Wed 10 Aug 2011
So, I’ve been noodling with the idea of setting up an incubator dedicated to games. In part it is driven by my sense that Canada’s current approach to supporting the game industry is not comprehensive enough (especially in Montreal, where the focus is on big foreign publisher-owned studios) and we need more indies – this lead me to write about the current state of indies in Canada in a Gamasutra feature article .
More importantly, there are so many talented developers that given the right nudge would leap at the chance to execute on their dream idea and dive into “indieness”. Of course, many do it without the nudge (or when their big studio shuts down), but I don’t mind providing encouragement to jump!
Incubators and accelerators are proving to be a successful model for building and validating tech/web start-ups in general. In fact, there are several hundred web/tech incubators in the USA alone, with y-combinator and TechStars being two of the more prominent ones. Yet, none of them focus on games and very few game projects have gone through those programs. In Canada, some are geared toward supporting student talent (eg, Ryerson Digital Media Zone, Concordia/Dawson Montreal Game Incubator) or are more general in nature (e.g., GrowLab in Vancouver, Year One Labs in Montreal). A commercial incubator focused on games has yet to emerge in Canada, as has been seen in the USA (eg, Joystick Labs).
My thinking is there must be a way to customize the model to create a system most conducive to the way games are made. My model would look something like this:
- Application: Simple application process focused on history of team members and proven ability to execute. Would be less about the idea itself (who am I to predict if zombies will do better than ninjas or better than cute pets, etc) and more about technical feasibility, business potential, art style, etc.
- Selection: 5 projects/teams are selected, teams would have to be at least 2 people, but no more than 5 members.
- Platform: Any platform is acceptable as long as it allows for digital distribution (ie, we couldn’t support physical/retail projects).
- Timing: All teams would start at the same time, and the program would last for 6 months.
- Funding: Each project would receive $2000 per month per member (ie, a team of 4 would get $8000 per month for 6 months for a total of $48,000).
- Resources: A shared space would be provided for all teams to work in (along with all the furniture, etc), plus free wifi, and importantly development workstations (eg, with Max, Visual Studio, Unity, etc, preloaded), backup server, etc.
- Mentorship: Every week there would be a guest mentor that would visit the incubator, lecture about some specific area (like cohesive art direction or trends in monetization models) and would get a demo from each team, giving targeted feedback on each project.
- DemoNights: Along with the mentor visits, every other week teams would demo their game to each other and take feedback, etc. Doors would be open for anyone else in the community to pop in…
- Marketing/Outreach: The incubator would pimp the hell out of the teams and their projects, applying to festivals like IGF, coordinating trips to PAX, providing guidance to build online presence, reaching out to the media, etc, etc.
Also, in addition to the mentors, the incubator itself would have a core team to provide support and coaching to the projects. Someone biz oriented, someone operations/production oriented and someone creative/design oriented. This core team of the incubator would serve the projects and do whatever it takes to ensure their success.
The goal of the program would be for teams to build and validate their ideas, and to more rapidly move onto the “next phase”. What that next phase is depends on the type of project, and what the team wants to do… could be going straight to market with an iOS game, could be seeking a publishing agreement with EA Partners, could be scoring larger-scale VC investment for a social game, could be selling the whole project/team to Zynga ;)
The main value that the incubator provides (beyond the seed funding and resources) is to fill the business gap that most teams would likely have. Assumption is that teams would be primarily made up of programmers, artists and designers. So, the incubator would surround the teams with business expertise and coaching, both in terms of starting/running a new indie studio, but more importantly in connecting with the business side of the industry, opening doors with publishers or portals or VCs (as appropriate), helping with the marketing and so on.
One possible spin on the usual incubation model (where team members co-found and incorporate a new studio on day 1 of the program and the seed funding is inserted into that new corporation), instead would be to delay the incorporation process until the end. Teams would come in, and members would be individually on contract to the incubator and be paid the $2000 directly each month. Assuming the team members don’t shoot themselves and/or bail from the program, then we spin-out the project at the end and create a new corporate entity to hold the IP (in legal terms this is often referred to as a “special purpose vehicle” or SPV). The team members take ownership of the SPV and any deals with EA or VC funds taken in are done with the SPV directly.
There are several benefits to that approach. First, it allows teams to focus on game execution from day 1 instead of shareholder/incorporation/etc papers. Next, there is real time and cost involved with incorporation, so best to delay until the end, when we know we have something real. Finally, since the incubator itself is engaging development labor, it can file for the 37.5% Quebec multimedia tax credits, rolling the dollars back into the program.
Another alternate model could look more like a co-op or partnership, whereby teams stay within the collective and get a share of the overall pot of the incubator and all the other teams. Teams would have to earn their way into the partnership, and would be motivated to help other teams succeed… I need to give this approach more thought…
In return for all this awesomeness, the incubator would keep 20% equity/ownership in the SPV when the IP is spun out, along with a 20% share of revenue from the project. Note, the rev share would come out of the developer portion, not gross sales (eg, on the AppStore, Apple takes 30% and the developer keeps 70%, meaning the incubator would take 20% of the developer’s 70% chunk, or effectively 14% of gross).
Oh, quick note on geography: it would start with Canada only just to keep things simple, but would eventually open up to teams from anywhere (as long as they can legally work in Canada for 6 months). Either way, it would require all teams to physically relocate to Montreal to work in the shared space, get the mentorship, participate in the demo nights, etc.
Hmm, well, that pretty much summarizes my current thinking.
So, what do we need to make this happen? Rough budget puts the set up, first year of operations and initial five teams at about $1million, give or take. We’d need a core team to help me run the incubator (ie, I would take on the biz role, but would need co-founders that were more ops and creative oriented, as noted above). We’d need a bunch of awesome advisors and mentors.
And, we’d need some sense that if we built it, experienced developers come!
Anyway, would be great to get some feedback on any specific aspect outlined above or on incubation in general. Plus would be great to hear from devs who have recently gone indie or are planning to go indie, and how this might (or might not) appeal to them. Please feel free to comment below, or you can email me directly at Jason (at) PerimeterPartners (dot) com.