Dungeons & Dollars

Friction Costs


So much in business is determined by a simple acronym: ROI (return on investment). Obviously enough, as a businessperson, if you make an investment, you’d like to receive a return on that investment. In fact, the need for a return on investment is so pervasive, essentially no decision is made without first measuring it, evaluating it and factoring it against ROI from other opportunities. What’s an acceptable ROI? It really depends on the investor. To some, making a modest 5% return is a sound business decision. When we get into the 20% range, many would say that’s a no-brainer investment. Where’s my checkbook?!

In the game industry, most investments are made into new technologies and tools to ensure games have the latest bells and whistles. Other times, investments are made in areas like licensing rights (e.g., for a longstanding successful movie franchise) or market intelligence. All in all, investments are made in the hopes of generating more revenue: Make more and better products, sell more products, etc.

That’s all fine and good, but much of the game industry is ignoring (or is ignorant to) a massive investment opportunity…

Nuts and Bolts
Countless studies performed over decades and across many business sectors have proven time and again that mature project management practices and an emphasis on keeping workers happy can net massive returns. And, we’re talking 1,000%-plus massive.

Investing in development practices such as formal code and design inspections, cost and quality estimation tools, and long-range technology planning can bring upwards of 1,000% return on investment over a multi-year time span. Research has shown that improved software practices pay an average ROI of 500% (including false starts) that is sustainable over many years.

A great deal of this return (or more accurately, savings) comes from improving development lifecycle costs. For example, spending more time in early stage planning and prototyping means unexpected changes and rework can be front-loaded in a project – when change is cheap. Formal production methodologies work to avoid changes late in a project, when the trickledown impact can be massive – the dreaded beta crunch.

Returns also come from improved production time and more predictable schedules – the stuff producers dream about. No need to explain the benefits here on the gaming front, with so much riding on a holiday shopping window or simultaneous movie launch.

Another area that drives returns is improved quality. Better and smarter production leads to games with fewer bugs and stronger feature sets. Though this is more subjective to gauge, a less painful production enables developers to infuse the game with more of the “fun bits.” More seriously, a front-loaded, iterative pre-production process allows the team to more easily “discover” and fine-tune the fun, as opposed to waiting for everything to miraculously come together at the end of a project.

Lazy Bums
The desired response is, “Where’s my checkbook?!” Right?

Wrong. Unlike writing a check to the bank and getting check + x% back in a year, this is the kind of investment that requires work. And most of us are just too lazy. As one anti-motivation poster said eloquently:

Hard work often pays off over time, but laziness always pays off now.

Additionally, the game industry is so in the dark when it comes to project management, many really can’t imagine that another way exists. (“You mean we don’t have to crunch from day one?”) Indeed, some developers have flatly stated that they had no idea such process improvement tools and techniques – which have been used for years elsewhere in software development – even existed. A related problem is the fact that the game industry has had much success under the current regime, and no one is willing to gamble their career on killing the goose that laid the golden eggs. Well, some are, but they are in the minority…

On a more practical level, a major challenge to widespread adoption of such improvements is that much of the production research and knowledge about their benefits is not directly from the game industry. For one, this means developers are too ready to dismiss the research as irrelevant (certainly, some of it is). But, more pragmatically, they don’t have the time or ability to “translate” and apply lessons from other types of projects to games. Moreover, the game industry has an ongoing and rather serious case of xenophobia, manifested in an unwillingness to adopt or in many cases even examine ideas from the “outside.” This behavior is less likely the result of arrogance, than from hacker ethic roots and of caution bred by constant battery from outside forces.

On the whole, everyone is still fighting too many fires related to today’s milestone to be looking at a longer-term pay off.

Churn and Burn
Of graver concern is the widely held view that developers are replaceable cogs in the machine. With a rampant developer-as-commodity attitude, it’s no surprise that more isn’t done to invest in workers’ long-term careers.

No doubt, any discussion of quality of life or saner production schedules framed in an “I don’t want to work hard” context is career suicide. Rather, the industry needs to take an approach that proclaims the ROI potential of happy workers running under smart project management.

Ignoring all the massive ROI potential discussed previously, the reality is that driving staff to the point of burnout is bad business. Humanitarian treatment aside, the friction cost of losing, and subsequently finding, replacing and training someone new ranges from $20,000 to $100,000-plus per head (the total is a mix of direct costs, like recruiting fees and relocation expenses, and indirect costs, like lost productivity during training or loss of tacit knowledge). An entire team walking out at the end of a project is not unheard of. Kudos to the producer who got the project out, but at what expense?

Let’s not even get into the massive costs buried in health care expenses and lost productivity due to sick leave.

Inside Out
In a nutshell, there are investments to generate money and investments to save money. Both approaches are viable paths to a healthy and profitable company and industry. In that regard, it would be interesting to measure the game industry’s actual profitability. We all know about the vast revenue growth ($10 billion in the U.S.A. and counting), but is the industry as whole turning a profit?

I’d wager that we are breaking even, at best. Too much emphasis has been placed on generating gross revenue (i.e., more and more sales) as opposed to driving for a larger net profit. Spending $1 million to make $10 million is better than spending $35 million to make $40 million (or in some cases 50 to make 40).

At a time when next-gen budgets are at the $15 million mark – on the low end of the scale – executives should be salivating at any opportunity to optimize. Simply put, there is an enormous opportunity to generate profits via more efficient production methodologies and treating development staff as investments as opposed to commodities.

The Bigger Picture
More fundamental is the notion that immature practices and extreme working conditions are bankrupting the industry’s passion – the love for creating games that drives developers to be developers.

When the average career length of the game development workforce is just over five years and over 50% of developers admit they don’t plan to hang around for more than 10, we have a problem.

How can an industry truly grow, and an art form evolve, if everyone is gone by the time they hit 30?

How can we grow beyond an 11.5% female workforce when the level of commitment expected all but negates any hope of raising a family?

Why does this kind of stuff matter?

Ask yourself what movies would be like if they were created mostly by people with five years of movie-making experience – and were typically male. Spielberg would have checked out way before creating E.T. Same for music, art, books – every art form. J.K. Rowling would never have penned Harry Potter. The examples are countless.

Immature production practices and poor quality of life are stealing the industry’s ability to innovate and reinvigorate itself with fresh ideas. It’s limiting our ability to attract new and diverse talent. It’s robbing us of our experienced creators, who leave us with their hard earned tacit knowledge in tow. It’s restricting our ability to reach broader audiences and create games with ever more cultural significance.

Investing in developers’ careers is investing in the future viability of the game industry and the continued evolution of the medium of games.

What’s the return on that investment?

Jason Della Rocca is the executive director of the International Game Developers Association. (Opinions expressed do not necessarily represent the IGDA.) If the frequency of posts at his personal blog, Reality Panic, is any indication, he works way too much.

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