Harmonix Explains Why It Took Amplitude To Kickstarter

Harmonix Explains Why It Took Amplitude To Kickstarter

Amplitude Kickstarter

If you've ever wondered why a rich game developer like Harmonix needs a Kickstarter to fund a game, PR director John T. Drake is happy to explain.

Earlier this month, Harmonix launched a Kickstarter for Amplitude, an update of a decade-old PlayStation 2 game for the PS3 and PS4. That very quickly led many people, myself included, to wonder why a studio like Harmonix needed a Kickstarter in the first place; after all, it won a $300 million lawsuit against Viacom less than a year ago, and that's an awfully big pile of money by any measure. If it wants to make the game so badly, why not spend a few of its own bucks on it?

But as John Drake explains, that perception of the situation is way off-base. "About three and a half years ago, Harmonix spun back out of Viacom as a newly formed independent company. While we're known for AAA console titles released via major publishers, at this point we're really just an independently owned and operated studio," he wrote in a recent blog post. "When it comes to big games, we're working contract to contract and hoping to get to make the next thing that fans will love."

Sometimes, he said, the studio is able to do things "the old-fashioned way" by getting backing for an idea from a publisher, as was the case with Disney Fantasia: Music Evolved. But niche titles without obvious commercial viability are another matter entirely, and if they that don't get that support, they don't get made. That's Amplitude in a nutshell: "A project that's too expensive for us to fund on our own with our limited resources, a game that people want us to make, and a game where a publisher isn't willing to provide development funding," Drake wrote.

Furthermore, the $775,000 Harmonix is seeking on Kickstarter represents less than half of Amplitude's total budget, meaning the studio will still be taking on considerable risk by making the game. "Harmonix had successes in the past that let us keep the studio going and make small games, but at this point our coffers as a company aren't full enough to fund the entirety of Amplitude by ourselves. There isn't a secret vault of Rock Band money that we've forgotten about," Drake wrote. "This Kickstarter isn't a ploy to get crowd-funding in order to see a bigger profit - it's a desire to see a horizon where the game we have in our heads has a chance to break even."

As for the obvious question about Harmonix's financial situation - what happened to all that sweet Viacom green? - the answer is obvious, too. "You may have read news headlines in years past about huge sums of money being paid out by Viacom (our former corporate parent) to 'Harmonix' following Rock Band's commercial success. In fact, Viacom paid that money as part of its purchase of Harmonix back in 2006 to the company's original shareholders, which mostly consisted of the investors who kindly kept Harmonix afloat for the 10 years that we struggled in obscurity before hitting big with Guitar Hero and Rock Band," Drake explained. "Those original investors were the primary recipients of 'all that Rock Band money'-as well they should have been - not the business of Harmonix that is trying to make this game!"

Drake's post is well worth checking out it in full for anyone interested in the game development business. Unfortunately for those looking forward to Amplitude, the Kickstarter isn't going well; with eight days remaining, it's raised just over $253,000, less than a third of its goal.

Source: Harmonix

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Okay, maybe I just don't get game budgets, but 2 million (based on the idea that the asking amount is less than half the cash they need) for a remake of a niche game seems like a lot to pony up.

I think the biggest problem and why people aren't funding it as much is that it's only available for Sony consoles.

Zachary Amaranth:
Okay, maybe I just don't get game budgets, but 2 million (based on the idea that the asking amount is less than half the cash they need) for a remake of a niche game seems like a lot to pony up.

Yeah, Game Budgets often look insane until you break them down. If you assume somewhere between $50,000 and $70,000 per employee (Probably a low number, Median salary for programmers is roughly $77k/year, although graphic designers are worth more like 55k/year each) and they put, say, 20 people out of their 200 on this project that's 1.2million right there. If it's more people or my number is low, that could go up. If they put more people or pay better or take more than a year or have to pay for things besides raw salary (Like marketing, outside testing, and the assorted costs of running a business) then it's not hard to see how they could easily end up with a budget closer to the 1.55 million implied in the article.

Ultimately, probably a relatively small percentage of that 1.5 million will go towards something that looks like a part of the game. Most of it will go towards paying people to do things that end in a game being made.

(NOTE: I am not an expert. This is purely conjecture based on spending a long time following the games industry and should not in any way be taken as a definitive breakdown of the budget for this project)

Fairly niche title, no PC port, Sony exclusive, remake of an old game.....

Why did they expect to raise that much money?

It's a shame because I love Harmonix. If they have made this game have PC support I would have easily backed this game for $100+ but since it's PS3/PS4 only they wont get any of my money sadly.

Zachary Amaranth:
Okay, maybe I just don't get game budgets, but 2 million (based on the idea that the asking amount is less than half the cash they need) for a remake of a niche game seems like a lot to pony up.

One thing to keep in mind is that Kickstarter and Amazon take about 10-20% of the kickstarter funds before HMX ever sees them, and a substantial amount of the funds has to go towards the backer rewards and shipping and all that mess. So they won't be receiving 700k from this kickstarter, maybe 500k if they're lucky.

image
[Source= http://www.doublefine.com/dfa/content/update_1_where_does_all_the_go/]

As an example, this was the cost breakdown for Double Fine's Adventure game, Broken Age. So even though they earned 3.3 million on their kickstarter, they only really had access to 66% of that. Double Fine probably gets to keep a smaller proportion than HMX because HMX isn't doing a documentary and their backer rewards may be cheaper to fulfill, but the principle is the same.

Sight Unseen:

One thing to keep in mind is that Kickstarter and Amazon take about 10-20% of the kickstarter funds before HMX ever sees them, and a substantial amount of the funds has to go towards the backer rewards and shipping and all that mess. So they won't be receiving 700k from this kickstarter, maybe 500k if they're lucky.

The article says that the KS amount, not what they will take away, represents less than half of what it will cost. So I ran with that number.

I think one of the major factors is that it's not available for PC, and from what I know PC players are the bulk of Backers.

Harmonix is owned by Jason Epstein, whose day job is senior managing partner of Columbus Nova. Columbus Nova is hedge fund with $2.5 billion in assets, so Mr Epstein isnt short of money. Yet again kickstarter has become the place where rich people go for free money

Zachary Amaranth:
Okay, maybe I just don't get game budgets, but 2 million (based on the idea that the asking amount is less than half the cash they need) for a remake of a niche game seems like a lot to pony up.

Hence the Kickstarter. They're not willing to risk 2 million of their own on it, but if they can get some money up front and establish that there's a least a base amount of interest, they figure it will be worth it.

There's certainly a decent argument that this sort of testing the waters isn't what Kickstarter was originally intended for, but I don't think it's such a bad thing. A big problem with the video game industry as a whole is that people often aren't willing to take risks, and for good reason. Big publishers don't want to take risks because if enough of them don't pay off they'll end up not being a big published any more, while smaller devs simply can't afford it in the first place. Going to Kickstarter is a great way to find out just how risky a given project actually is - if there are enough people willing to pay before the product even exists, you can be reasonably sure there's a decent sized audience for it to be worth spending your own money (and time and resources) into making it as well. From the publisher/dev's point of view it's good because they get some of the pay in advance and can avoid throwing money into failures as much, while from our point of view it's good because we get the opportunity to see games that would previously simply not have been made at all.

 

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