Video game publisher

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Video game publishers are companies that publish video games that they have either developed internally or have had developed by a video game developer. Most video game publishers also produce and publish computer games, but the term "video game publisher" is often used generically to refer to companies that publish interactive games despite the platform used to play them.

Table of contents

1 Overview
2 Business risks
3 Investor interest
4 Selected video game publishers
5 Other video game publishers
6 Notable former video game publishers
7 See also

Overview

As with book publishers, video game publishers are responsible for their product's manufacturing and marketing, including market research and all aspects of advertising. They usually finance the game development, sometimes by paying a video game developer (the publisher calls this external development) and sometimes by paying an internal staff of developers called a studio. The large video game publishers also distribute the games they publish, while some smaller publishers instead hire distribution companies (or larger video game publishers) to distribute the games they publish. Other functions usually performed by the publisher include deciding on and paying for any license that the game may utilize; paying for localization; layout, printing, and possibly the writing of the user manual; and the creation of graphic design elements such as the box design. Large publishers may also attempt to boost efficiency across all internal and external development teams by providing services such as sound design and code packages for commonly needed functionality.

Because the publisher usually finances development, they usually try to manage development risk with a staff of producers or project managers to monitor the progress of the developer, and assist as necessary. Most video games created by an external video game developer are paid for with periodic advances on royalties. These advances are paid when the developer reaches certain stages of development, called milestones.

Business risks

As businesses go, video game publishing is risky:

The Christmas selling season accounts for about half of the industry's yearly sales of video and computer games, leading to a concentrated glut of high-quality competition every year in every game category, all in the fourth quarter of the year.
Product slippage is very common due to the uncertain schedules of software development. Every publisher has suffered a "false launch", in which the development staff assures the company that game development will be completed by date x, and a marketing launch is planned around that date, including advertising commitments, and then after all the advertising is paid for, the development staff announces that the game will actually be ready by date x plus four months. When the game finally appears, the effects among consumers of the marketing launch—excitement and "buzz" over the release of the game and an intent to purchase—have dissipated, and lackluster interest leads to weak sales. These problems are compounded if the game is supposed to ship for the Christmas selling season, but actually slips into the subsequent year.
There is a consensus in the industry that it has increasingly become more "hit driven" over the past decade, with masses of consumers buying the game that is best in quality and best-marketed in each game genre, and, by comparison, very few buying any other games in that genre. This has led to much larger game development budgets, as every game publisher tries to ensure that its game is #1 in its category.
When publishing for game consoles, game publishers take on the burden of a great deal of inventory risk. All significant console manufacturers since Nintendo with its NES (1985) have required all publishers to pay a royalty for every game manufactured to run on their console. This royalty must be paid at the time of manufacturing, as opposed to royalty payments in almost all other industries, where royalties are paid upon actual sales of the product—and, importantly, are not payable for games that did not sell to a consumer. So, if a game publisher orders one million copies of its game, but half of them do not sell, the publisher has already paid the full console manufacturer royalty on one million copies of the game, and has to eat that cost.

Investor interest

Video game publishers who are publicly traded on stock markets are not known as a successful group. Interest from investors varies with time. At present, Electronic Arts is the only third-party publisher present in the S&P 500 diversified list of large U.S. corporations. Interest from outside investors was high during two notable periods:

In the early 1990s when the introduction of CD-ROM computer drives caused a great deal of hype about a multimedia revolution that would bring interactive entertainment to the masses. All Hollywood movie studios formed "interactive" divisions to leverage their intellectual property in film in this booming new media. Most of these divisions later folded after expensively producing several games that were heavy in "full-motion video" content, but light in the quality of gameplay.
In the dot-com days of the late 1990s when technology companies in general were surrounded by hype, and when statistics were first published noting that in the United States, revenue from the sales of video and computer games had for the first time exceeded revenue from film box-office receipts. Notably, however, video game publishers did not experience the fleeting skyrocketing of stock prices that many dot-com companies saw, probably because video game publishing was seen as a more mature industry whose prospects were fairly well understood, as opposed to the typical exciting dot-com business model with unknown, possibly sky-high prospects.

Selected video game publishers

The top 20 video and computer game publishers, ranked by Game Developer Magazine in September 2003 in order of estimated game sales revenue:

Electronic Arts
Sony Computer Entertainment (console manufacturer)
Nintendo (console manufacturer)
Activision
Vivendi Universal Games (including Universal Interactive, Sierra Entertainment, and Blizzard Entertainment)
Take Two Interactive
Atari (formerly Infogrames) (see also Notable former video game publishers, below)
Konami
Microsoft (console manufacturer)
Sega (former console manufacturer)
Square Enix
Ubisoft
THQ
Capcom
Bandai
Namco
Acclaim
Koei
Eidos Interactive
Midway Games

Notable former video game publishers

3DO (console manufacturer)
Atari (console manufacturer) (acquired by Infogrames, which then renamed itself Atari)
Coleco (console manufacturer)
Crystal Dynamics
Epyx
GT Interactive
Hasbro Interactive (sold out to Infogrames)
Iguana Entertainment
Imagic
Infocom (acquired by Activision)
Mattel Electronics (console manufacturer)
Mattel (computer software)
Melbourne House (computer games and books)
Microprose (acquired by Hasbro Interactive)
Mindscape, Inc
MUSE Software
Origin Systems (acquired by Electronic Arts)
Penguin Software
Psygnosis
Spectrum Holobyte (acquired by Hasbro Interactive)
Strategic Simulations, Inc ("SSI")
Technos Japan Corporation
Taxan
US Gold
Virgin Interactive Entertainment

Some of these publishers went out of business; others were purchased or merged with a larger company, and no longer do business under this name, or they exist in name only as a brand.