuver.

The sign off is the point where Widget Games sign a publishing agreement. Part of this exercise is the issuing of the Phase IV status report to the team. This report should form the basis of how Widget Games is going to move forward. A successfully publishing agreement will open up more opportunities for Widget Games. Therefore getting Widget Games ready for the next strategic phase is paramount to ensuring future development.

Costing & Projected Revenues

Overview

The purpose of the costing section provides a project estimated costing of the project. The section is broken down into the following sections:

Note: all costs in the following charts are in U.K. Pounds. Consult http://quote.yahoo.com/m3?u to get the current conversion rate. At press time, $1.65 = 1 Pound sterling.

Variable Costs

Variable costs are mainly salaries. Sound is based on a fixed cost of 80000.00 to 150000.00 which will be probably be contracted out. All figures in sterling

Fixed Costs

Fixed costs are mainly fixtures, premises and equipment required over 2 years (730 days). Fixed cost does not include telephone and miscellaneous business expenditure.

Total Cost

The total cost of realising Widget Games' short term goal is illustrated below.

Return On Investments

The objective of Widget Games's short term goal is to obtain a publishing agreement for its first release. Listed below are the type of publishing agreements currently pursued by software development houses:

First time developers tend to receive a base royalty rate of 10% of sales revenue (source: The Ultimate Game Developers Sourcebook,By Ben Sawyer, Coriolis, 1996.). However, negotiating stepped royalty rate based on sales will ensure that Widget Games receive a greater piece of the pie. To protect Widget Games's financial position the inclusion of a kill fee is advisable. A kill fee is received if a Publisher terminates a publishing agreement.

Costing based on a unit sale price of 35.00 to retail (PC CDROM at a retail price of 40.00 - 45.00) and a base royalty rate of 10% for the first 100,000 units, 15% up to 500,000 units and 20% for 500,000 units or more. A 1 million seller is used as a benchmark for a killer app ( a leading product) in the games market. Based on the above Widget Games will break even at 150000 - 200000 unit sales. Widget Games net profit is before tax.

Conclusion

The purpose of this section is to detail the possible options now available to Widget Games. The crux of the matter is gaining the capital to start the venture (1 million to be on the safe side). The main priority should be to satisfy Widget Games's short term goal which will lay the foundations for moving towards the company's long term objective.

The options available to Widget Games include:

Summary

The main advantage of capital from outside the industry is that the creative freedom required to produce the final product will probably not be influenced by the investors. The sales objective would be to realise the sale of 500,000 units or more.

Venture capital of 0.5 million will provide Widget Games with the means to produce a prototype which can then be marketed to potential games Publishers. The aim of this exercise would be to receive a standard publishing agreement with milestone advances up front to complete development. Basically, the Publisher funds the remaining development exercise. The main issue is that the Publisher will be in a position to influence the creative direction of the product which could become a source of conflict between the two organisation's.

A Publisher will look for features in a product that will make the product viable in a hit driven market. Remember that Widget Games's objective is to fill a gap in the market with an original product not compete with other market leaders. The Publisher might want to shift that creative direction to include features and themes which feed a current market demand. For example, Command and Conquer/Red Alert produce loads of clones but how many where actually more innovative than the original ? There is no denying that feeding a market demand could be profitable for Widget Games but such an approach is not in line the stated strategic aims of the company.

A summary of strategies based on investment can be found below.

**Editor's note: While venture money is doled out based on more than just a company's written business plan, presenting a concrete document to lure potential investors into backing your company is essential. As of early March, the document presented in this article helped secure $1.2 million in capital for the client for which it was written, a testament to the thoroughness and preparation of the company and its business consultant.

Donato Piccinno has been a computer gaming enthusiast for over 15 years and is currently employed as an IT consultant with a global Management Consultancy. His responsibilities include systems development, project management and consultancy. He assisted a start up studio in producing a strategy for a successful first release using techniques from this background and a knowledge of game production. Mr. Piccinno can be reached at [email protected]