“Games are like the movie business. A single game has a very high upfront cost — easily $50 million to develop a major game — before you know whether or not it will be successful. Then there is a huge fanfare with marketing around the launch of the game, sometimes requiring another $50 million to $100 million investment. If you’ve got a hit on your hands, it’s fantastic. It’s the biggest thing out there … for a month or so. Then you have to be on to developing the next thing.
“What we think is a more interesting model is the idea of a TV-show style game platform. We will deliver an evolving story line of new game content every week, hopefully to users waiting with bated breath. With our model, we can validate ‘hit’ games at 20 percent of the upfront cost of regular game developers because we can continuously test and improve.
“The major business challenge facing us is to create a game that can prove that our new platform model is viable. Our team is working hard to optimize our first game to hit our milestones for success. Still, we would not want to peg the success or failure of the platform on a single game because we believe that the platform has significant potential. Therefore, it would be ideal to be able to test our platform with multiple games. Ultimately, with multiple games on the platform, we will be able to cross-promote one game to another and manage the schedule like a TV network.
“Because it is early for us to divert our own resources to develop multiple games, should we forge partnerships with third-party game developers to launch on our platform alongside our title? If we structure that relationship, how do we find the right partners? How do we split the economics with the partner? And if partnerships are not the right way to go, how should we plan to test the viability of the platform if our first proprietary game does not succeed?”
Jason Shrensky, entrepreneur-in-residence, Dingman Center for Entrepreneurship
“Gaming as a business is hot and fiercely competitive. You want to establish your beachhead as fast as possible.
“Your idea to have third-party game development running contemporaneously with your own game development is a great way to hedge risk in proving out the value of your platform quickly. But you will face two big challenges in executing on this plan: getting quality game developers to take the risk of spending time developing on your unproven platform, and not burning too many of your company’s resources providing support to third-party developers who are not fully committed.