This started as a collection of random thoughts and answers to questions the Xsolla team and I frequently get about pitching and has ended up as an in-depth look at the process. Ultimately, the purpose of this piece is to provide some practical and applicable insights into the mind of an investor/publisher. This is done to enable you to better prepare your pitch and give you the best possible shot at getting money to work on your game. It is intended for developers who are just getting started and for those more experienced developers looking to further fortify their pitching skills with new nuggets of wisdom. I’ve found what’s old is new again, even in games.
I had trouble figuring out how to begin this article — ironic given the section title, huh? I realized that overstating the obvious was probably not a bad idea. Make something fun and special. Make something you’re passionate about because it’s a long, hard road to get funded. Temper that passion with feedback from friends, especially the kind that will be honest — even brutally so — when necessary.
Next, build a plan for your game. Define who owns what or has rights to the game before you even begin development. It’s fine to dream big, but you’ve got to focus on executing small. I’ve seen deals fall apart because the developer wasn’t set up properly, making those who write the checks — aka the people you want to impress — skeptical about the game creator’s ability to run a business.
Keep in mind the basic idea is something I call the ATM approach.
First you need to get their Attention, then you need to keep their attention to get enough of their Time. If you get enough of their time, only then can you get their Money. This applies to consumers as well as investors/publishers.
What I call the Indie Budget, an amount that spans the $100,000 to $3 million range, is what you should consider requesting when pitching for funding consideration. This can easily change based on different variables — such as the country of production, your development experience, the quality of your IP, and more — but most indie devs reading this should fall within this range. A quick side note: investors and publishers, which I’ll often refer to as funding sources, typically don’t make deals less than $100K since they don’t see much return on investment with these smaller projects and the overhead “internal costs” end up being a large part of the total value of the deal. Although, as above, there are a lot of variables.
So, what will it take for you to strut away from a meeting with a check the size of the Indie Budget in hand? Research … a lot of research — and, of course, your soul.
Actually, pitch to a different funding source if they’re asking for your soul — they’re not who you want to do business with.
The research I’m talking about includes more than just information on your game, its genre, and its competition. Be sure to study up on:
Next, determine which funding sources are a good fit for your game and reverse engineer your target list from there. This doesn’t mean you should only pitch to sources that seem like an exact fit. It means that you need to understand where they’re coming from in order to improve your odds of receiving funding.
I got some feedback during an initial draft of this piece to provide some insights on the financials behind video game funding. There are a lot of hidden costs if you have not built them into your proposed budget. Things like quality assurance (QA), localization, ratings, and submissions to first-parties, as well as internal staffing costs add up quickly. Let me break things down a bit more tangibly with an example below.
If you pitch a $500,000 budget, the funding source will most likely need to add an additional 10%-20% to your budget for QA, localization, ratings, and submissions. Not to mention external marketing costs. These costs will generally be deducted first before any royalties are paid. This means the funding source will need to invest an extra $100,000 to help you get your video game shipped/launched, bringing the total budget to $600,000. On top of that, if you are pitching to a publisher, you may have the following personnel assigned to you:
In most cases, these personnel will spend roughly 20% of their working day on your video game. That amount of time across a typical development cycle usually creates a “soft cost” of $100,000. A word of caution: don’t let the publisher make these costs recoupable, these are their costs of doing business. Be aware of them.
So, if you’re a developer pitching a game with a $500,000 budget, it may actually cost the funding source somewhere between $600,000 and $700,000 to make your game. These hidden costs play into what you should be requesting for your game, as well as how likely you are to receive funding.
In Part 2 we go on to explore “The Essentials For Any Pitch” and what to expect in “Your Post Pitch Life”.
This article was originally written for GamesBeat. Justin “Dark Yoda” Berenbaum is Vice President of Strategy at Xsolla and GM of Xsolla Funding Club and has more than 25 years of strategic development experience in the video game industry that includes Activision, 505 Games, Capcom, and many others.