Co-Development: An Inside Look
In this episode, Mishka Katkoff hosts a conversation with Tim Bennison, COO of Hot Head Games and a leader with over 25 years of experience in game development, creative product development, and more.
They discuss the nuances of moving into work-for-hire projects, client engagement, and strategies for success for a co-development studio in a rapid games industry. Tim provides essential qualities for co-development studios as well as strategies to exceed client expectations.
The two also discuss the importance of being honest, transparent, communicative, and understanding client needs. You’ll also learn why time zone alignment can be a key factor in successful co-development, and hear valuable advice regarding pitching and re-pitching projects.
Let us be honest, do-development is not ‘sexy’. But without a great co-development studio most of the top titles from premier studios as well as smaller studios would have missed the release date and failed to deliver their signature player experience - and commercial success.
In short, a good co-development studio is a fast, effective, and flexible partner for a studio of any size. They will help you avoid the investment of time and money that goes into growing your own organization. And by limiting the internal growth, you’ll also avoid the risks that come with scaling such as the change of the culture, internal silos and turf wars, and the overall bloatedness of middle management and central services that are expected to sustain a larger headcount.
But it’s never as easy as it sounds. Finding the right partner out of countless options, integrating them successfully, and managing them properly requires effort from both the client and the co-development studio.
And if you’re a co-development studio, you’re not only engaged in endless pitching but also working with ever more demanding and savvy clients whose expectations are ever-increasing.
Read further to learn how to work effectively with or as a co-development studio. Learn what makes a great co-development studio and what the pot of gold at an end of a rainbow looks like for one.
You can watch or listen to the full conversation and get all the insights on your preferred podcast platform below!
When and why to integrate a co-development studio and how to be a great client?
From the client’s perspective, it’s actually hard not to work with a co-development studio regardless of the size of your operation and the scope of the game you’re developing. The most typical scenario of engaging with co-development are:
Big companies that want to grow the scope of their game, by say adding a new mode.
Smaller companies that have great ideas and designs but lack the technical expertise and experience to implement them
A studio that has underestimated the time and people it needs to deliver the project on-time
A studio that wants to contract out relatively straightforward feature or content work and ensure the quality of deliverables by integrating a co-development studio into their teams
An IP holder is looking to develop a full game but lacks the internal development resources
A studio looking to move their live game into a maintenance mode and free up internal resources
Managing a co-development studio is different from managing an internal one. In our podcast, Tim lists the four characteristics of a great client:
Help the co-development studio understand your decision-making process. This way the co-development studio can avoid talking and taking orders from the wrong people.
Communicate a clear product vision so that the co-development studio can proactively do its best to support it.
Champion the project with key stakeholders, remove obstacles, and keep the co-development studio clear from internal politics.
Let the co-development studio do what they do best without micromanaging the day-to-day work and creating unnecessary overhead.
The transition into co-development is a natural one and doesn’t have to be either or
Your studio self-published a game. And the quality of the game shows! It’s fun to play. Looks polished. Has some nice incremental innovation. Yet quite oftentimes what happens is that the studio’s investment, in terms of funds, doesn’t return. The game fails to gain meaningful traction and thus is unable to sustain the studio as a business.
At this point, moving into co-development becomes a solid option for the studio. They’ve essentially proven that they can do great quality, but there might have been issues with product design in terms of monetization and/or challenges with publishing. In other words, the pitfalls were not really in how well you can make a game.
This is exactly what happened with Hot Head Games. Over 17 years they’ve had their ups and downs, but most importantly, they’ve shipped several really good games that despite their quality didn’t quite get to the upper echelon of top-grossing lists.
With the mobile landscape making changing and self-publishing becoming ever more challenging, the studio pivoted to co-development. The leadership of Hot Head Games had previously led Radical Entertainment for 15 years, a co-development studio that was acquired by Activision in 2009. This wasn’t a radical pivot (pun intended).
The good part about co-development is of course the revenue, profitability, and longevity. While as a studio you’re not going for those big swings and home runs anymore, you’re also avoiding those painful big misses that nearly always lead to layoffs and closures.
It’s good to remember that co-development is not either scenario. As a studio, you can continue doing both. The most important thing is being honest, communicative, and transparent about this with your client(s). They should never even assume that you’re prioritizing your own project on their behalf.
The challenges of operating a co-development studio
The obvious main challenge is that all of your employees are permanent and rely on their salary being on time every month. This means that a co-development studio has to have a constant and well-thought-out deal flow. In other words, the leadership of a co-development studio has to be always pitching and closing. And the pitching continues even after you’ve closed the deal.
If you've chosen to play the game of work for hire, you should expect to always be pitching. And that includes after you've gotten the deal and you're working on the project. There could be on the client's side, a new executive, and you need to get buy-in from that person because they need to be convinced that the project should continue.
So the team has to almost down tools and do a demo that's never gonna see the light of day just to keep the project going. That's okay. You should expect that, especially with larger-scale projects. It's just the price of doing business in a work-for-hire studio.
Tim Bennison, COO of Hot Head Games
Another challenge is presented in the form of competition for every single project. To win a project, you need to beat established co-development studios along with news studios transitioning to a work-for-hire model due to the tightening of venture capital as well as the increasing challenges in self-publishing. What this means in practice is that to even get through the door you need to have a good reputation as a studio that is able to deliver on time and with outstanding quality.
Finally, the clients are very savvy - especially the big media corporations. They're very demanding in their requirements for pitches so you have to really put your best foot forward. “Have a lot of meetings early in the pitch process with the people who are gonna be green lighting your pitch,” Tim suggests. “Throw them something and then triangulate. Zero in on what they like and what they don’t like long before the due date.“
The pot of gold at the end of the rainbow for a co-development studio
Co-development is a traditional form of business in the sense that it relies on profitability and is built over a long time through excellent delivery and long-lasting client relationships. The business is not tied to the hype of the latest technology and it’s not built on venture capital money that allows for unprofitable scaling at the promise of outwardly exits.
And just like with a venture capital-backed studio there is an exit scenario in co-development. The goal for most co-development studios is to become an essential service provider to an IP holder or a publisher. Then eventually sign a master development agreement where you're doing multiple products and you become such a key driver of product and therefore revenue for your partner that they’ll angle to acquire you.
While the acquisition price might be smaller than with a venture-backed games company, the percentage of the price going to the shareholders is often much higher due to fewer investors being involved. And then there are the dividends that a profitable business will generate to shareholders over long periods of time before an exit event.
Most importantly, as Tim points out, a successful co-development studio is always honest, transparent, communicative, and understanding of client needs. Those four elements enable the rainbow that will eventually lead to the pot of gold.
