Video game publisher facts for kids

A video game publisher is a company that helps bring video games to players. They publish games that are made either by their own teams or by other companies called video game developers.

Publishers often pay for the game to be made. Sometimes they pay an outside game developer. This is called external development. Other times, they pay their own teams of developers, known as a studio. Big publishers also help sell and deliver the games. Smaller publishers might hire other companies to do this for them. Publishers also handle many other important tasks. They get any special licenses needed for the game. They pay for the game to be translated into different languages. They design and print the game's manual and box. Some big publishers even own smaller publishing companies, called labels.

Large publishers also help their development teams work better. They might offer services like sound design. They can also provide special code for common game features.

Since publishers often pay for game development, they try to manage the risks. They have producers or project managers. These people watch the game's progress. They give feedback and help out when needed. Most games made by outside developers are paid for in stages. Payments are made when the developer reaches certain goals, called milestones.

Challenges in Publishing Games

Publishing video games can be quite risky. Here are some of the challenges:

Holiday Rush and Competition

• A huge part of game sales happens around Christmas. This means many high-quality games come out at the same time. It creates a lot of competition every year in the last three months.

Game Delays and "False Launches"

• Games often get delayed. Developers might promise a game will be ready by a certain date. Publishers then plan big marketing campaigns and pay for ads. But then, the developers say the game needs more time. This is called a "false launch." When the game finally comes out, people might not be as excited. This can lead to lower sales. For example, the PSP version of Spider-Man 3 had this problem.
• These delays are even worse if a game misses the Christmas season. Some developers, like id and Epic, try to avoid this. They just say a game will be released "when it's done." They only announce a date when the game is truly finished. But this can also cause problems, as seen with Duke Nukem Forever.

Focus on Big Hits and Sequels

• The game industry now focuses more on "hit games." People often buy the most advertised game, not always the best one. This means fewer other games in that style get bought. This has made game development much more expensive. Every publisher wants their game to be number one.
• This also sometimes makes publishers push for sequels to popular games. They might not want to try new ideas or IP. Some publishers, like Activision Blizzard and Electronic Arts, have been criticized for this. They bought studios that made original games. Then they made those studios help with bigger, more famous game series.

High Costs for Modern Games

• New game consoles have amazing graphics. To use these graphics, games need bigger teams to make them. Characters need more detail and animations. More textures must be created. The process of making art for games is more complex. It also takes more complex computer code. This code helps make game physics real and graphics look great.
• Today, many console games cost US$15 million to $20 million to make. Spider-Man 3 cost US$35 million to develop. This doesn't even include marketing costs. So, every game is a big gamble, and the pressure to succeed is very high.
• However, there are also smaller, simpler games. These are called casual games. They are made for PCs or as downloadable console games. Also, the Wii console, while in the same generation as PlayStation 3 and Xbox 360, needed less money for development. Its innovation was about the Wii Remote, not super-realistic graphics.

Inventory Risk for Console Games

• When publishing games for game consoles, publishers face a big risk with unsold games. Since the NES (1985), console makers control game manufacturing. Publishers must pay a royalty for every game made for that console. This royalty is paid when the game is made, not when it's sold.
• This means if a publisher orders a million copies of a game, but only half sell, they still paid royalties on all million. They have to cover the cost of the unsold games.

Companies That Publish Games

Many video game publishers are public companies. This means their shares can be bought and sold on stock markets. Their performance has been mixed. Electronic Arts is one of the few game publishers on the S&P 500 list of large U.S. companies. In 2010, it joined the Fortune 500 for the first time.

There have been two times when people were very excited about video game publisher stocks:

• In the early 1990s, CD-ROM drives for computers became popular. People thought this would start a "multimedia" revolution. Many Hollywood movie studios created "interactive" divisions. They hoped to make money from this new entertainment. Most of these divisions later closed. They spent a lot of money making games with many videos. But the games often weren't fun to play.
• In the late 1990s, during the Dot-com bubble, video game sales in the United States earned more money than film box offices for the first time. There was a lot of excitement about technology companies. However, video game publishers' stock prices didn't rise as much as many dot-com companies. This was likely because game publishing was seen as a more established industry. Its future was better understood than the new dot-com businesses. Many technology stocks crashed in the early 2000s. But video game publisher stocks recovered. Some larger publishers, like EA and Take-Two Interactive, reached their highest prices in the mid-2000s.

Top Video Game Publishers

Here are some of the biggest video game publishers by how much money they made in a recent year.

Major Publishers

In 2021, the biggest public companies by game revenue were Tencent, with US$32.2 billion. Next was Sony, with US$18.2 billion, and then Apple, with US$15.3 billion. This information comes from Newzoo.

Mid-size Publishers

See also

In Spanish: Distribuidora de videojuegos para niños