Industrial Depression
Bonus Schemes W
e’ve all seen the amazing, royalty-driven excesses that some developers have been prone to—the cutting-edge electronic toys, the fast cars, the expensive bikes, the million-dollar homes in the Hollywood Hills, and (lest we forget) the twoweek vacations on the International Space Station. After reading stories in the mid-‘90s about John Carmack and John Romero racing each other to work in identical Ferraris, it was easy to conclude that making video games was finally a real job that any young gamer could aspire to—with an honest-toGod pot of gold at the end of it. Sadly, these stories of financial windfalls have turned out to be aberrations. Indeed, it’s the fact that they are so few and far between that makes them so newsworthy. These days publishers want to own the IP rights (because that’s where the long-term monetary value really is). Owning both IP and getting a great royalty rate from a publisher is getting rarer all the time—especially if you’re a startup without 100 percent self-financing. Add to that the fact that 85 percent of games do not, in fact, make their development costs back, and you realize why distributing royalties (or bonuses)—when they do happen—can become such a political nightmare, particularly when the sums are small. That may sound contradictory, but experience shows that financial envy is strongest when the amounts are low because who-gets-what suddenly becomes that much more important. Once your own personal bonus goes beyond $100K, it becomes less about what other people got because what you got was 20 gamesauce • Fall 2010
sufficient for you to feel ok about yourself, your position and your contribution. However, if you got $10K and the guy over there got $25K, well, a difference of $15K suddenly assumes that much more importance:
are so uncommon, it’s probably smart to understand what kinds of royalty schemes are out there, how they work, and how they might affect you.
Because “bonus” opportunities are so uncommon, it’s probably smart to understand what kinds of royalty schemes are out there, how they work, and how they might affect you.
$15k can keep you from buying that car you want, or from totally paying off your credit cards. When the values are of a magnitude larger than that, then you’ve already satisfied your immediate wants. At that point bonuses start becoming a means of keeping score. But let’s return to the point that this is less likely than more likely. Most games do not make their development and marketing costs back. Unlike movies, games have only one avenue of revenue, and even that’s diluted by the buyback policies at companies like GameStop and GameFly. Given this point of view, worrying about what you might earn versus what you are earning is somewhat premature. Because “bonus” opportunities
Bonuses, Royalties, and Profit-sharing A bonus is, at root, just that: a lump sum given at a company’s discretion to say, “Thanks for working here and contributing.” It might be for something specific (shipping a game, for instance) or for doing something above and beyond the call of duty (moving to another location for six months to help finish something up). Or you may receive a bonus just because the company wants to reward everyone. Yearly bonuses are most often a predetermined value (a percentage of your actual salary, perhaps) tied to a performance review. For instance, your company’s policy might be to give bonuses of up to 30 percent of your annual salary, depending on the degree to which you have met your various performance