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When you sign an agreement with a publisher, they won’t give you the money all at once. That’s a big risk for someone who doesn’t know you that well. Instead, they’ll spread out their money over the course of the project in the form of disbursements. You earn disbursements when you complete work associated with milestones throughout the project.
Milestones are measurable moments in project development that drive a publisher’s investment schedule. Before signing your contract, you'll agree on a milestone schedule with a publisher. It'll drive many production decisions moving forward.
Your next task is to develop your project’s milestone schedule. Quick note: this will be heavily revised in collaboration with your future publisher. It’s still important that you’re familiar with the concept and have a starting point for future conversations.
Here’s a simplified example for us to walk through, featuring Arnie the Axe-Swinger’s wave survival roguelike.
I’ve started with a brief description of the “why” behind the milestones, which also explains the structure of the production schedule. It gives publishers insight into your development process and shows that you’ve thought through what it’ll take to complete the game.
I then built out the milestones. For each milestone, the schedule outlines:
A milestone name
A target date for completion/payment.
Requirements for completing the milestone (and thus triggering disbursement).
The amount of money owed from publisher to studio following completion.
Let’s break that down.
Milestone Name
Name your milestones in a way that's makes sense to publishers. Recall that games in development reach their Alpha build when they're feature-complete and their Beta build when they're content-complete. It's helpful to have both of those moments earmarked as milestones. Otherwise, you can name your milestones sequentially. I call mid-production milestones "Production [I/II/III]."
Target Date
You typically want 60-90 day periods between milestones. At experienced studios, milestone timelines can stretch a lot longer–say 4-6 months. With a new studio, it’s a lot safer for publishers to extend no more than 2-3 months of runway at a time. That limits their risk, particularly in the early stages of the process. It’s okay to let your milestones open up a bit later into the project. I don’t recommend less than 60 days; it’s too risky to bank on perfect progress every single month.
Requirements for Completion
This is a list of deliverables for each milestone. They usually include content bundles and new systems. With Arnie the Axe-Swinger, I’ve identified “segments,” which are content bundles that include levels, upgrades, enemies, weapons, and items. For each milestone, I summarize new progress on each segment and system the team has worked on in the preceding period.
Take care with your wording. The final milestone schedule you and your publisher agree on will govern the flow of money into your studio. It’s important. If you’re hyper-specific, you may find one missed deliverable holds up funding for the entire studio.
Here’s an example: you’ve determined that your composer should create seven minutes of music for each level. You’ve reached the third level and are finding that seven minutes is actually quite a lot of music… but your deliverable specifies that’s the amount of music that must be created. You’re in this situation because you overspecified your milestone. Now you have a situation to work out with both your composer and your publisher. Instead of limiting your flexibility, simply say “level three music complete, not implemented.”
Amount of Money Owed from Publisher to Studio
Let's refer back to the sample budget template. Take a look at your total costs each month—the green line at row 41. You must cover these costs via publisher disbursements or you’ll be unable to pay your staff and bills.
I recommend padding your numbers a bit, especially at the beginning of the development process. In my example, I’ve done this a few different ways:
Realized all legal and accounting costs in month 1 (see column K, rows 36/37/39).
Realized all Wwise costs at the beginning of the project (see K28).
Requested a disbursement of $75k, though my costs in the first two months only amount to about ~$65k.
That should give the studio cash reserves in excess of $15k. It’s important to note they’ll need that money later, but more money early softens blows from publisher payment delays, unexpected contractor needs, and missed milestones.
Keep in mind publisher payments don’t get deposited overnight. Publishers will usually have 10-30 days to get payment to you following milestone approval (you’ll see this referred to as “net 10” or “net 30”). You’ll need to be able to float some cash while you’re waiting for payment. That's another reason that it's crucial to always have a little extra in the tank.
We're now ready to move on from budgeting to more interesting waters. It's time to really sell your game and create The Pitch Deck.
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