The Business of Reviving Retro Games

We get requests from the community for titles you’d like to play on a daily basis - and the largest repository of these requests are from our Discord community! These requests are valuable data and help to validate our path forward. We also get tons of questions and interest in our work, which we appreciate so much. 

But we know that it’s also frustrating when we are cryptic in our responses, push the response to someone else, or we simply don’t even respond. So we wanted to share a glimpse of what’s going on “behind the scenes” when a deal comes together - or falls apart - to hopefully explain some of the logic behind those decisions. 

Ultimately, our (lofty) goal is to get as many classic titles into the hands of our community as possible - and while there are many players in the mix and we can’t always answer questions, we want to share as much as we can to be transparent. So we’ve broken down the general process we follow into three Stages.

Stage 1:  Choosing a Game

The number one question we get, and really the first step in the whole process, is how we choose a game to work on. 

The better question to ask is: When do we have the choice?  

There are two starting points for how we “choose” our own adventure when selecting a game to produce: Work for Hire, and Revenue Sharing. These are the two main streams for revenue, and determine the playing field for what can come next.

Work for Hire: 

This is the simplest, but most restrictive business model. Games can be selected in a number of ways. Usually, a publisher will approach us and ask if we’re available to work on a game. If the answer is yes, then we move on to Stage 2 or Stage 3 below.

Typically with this model, the publisher has control over which games are selected and its features. For example, we can offer trophies, but they may not want to include them due to the additional “hidden costs” (more on that later). On the other hand, they may want to show bonus content, like original artwork, so we can add this feature for them.

The publisher also decides when the game is released, where it’s released (regionally), and even if it gets released at all (projects get cancelled for a variety of reasons).

Part of our ongoing business development is scouting for publishers who might be interested in what we have to offer. For example, we might approach a publisher that has a number of PS1 games that we think could be bundled into a collection and sold on the Nintendo Switch. Ultimately, the publisher makes all the decisions on this front.

Revenue Share (aka “revshare”)

Publishers are usually more open to this suggestion, because there is significantly less risk on their end of the deal.  Publishers, more than ever, are risk averse. This sentiment was even echoed at recent events like DICE Europe 2024 at roundtables discussing the challenges of funding game development. To lessen this risk, we’ll offer them an agreement that’s something like, “Hey, we think this game from your catalog will do really well if it’s brought back and ported to console X, Y, and Z. We’ll cover the cost of development, but we’ll split the revenue for the next # of years.”  

Since the onus is on the developer (us) to cover all the engineering aspects, the publisher might be willing to split the revenue. Usually, a split could look like 40% to the developer and 60% to the publisher, until the cost of development is recouped - at which point it might switch to 30% for the developer and 70% for the publisher. Those numbers are made up to just give an example, and there can be many variables that can break up the split and the duration of the royalties, like duration of the agreement, or even the value of the IP and publisher.

So why wouldn’t every publisher just accept this deal if there’s nothing for them to do? This is where the “hidden costs” come into play.  

For each game, there are legal fees (making sure the intellectual property rights are good, licensing of music, VO, art, etc), project management, and QA costs. And of course, being a publisher, they are responsible for marketing the game. So even though they are not funding development, they are still investing money and time.

With revenue sharing agreements, we’re also taking a big risk. We’re banking on the game doing well and recovering our costs. It may flop, in which case we lose the gamble. On the other hand, it may do well and provide a healthy stream of income for years to come. Ideally, there are multiple revshare agreements in place so that there is sufficient cashflow for the company to succeed.

Work for Hire helps with cashflow now, while Revenue Sharing helps with cashflow later.

So back to the question of how we choose a game - There are many variables:

• Is there enough demand for the game - and will it succeed financially? Yes, money blah. But unfortunately, if there isn’t enough money in the pitch/deal for the publisher (and us), it’s probably not worth their time. Imagine you are a publisher that has revenue of 1.5 billion dollars per year. Are you going to put effort into a deal that may make a few hundred thousand?

• Is it in “licensing hell”? If it is, the game is unfortunately almost always off the table (more on that later in Stage 2).

• Can we improve it for modern audiences while keeping its nostalgic elements? - Our vision for bringing these games back is to keep them as close to the original experience as possible. But we also don’t want it to be painful, if we can offer quality of life features.

• Is it technically feasible? Do we have an emulator for it? Which version of the game is wanted: original, remake, PS1, PSP, or some other? Are there known issues with specific versions of the game that make them more difficult to work on, thus increasing potential costs?

• Do we have the time and resources for it? (from preparing a pitch to release, it’s a lot of work!)

That doesn’t mean it’s a complete dead end, forever. But it does increase the difficulty level of cementing a deal on a game if it falls into any of these buckets.

So why don’t we publish ourselves?

Rarely (ok, once), we will publish a game. An example of this deal is Micro Mages. Morphcat Games developed it and published it for NES, however, Implicit Conversions ported it to PS4/PS5 and we were the publisher of record on the PlayStation platform.  

As publisher, there are many more ongoing costs and responsibilities: configuring the stores for each console, marketing, sales, customer service, finances, etc. But this is a detailed and complex topic in itself, so we’ll save that for another post!

There is another publishing-related route that we haven’t done, and that’s purchasing the exclusive license to develop and release a particular game from a publisher’s catalog (a known IP/franchise).  

In this case, we’d approach a publisher and pay a fee to be the only developer that can work on a game (or franchise/IP) for a determined number of years. Here too, it would be a revenue sharing agreement, but there’s a catch: if you “rent” the IP for X years and don’t ship the game within that time period… well the license goes back to the publisher, unless re-negotiated for another Y years. That’s a huge sunk cost. Especially when, for more valuable IPs, the exclusive license can be in excess of $1M or even higher!

Stage 2:  “What Does Legal Say?”

Here is where many deals fall apart either right from the get-go, or even midway through a project.  

When working with 25+ year old games, unsurprisingly, legal documentation specifying who owns the intellectual property is sometimes lost (similar to the source code!), ambiguous, or missing critical pieces.   

Other times, the IP has been transferred to a new entity, and part of that entity sold x% of it to a person, who has since passed away, and it is now part of their estate with a person nobody knows how to reach. The same goes for licenses for music or technology. Imagine trying to solve a 1,000 piece puzzle, but some friends own 10% of the pieces. Some stranger in another country owns 22%, you own most of the other pieces… How do you put the puzzle together with no missing pieces?

It is a long, tedious, and sometimes frustrating process. We’ll have a deal “ready”... it’s just pending legal clearance - which might take a year - only to find out that the project hasn't been cleared.

Two real-life examples:

• A PS1 game was cleared by a third party and by the publisher. We’re given the go-ahead to begin engineering work. Months of work go by, and eventually we’re excited to deliver a release candidate because it’s “engineering complete”. The game is even slotted for a particular month of the year. And then… legal discovers that a musical track’s license was not fully cleared and we are not permitted to substitute (remember, with our tech, we can replace textures, audio, video, etc). The game was cancelled indefinitely.

• We begin negotiations with a publisher and express interest in an IP they own. We provide some initial assessments, only to find out a few weeks later that the publisher actually doesn’t own all the IP - there’s a part of it they can’t get (for reasons we don’t know). The project is cancelled.

There are a few genres of games that are usually off the table immediately due to licensing issues: sports, racing, and music.

Sports games require licensing from so many different entities: the player’s association, the publishers, the ads in the game, the equipment the players wear, etc. That makes it almost impossible to get them cleared. Too many players in the game, literally.

Likewise for racing games. Typically, a racing game will have a license to use a brand of vehicle for X years. Once that expires, it either needs to be re-negotiated or it’s pulled.  

The same goes for music games like Rock Band. Have you tried Guitar Hero or Rock Band recently? You’ll probably notice that your song collection is smaller - that’s because the licenses have expired.  

Stage 3:  We Have a Deal!

Once a deal is finalized, we create a contract with milestones and then we’re off to the races.  Engineers work their emulation magic. Artists design beautiful things. And finally, the community gets to play the game.

But there’s one more thing we didn’t address, and it’s the elephant in the room: talking about the games.

Once a deal is done, and during production, it is common that everyone has signed an NDA (non-disclosure agreement), meaning we can’t talk about the game publicly.  

Sometimes, the community has asked for a game and we know it’s coming “soon”. Other times, we’re not permitted to talk about a project at all (or even that we worked on it, after release). Every contract is different, and every publisher has their own requirements.

There is, of course, nothing more that we would love to do than talk about all the work we’re doing, the projects we have brewing, or the games we have planned. Unfortunately, it isn’t always up to us, and we have to respect our partners and their own plans for how they want to announce their projects. Fortunately, we have become much better positioned recently to be able to speak about our work, even if it’s closer to a game’s release, so we look forward to doing that more often!  

So tying it all back to the requests we receive from our community - or even the requests that other teams in the space receive from their own communities - please, keep requesting them! Vote in our Discord, vote on GOG’s Dreamlist, vote on Reddit threads, forum posts, like tweets and YouTube comments, send your collective and concentrated mental energy, and write catchy poems expressing your love for these classic gems. Every vote counts. Every request matters. And even if we can’t promise, or guarantee that we can work on every game, or if a game takes a really long time to be picked up - don’t give up hope or lose confidence. Every team we know working on bringing retro games to modern consoles are just as passionate, hardworking, and determined as we are, and we aren’t slowing down. All of your feedback is ammunition used when pitching titles to work on and it’s important.

Hopefully this peak behind the curtains has helped explain why it’s sometimes difficult to get answers or info out of us, and others. Let us know if there are any other topics you’d like to know more about in Discord, and we’ll see what we can share!