Square Enix's Collective Service Takes 5% Off Crowd-Funded Titles, 10% Of Game Revenue

By William Usher 2014-01-28 14:10:02 discussion comments
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Well, it all sounds like charitable deeds until you start taking into consideration the costs of the platform and what gamers and developers give up in that process. As noted by Elliot, the service does not directly provide any revenue services for developers, but the service does require a bit of financial upkeep...
“We're not funding games directly. Normally in the publisher developer relationship the publisher brings the money and the developer brings the expertise. We are creating a platform and we're inviting developers to make use of that platform,"

"Revenue isn't the primary driver for us, launching Collective, we think it it's important for the industry that there are good pipelines for new talent and creativity to come through."

Instead of funding the games, Square will instead use the platform to help bring “awareness” to the games and – if they're successful through the crowd-funding phase – they'll lift 5% of the total crowd-funding intake as compensation.

It doesn't end there, though.

If developers use Square to distribute their game, the Collective will take 10% off the net revenue after distribution fees have been paid.

So if a game racks up $100,000 in crowd-funding, Square will take $5,000 of your money since the game was used in affiliation with Collective. If that same game makes it to Steam and manages to sell 50,000 copies at $25, Square will lift $125,000 off the net revenue in addition to the 30% Valve takes. Developers are essentially losing 40% of their net revenue and Square will have netted $130,000 from a single game, without spending anything on the actual production.

Elliot defended this monetary decision by Square, with comments about the service, noting...
“...we have costs associated with building the platform and running the Collective project. Given that going through the feedback phase is free, and there's no requirement for a dev to go past this point with us, there's a point at which we need to try and cover those costs. We feel that by the time a developer hits their target via the Indiegogo partnership, because of the visibilty and awareness they'll have benefited from by that point, a small amount of the funds raised is a fair thing to ask in return.”

“Do all devs need this? Of course not, and Collective won't be necessary for all devs - but for some teams it's a massive chance to get their project seen by larger numbers of people. The crucial point is that it's up to them to decide that, before they go through the crowdfunding process. “

In simple terms, Square is capitalizing on YOUR money that you spent to foot the bill for the cost of a developer's game, and taking a cut of it by doing a small amount of promotion to help leverage the game's presence in the market place. Basically, it's like profiteering-lite.

If Square really wanted to help indie devs they would break off a small subsidiary and help push through indies like Midnight City. Co-founders Casey Lynch and Doug Kennedy actually seem to understand that gamers are typically fed up with the AAA bull crap and are looking for something different, not another middle-man with their hand in the money pot.

As noted by Lynch in an interview with GamesIndustry.biz...
"The truth is indie developers don't necessarily need publishers,"

"What it really comes down to is how good they are at managing the development of their game while simultaneously telling the story of their game, getting out in front of the media, working with first-party, and what type of access they have to resources like QA and test. And some developers are really good at those things. But for every one to 10 of those, there are hundreds of independent teams that are out there that either don't know anything about that, don't have those types of relationships, whether it be with the media or other partners that would benefit them."

This makes sense. A publisher providing a platform for developers in a straightforward way. Collective, in the practical sense, is a non-essential middle-man. If a Kickstarter needs help that's what gaming media is for... they're not hard to reach. There's also social media like Reddit, Tumblr, YouTube... the internet.

Having a publisher not directly fund your game but take money off the top from the crowd-funding is as low as it gets. However, we expected as much from the AAA publishers looking to find long-term revenue options while keeping operating costs low.

Midnight City's Doug Kennedy plainly lays it out there, sort of indirectly addressing the situation with Square's Collective, by stating...
“A lot of these companies that step up and want to be support vehicles for independent developers have two initiatives: they want to sign games and they just want to make money,"

"While those are important elements, we're looking at this in the long-term facet of how we support the independent game model so that community can grow. So it's not just about trying to churn and funnel stuff through our portfolio.”

If you think what Square has to offer is worth the time or investment, feel free to learn more at the official Collective website. I imagine this is just one of many new services we'll start seeing crop up from AAA publishers looking to get their hand in the crowd-funding cookie jar.
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