DAVE SCHOOL BLOG

Profit-Sharing Opportunities – Are They Worth It For Students?

David J. Sushil – Lead Instructor Online, The DAVE School

Increasingly, I’ve been hearing the same story from fledgling game developers.  It goes something like this: “I just landed a job with a company making a really cool game!  I’m working ten hours a week with them, and when the game ships, I’ll get a percentage of whatever it brings in.”  So far, so good!  However, when I press them for more detail, it turns out they’re missing a key feature of all good jobs: guaranteed compensation, paid in regular installments, based on time or specific deliverables.

I have mixed feelings about situations like this, especially when a student or a recent graduate is involved.  On the one hand, I can’t help but share in their excitement at the prospect of starting a new project, one which is likely their first career opportunity.  On the other hand, I want to sit them down and have a long heart-to-heart talk about the value of talent and time.

I believe that if you can do the work, you deserve to be paid for the work.  Receiving a share of the profit should be a bonus, not a primary form of compensation.

So why do game development novices agree to these profit-sharing arrangements?  Simply put, they often feel an enormous amount of pressure to land a first industry job.  After years of hard work and intense study, there’s a desire to see those efforts come to fruition.  Educational loan payments might be looming, friends and family keep asking about the job hunt, and it seems like employers take forever to respond to inquiries.  When that first opportunity finally comes along, there’s a strong urge to say yes, even if it’s not an ideal situation.  At least it’s something.

To be fair, I have accepted work like this in the past, and I know a good many professionals who have done so as well.  My experiences have been mixed.  It’s safe to say that some of those ventures were worth my time, and that others weren’t.  When profit-sharing projects have gone in my favor, I’ve made money, learned new skills, met new people, and had fun.  When they’ve not, I’ve felt upset, angry, and – worst of all – taken advantage of.  From an optimistic standpoint, even those bad experiences taught me a great deal about what not to do when evaluating this kind of speculative work.

With all this in mind, let’s explore some of the arguments for and against profit-sharing scenarios.

Arguments In Favor

That famous Nike slogan tells us to “Just do it,” and didn’t you hear someone once say that fortune favors the bold?  You’ve got an opportunity to help make a game, so let’s talk about why you should jump in with both feet.

Get Busy, Get Integrated!

Landing your first career job can be difficult, especially when studios are looking for employees with years of experience and shipped titles to their name.  Sometimes students feel like they’re stuck in a catch twenty-two: they can’t get a job unless they’ve already had a job!  Profit-sharing projects usually have a lower barrier of entry – as long as you have the necessary skills, experience isn’t required.

In fact, many profit-sharing gigs are pitched as learning opportunities.  For current students and recent graduates, these kinds of projects are a good way to accrue experience, pad a résumé, and gain industry connections.  In this sense, profit-sharing can be seen as a mutually beneficial arrangement: clients receive what they need in order to launch games, and their contractors benefit from training, feedback, and time spent working with game development tools.  If all goes well, everyone makes money, too.

When it’s over, you’ll have cleared that hurdle of gaining experience, and maybe future employers will give you a fair shake.

A Productive Use Of Time

And let’s face it, if you’re not gainfully employed, you might as well do something productive.  I often tell my students that just because you’re unemployed, it doesn’t mean you’re not working.  Engaging in a profit-sharing arrangement with a studio is a better use of your time than binge-watching Netflix.

Plus, when working within the framework of a profit-sharing project, you’ll get to make mistakes and learn from them before it really counts.  Broke the build?  Forgot to comment your code?  Left some wonky geometry in your 3D model?  No problem!  I mean, what’s your client gonna do, dock your pay?  In this way, you can think about profit-sharing work as a stress-free trial run.

Finally, you’ll have something to show for your time.  Instead of a gap on your résumé, you’ll have something tangible to demonstrate instead.  Yeah, maybe you didn’t make a dime off of your efforts, but you produced a bunch of code (or models, or textures, or whatever), and your name is in the credits.

This Could Be Huge

Ah, the lure of success!  If things go well on your profit-sharing project, there’s a good chance you will benefit financially.  Maybe the game blows up, and suddenly the studio is in demand, fielding contract requests left and right, and of course your client will want you to come back and work on those future projects – after all, your hard work contributed to that good fortune.

The game industry is such an odd duck.  It’s not unusual to see a slick and comprehensive 3D title from a AAA studio at the top of a weekly best-seller list one week, followed the week after by a retro-inspired 2D labor of love from some lone dude who nobody’s ever heard of before.  In other words, there’s a chance you’re getting in on the ground floor of something amazing.

Arguments Against

Outlined above are some decent reasons why a profit-sharing arrangement might work to your advantage.  But did it seem a little too optimistic, a little too hopeful?  Let’s explore some of the downsides to profit-sharing, and why you should avoid agreeing to work without certainty of financial reward.

You’re Shouldering Someone Else’s Risk

The bottom line is this: the client is deferring payment until the project succeeds, but there’s no guarantee that will happen, and no assurance that the pay you receive will be at or above minimum wage.  What if the game is a total dud, and nobody buys it?  What if it’s never released at all?  In these likely scenarios, who eats the cost associated with the time you’ve dedicated?  Certainly not your client!

Consider how much money would be needed to write all that code and produce all those assets if you hired a team of professionals.  We might be talking tens or even hundreds of thousands of dollars’ worth of talent.  If people are asking you to work within a strictly profit-sharing arrangement, it means they aren’t willing to roll the dice with their own money, and they couldn’t convince investors to do it with theirs either.  Does it seem fair that your client should now turn to you, a current student or recent graduate, to shoulder the financial burden?

Realizing the value of your time and talent is a necessary part of growing your career.  It gives you the confidence to ask for what you want and to demand fairness in every business relationship you enter.  You could start developing that mentality now by saying no to a profit-sharing project.

Could Your Time Be Better Used Elsewhere?

In the section on arguments in favor of profit-sharing deals, I stated that they could be a good use of your time.  Now I’m going to state the opposite.  How fickle, right?

Every minute you spend working on a profit-sharing development project is a minute that could have been devoted to something else.  You could be attending industry events, studying your craft, or practicing game development on your own terms.  If you’re career-driven, then certainly you want to land a gig where you’re receiving money in exchange for your time and talent.  Why not say no thanks to the invitation to work for free, and instead devote that same amount of time to actively hunting for paying jobs?  The rate of return for job-hunting is probably much higher than the rate of return for whatever profit-sharing arrangement you’ve been offered.

Consider also, if you’re willing to dedicate yourself to someone else’s project, why not focus instead on your own?  The risks are the same, sure.  But with so many inexpensive and fantastic game engines on the market, you could dedicate yourself to building something of your own instead.  Be your own boss, man!

You’re Potentially Enabling Predators

The kinds of profit-sharing arrangements that we’re discussing in this article exist because there is no shortage of eager young creatives who are willing to sacrifice their time for the promise of future rewards.  That’s unfortunate!  It incentivizes unscrupulous developers who see entry-level game developers as a source of free or cheap labor.  By entering into such an arrangement, you’re enabling these people to continue a practice that should be frowned upon in most cases.

By rejecting offers to work on profit-sharing projects, you are doing two things:

  1. Affirming your worth as a game developer.
  2. Reminding potential employers that producing quality content comes at a price.

There’s a similar movement in other industries against speculative work, which generally requires contractors to produce free, custom samples in order to land a job.  It’s seen as a predatory practice, and we should take steps to ensure that it doesn’t become a rite of passage for entry-level game developers.

Now, not everyone who is offering profit-sharing assignments is dodgy.  Some people leading these kinds of projects are enthusiastic, well-meaning, and honest.  Still, it’s probably best to educate these benign folks on the value of time and talent.

Some Helpful Advice

Not sure where you stand on accepting a profit-sharing assignment?  The following section should help you think more critically about how to evaluate such a proposal.

Vet Your Client

If you’re embarking on a game development quest with your nearest and dearest friends, and you’ve all agreed to partner up and work for free, but will split profit in some way that everyone agrees is fair, then you already have a good sense of what you’re getting into.  That’s clearly not the kind of situation we’re dealing with in this article.  No, the problem arises when your partner is someone unfamiliar to you, whose reputation is unknown.  You have to get a real sense of who you’re working for before you jump into business with him.

What drives your client?  What other projects have they worked on, and were they successful?  How much training do they have in terms of running a business, managing a project, balancing a budget?  Who is advising them?  Ask how they’ve prepared for this project – which books they’ve read, what seminars they’ve attended, what degrees they’ve earned.  You have to have a high level of confidence in the people running a project before you dedicate yourself to it.

Is it rude or nosy to poke around someone else’s business, or call into question their expertise?  Not at all.  Not when it’s your time and money on the line.

Use Math To Your Advantage

A good sales pitch will evoke emotions to elicit a response.  The trouble is, emotions are tricky, and emotions aren’t facts.  You may find yourself feeling very excited about the possibility of working on someone else’s project, and that enthusiasm could cloud your judgment.  Thankfully, we have math to keep us grounded.

First of all, your client should be upfront about how they intend to monetize their game, how many units they expect to sell, and – most importantly – why.  Do a bit of research, and decide if the numbers make sense.  Again, it’s not rude to ask about this stuff, and if a potential client isn’t forthcoming, then that’s kind of problematic, isn’t it?  If you’re being offered 1% of revenue, that number is meaningless unless you have a good idea of what the game is likely to make.

Once you know the projected revenue range, what does that translate to in terms of an hourly rate?  If your projections show you’ll make $1,000, but you’ve worked 1,000 hours, then you only made one dollar per hour.  Yikes!

Do You Believe In The Concept?

Stop and consider what you’re really excited about.  Is it the chance to work on a game, or is it the game itself?  I think that if there’s a chance you’ll not get paid, then it’s important to really believe in the project to which you’re committing your time and talent.  Make sure it’s a game that you would play – or better yet, a game you would buy.

On the other hand, if it’s simply the chance to work on a game that’s driving your enthusiasm, consider passing.  If you get burned, what could happen to your ambition?  Will a negative experience at the start of your career sour you to other opportunities?  Proceed with caution, and remember that there are better arrangements than waiting for profit that may never materialize.

Finally, consider the development timeline.  Even though you’re excited about this opportunity now, will you still be excited about it two weeks from now?  What about two months from now?  Two years?  Decide how much time is realistic to maintain your enthusiasm, and use that as a guide in deciding whether or not profit-sharing is right for you.

Everything Is A Negotiation

If you’ve been offered a spot on a profit-sharing project, and you’re not happy with the terms, negotiate for what you want.  A good client should be willing to entertain your counteroffer, and if they’re not, well… it’s somewhat silly for someone who’s not actually paying you to dictate the terms of the contract.  You have the upper hand in this negotiation, so use it to your advantage.  Go ahead: ask for an advance and see what happens!

It’s important to understand with full clarity the mechanisms that drive your payout.  For example, your client may want to recuperate certain expenses before they pay you.  If that’s the case, you should know what those expenses are.  A software license might seem like a reasonable thing to stand in the way of you and your share of the profit, but what about business lunches, or the client’s travel expenses?  It’s OK to say, “I’m not comfortable with that expense taking priority over the work I’ve done.”

If you’re going to accept a profit-sharing arrangement, then make sure you get what you want, and make sure you get it in writing.

Rely On Experts

Still undecided?  How about talking to some of the experts in your life about the opportunity you’re evaluating?  If you’re a student or a recent graduate, then consider reaching out to your instructors and listening to what they have to say about profit-sharing assignments.  Additionally, your school likely has staff dedicated to career services who can help steer you in the right direction.  If you’re involved in your local game development community, then ask around, and see what other people think about your options.

Conclusion

We’ve covered pros and cons, and now you are armed with advice to make sure you are as satisfied as possible with a profit-sharing arrangement, should you choose to pursue one.  Ultimately, you have to decide what’s best for you and your career.  Your individual situation should dictate where you land on the issue of accepting profit-sharing assignments.  Be smart, think it over, and remember that there’s no shortage of opportunities out there for talented, hardworking people like you.

Profit-Sharing Opportunities – Are They Worth It For Students?

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