Why don’t more game developers see royalties from their work?

When people talk about the importance of actually spending money on games, rather than resorting to a used purchase or piracy, the importance of “supporting the developers” is never far from the argument. Yet for a lot of classic titles being repackaged and sold these days, money from new purchases isn’t going to the developers at all, but solely to the publishers that own the long-term rights to the titles.

Freelance developer Simon Roth decided to see just how deep this problem goes. He started digging around on Google and talking to his colleagues to determine which developers, if any, were actually receiving a cut of the continuing profits on their work. Last week, he published the results of his research, a list of over 200 classic titles that are currently being sold by publishers without any of the new income going to the actual developers that made the game.

Of course, you could argue that the developers were paid for their work when they actually made the game in the first place, and that the publisher deserves to reap the long-term rewards for their initial investment in the project. But Roth sees the current balance of money and power in the game industry as an untenable situation in which developers need to recognize their value and demand their fair share. Roth talked to Ars Technica about this issue and where he sees the industry heading in the future.

Ars Technica: What inspired you to create your list of games that don’t provide creator royalties?

Simon Roth: I’m very big on educating gamers about the nature of the industry. To many it is a magical wonderland where everyone is rich and plays video games all day. I’ve been finding it very surprising that so many didn’t know that when they paid for a game, that they were not actually directly supporting the creators.

PC gamers are particularly thoughtful about the impact of how they spend their money. There is a lot of emotion involved in a purchase. When we released VVVVVV in the summer as part of a pay-what-you-want bundle, I experienced this first hand. I was amazed how much some people would pay just to show appreciation to the creators of the game. The rapid expansion of the crowd funding and investment-like pre-ordering trend has shown that developers themselves are now brand-worthy.

I wanted to illustrate the importance of financially supporting creativity and when Lewie Procter of Savygamer suggested that someone should make a list of games on sale that directly support their creator, my ever contrarian thought processes decided on entirely the opposite.

Ars: Did you find any companies that do pay royalties to the developers? Is the situation improving?

Roth: Many companies do offer limited profit sharing to current employees, but true residual royalties are few and far between. Only senior management positions and celebrity voice talent seem to be offered anything worthwhile in that regard.

From what I’ve seen, some developers, active in the late ’80s, did receive royalties for a time, but they have dried up as the games are no longer available for purchase.

Ars: How did the game industry come to be dominated by a work-for-hire model? What makes it different than other entertainment industries, or the larger software industry, where creator royalties are more common?

Roth: I believe the work-for-hire model was an indirect result of the mass retail commercialization of the industry. To maximize sales, most games are released on a strict schedule that fits the obvious pre-holidays release window. In retail, first week sales are used by stores to decide on POS placement and shelf space. After the initial rush, retail sales drop off quickly at a predictable rate based on a game’s placement within the store. In a strictly retail-based industry, paying developer on a work-for-hire basis with a Christmas bonus, based on sales performance, actually makes perfect sense.

The difference between the video games industry, as it currently stands, and the film industry is the level of maturity. With a hundred years of experience, the film industry has had more time to think about these problems. Organizations have grown to protect the rights of people working in films, for instance, the film actors guild works hard to ensure residual royalties are paid.

This is not to say they’ve solved all of the issues faced with fair remuneration. The problem for films that they are a convoluted mess involving many commercial entities. I know from experience that the visual effects of single shot from a film can end up being worked on by three or more companies; at the end of the day it’s easier to quote for the work before it is done and pay people generously on a contracted basis.

As for software, it’s going in entirely the opposite direction, with software cycles moving from eighteen months, to yearly, to six months. In commercial software, code obsoleteness is happening faster than ever and I very much doubt there is a nostalgia-led market for Word 95.

Ars: Do you really think most developers are deserving of royalties, or is this a system that will only really pay off for the big name developers who can demand such a deal? Can publishers really afford to give royalties to everyone on a development team that can comprise hundreds of people?

Roth: In my opinion, the creativity of the games industry unparalleled across all the mainstream media. It took us 28 years to overtake film and music as the leader in entertainment and I believe, perhaps naively, that everyone should get a slice of the ever growing pie.

Development teams are large nowadays, but that’s nothing a good spreadsheet can’t keep a handle on. How the money is divided and whether everyone gets their fair share will be down to the company culture, their bargaining power and their contribution. It’s unlikely that a perfect system will be found, but that’s no barrier to giving it a bloody good try.