sjar Chapter 139 Layout in the Game Industry
Chapter 139 Layout in the Game Industry
Nine o'clock in the morning, in the conference room of the Santa Clara Alien Company.
Sofia was dressed in a black business suit, with three thick folders spread out in front of her. She had arrived half an hour early, and coffee and a projector were already prepared.
She immediately stood up when Ling Yun and Zhao Hu walked in.
"Good morning, Mr. Ling."
"Good morning." Ling Yun sat down. "Let's get started."
Sofia turned on the projector; the first page was a summary table.
"Over the past two weeks, I've researched six game development companies. My conclusion is: Blizzard Entertainment, Sierra Entertainment, and Epic MegaGames are three companies I'm open to discussing equity investments in; the other three, including Looking Glass Studios, currently have no intention of bringing in external investment."
"reason?"
"Blizzard is developing StarCraft and has a huge funding need. Sierra has multiple projects running concurrently and is facing a tight cash flow. Epic MegaGames' Unreal Engine development is at a critical stage and needs money." Sofia switched to the next page, "But they have all made it clear that they will not accept being acquired. They want to maintain independent operation and creative freedom."
Ling Yun nodded: "How about we have them develop a version of the Star System?"
"This is page two." Sophia turned the page. "The conditions of the three companies are basically the same: a guaranteed minimum plus revenue sharing model."
She pointed to the form on the screen.
Blizzard: They demand a minimum guarantee of $500,000, non-refundable regardless of game sales. Their revenue share is 25% of sales.
"Snow Mountain: $300,000 guaranteed, 20% commission."
"Epic: $400,000 guaranteed, 30% revenue share. But they are willing to license the Unreal Engine to the StarCraft developers, which would reduce their revenue share."
"What does 'guaranteed minimum' mean?" Zhao Hu asked.
"It's an advance payment," Ling Yun explained. "If we have them develop the Starry Sky version, we'll pay this money upfront. When the game sells, we'll deduct the guaranteed minimum profit, and then split the rest proportionally."
"What if the game doesn't sell well? Will we lose our guaranteed minimum?" Zhao Hu asked.
“Yes,” Sofia said. “That’s why they call it ‘risk protection.’ It makes sure they can at least cover development costs and not lose money.”
The meeting room fell silent for a moment.
Ling Yun looked at the data and quickly performed calculations.
The three companies combined would have a minimum guaranteed revenue of $1.2 million. Their revenue share would be between 20% and 30%. If each game sold one million copies at $40 each, that would amount to $40 million in sales. Their share would be approximately $8 million to $12 million.
"How much development resources are they willing to invest?" Lingyun asked.
"Blizzard said they could provide a ten-person team to complete the port in six months. Sierra's eight-person team would take four months. Epic's Unreal Engine adaptation would take longer, and they suggested we directly support a dedicated team of twelve people for eight months."
"What about time?"
"If we sign now, Blizzard's StarCraft: Astral Edition could launch this October. Sierra's Half-Life—the one we discussed before—could launch in September. Epic's Unreal Engine won't be available until January next year."
Ling Yun stood up and walked to the window.
Outside the window is a typical Silicon Valley scene: low-rise office buildings, parking lots, and sparse greenery.
He was weighing his options.
The guaranteed minimum plus revenue sharing model was very common in the past. Especially for emerging platforms, developers have concerns and need guarantees.
Star System currently has a market share of less than 1%, and it must show sincerity to attract top game companies.
"What are their requirements for our system?" Ling Yun asked, turning around.
"Technically, they require us to provide a complete development toolkit, graphical interface documentation, and a technical support team," Sophia said. "Market-wise, they want us to commit to certain promotional resources, such as pre-installation, homepage recommendations, and bundled sales."
"Okay." Ling Yun returned to his seat. "Arrange appointments; I'll personally visit these three companies."
"What about time?"
"Next week. Blizzard in Irvine, Sierra in San Luis Obispo, Epic in North Carolina. You plan the itinerary, keep it as tight as possible."
"Okay," Sophia wrote down. "What materials do we need to prepare?"
"Bring a USB sample, a Starry Sky System demo unit, and our development toolkit." Ling Yun thought for a moment. "In addition, prepare a cooperation framework agreement. The guaranteed minimum amount is negotiable, and the revenue sharing ratio is also negotiable. But the core terms are: the game must be released exclusively or preferentially on the Starry Sky System, and can only be released on other platforms after at least three months."
"Exclusivity might be difficult to negotiate. A three-month grace period... I'll give it a try."
"And one more thing," Ling Yun added, "we asked them if they were interested in accepting strategic investment. We'll take a 10% to 20% stake, not interfere in their operations, but require all their games to be compatible with the Star System."
Sofia's eyes lit up.
"This proposal might be more acceptable. I will prepare a letter of intent to invest immediately."
"Go ahead. Let me know once you've made the appointment."
Sofia packed up her documents and left.
Zhao Hu asked, "President Ling, is investing in a game company a worthwhile investment?"
"It's a good deal." Ling Yun sat down again. "Games are the killer app for operating systems. Many people choose a system because they want to play a particular game. If the Starry Sky system has exclusive or first-release games from Blizzard, Sierra, and Epic, it will attract a large number of players."
"But isn't the guaranteed minimum too much? Over a million US dollars..."
"It's a risk," Ling Yun admitted, "but if we succeed, the rewards will be tenfold or a hundredfold. Moreover, we need these games to prove the performance of the StarCraft system. Especially Epic's Unreal Engine, which is the technological benchmark for next-generation 3D games. If it can run smoothly on the StarCraft system, it will prove that our graphics capabilities are on par with Windows."
Zhao Hu nodded, seemingly understanding but not quite.
At noon, Sofia sent me an email.
The appointment has been arranged:
April 1, Blizzard Entertainment, Irvine.
April 3, Sierra Nevada, San Luis Obispo.
April 5, Epic MegaGames, Raleigh, North Carolina.
The schedule is tight, but feasible.
Lingyun replied to confirm, and then called Alex.
"Make twenty more USB flash drive samples and give them to me by next Monday. I want to give them as gifts."
"No problem. Should we burn the drivers and installation package to a disc together?"
"Yes. Also, prepare a UHSB technical white paper, the kind that's simple and easy to understand, so that even non-technical people can read it."
"OK."
That evening, in his hotel room, Lingyun studied the detailed information about the three companies.
Blizzard Entertainment, founded in 1991, is best known for its game Warcraft, and its upcoming StarCraft game is highly anticipated. Company financials: Last year's revenue was eight million US dollars, with a profit of approximately one million US dollars. It has 150 employees.
Sierra Entertainment, a veteran game company known for its adventure games, is currently collaborating with Valve on the development of Half-Life. Its financial situation is average, with multiple projects tying up funds, and it has about 200 employees.
Epic MegaGames is a technology-driven company, best known for its Unreal Engine. It's a relatively small company with strong technical capabilities, employing eighty people.
Each of the three has its own unique characteristics.
Blizzard has a brand and a fan base.
Sierra has distribution channels and IP accumulation.
Epic has engine technology that can influence the entire development ecosystem.
Lingyun wrote down the strategy in his notebook:
Blizzard: Focus on exclusive first release of StarCraft. A higher guaranteed minimum price is acceptable.
Sierra: Focus on Half-Life and future franchises. Seek bundled investment.
Epic: The main focus is on engine licensing. They're willing to invest in exchange for technology sharing.
After finishing writing, he sent an email to Sofia.
"Prepare three different cooperation proposals. Blizzard will focus on marketing, Sierra will focus on financial support, and Epic will focus on technical cooperation. Give me the drafts by tomorrow morning."
The reply came quickly: "Received. The draft will be sent to you before 10 a.m. tomorrow."
Lingyun put down her computer and went to the balcony.
The nights in Silicon Valley are quiet, unlike the hustle and bustle of Hong Kong or Bangkok.
But another war is raging here. Not a financial war, but a technological war and an ecosystem war.
The competition between operating systems is essentially a competition between application ecosystems.
Windows is powerful because countless software programs and games run on it.
For the Star System to break through, it must have its own killer application.
Games are the fastest way to break through.
He took a deep breath of the cool night air.
The three negotiations next week are very important.
If all these negotiations are successful, a significant portion of the Star System's shortcomings in the gaming field can be addressed.
If the talks fail...
Then we'll have to think of other solutions.
But you have to try, no matter what.
My phone vibrated. An Shiyu had sent a text message: "You passed your defense."
Ling Yun smiled and replied, "Congratulations. I'll celebrate when I get back."
"Okay. How's everything going on your end?"
"Smooth sailing. There are several important negotiations next week."
"come on."
"come on."
Lingyun put away her phone and returned to her room.
Conserve your energy and prepare for next week's tough battle.