Image courtesy of StrategicPartnerships
Deal-making is a key aspect of every business. In the video game industry, the situations and issues that require negotiation may be different than in other forms of entertainment, but the techniques used remain the same. Below are summaries of three videos that discuss various negotiation techniques as well as how the techniques they discuss apply to the world of video games.
Margaret Neale - Negotiation: Getting What You Want [Link]
Mrs. Neale, who is a professor of management at Stanford's Graduate School of Business, discusses the four steps she believes will help anyone succeed in any negotiation scenario. The steps are as follows:
- Assess - Gain a thorough understanding of the situation. Do the benefits outweigh the costs?
- Prepare - Research every side of the issue before starting. Understand your own interests as well as the interests of your opponent.
- Ask - Engage with your opposition (politely, of course) and ask meaningful questions.
- Package - Bundle up all of the issues of the negotiation as well as your desires in order to make it more appealing to your opponent.
Of those four steps, the second is perhaps the most important. One of the most important rules to follow in negotiating is to be able to separate the people from the problem. In preparing for your negotiation, you not only have to understand what the issue at hand is, but also know where your opponent is coming from and what they want out of the deal. That is key if you want to keep the discussion on the issue and not on demands.
When a developer makes a game, it is very common that they seek out a publishing partner in order to get their product to make it to market. Negotiations between developer and publisher usually revolve around money, as most negotiations do. In situations like that, the publisher needs to understand where the developer is coming from. A video game developer usually does not have enough internal funding to release the game by themselves, which is why they seek a publishing partner in the first place. The games they make are their lifeblood, and if they fail to find a way into gamer's hands, the studio will likely shut down. Publishers (like EA, UbiSoft, Activision, and Warner Bros., among others) are large corporations with lots of money and can usually withstand a few financial failures, so they have less at stake in this kind of negotiations. Luckily, today there are multiple ways to get a video game released (for better or worse) and negotiations like that do not even have to take place.
Stan Christensen - The Art of Negotiation [Link]
As an investment banker, Mr. Christensen has done his fair share of negotiating. He states that negotiation is all about effective relationship management, meaning that all good negotiators are able to maintain some sort of relationship with the person they are discussing terms with. Communication is key to develop meaningful relationships, and he stresses the fact that no negotiation can ever reach a successful end without both sides knowing who they are, what they want, and how the other thinks, acts, and feels. He also mentions the role objective criteria plays in negotiation. He stressed the importance of basing decisions on industry standards or well-known information rather than what you want or what the other party wants. To me, he is not saying to ignore your opponent's desires or demands completely, but to use outside sources to help guide your final decision to a mutually beneficial end. You cannot misinterpret demands as fact.
The wonderful thing about the video game industry is that there is a wealth of information on just about every aspect of it. Say a game studio is entering talks with a major gaming company (like Microsoft) about potentially being bought by them and made a first-party, in-house developer. A small developer being bought by a major company is something that happens all the time, and the outcomes vary greatly. Some times the developer is broken up and absorbed into other studios, and some times the developer remains intact. Depending on what the developer wants out of the negotiation, they have a lot of information to help ground the discussion in truth and help their cause.
The video game industry is all about relationships, primarily those between developers and gamers and between developers and publishers. For a developer to sell their game, either to a publisher or a gamer, they have to be able to explain why their product is important and worth playing. Gaming, in a sense, is all about trust. Gamers are a finicky crowd, and without trust and communication, no developer can stay alive for very long.
Negotiating Strategies and Tactics [Link]
The speaker in this video, Brian Tracy, talks about the various skills a person must have in order to be able to become a good negotiator. Without actually using the term, he discusses the importance of BATNAs in a negotiation (he refers to them simply as "options"). He states that a good negotiator develops many options for themselves, as that gives them more power. Preparation plays an important part in developing a BATNA since you have to think of every possible angle you can take in regards to the issue you are discussing and the solution you want. It is important to have more than one alternative to fall back on in case a negotiation falls apart.
In the video game industry, there are many options to choose from when it comes to releasing a game and playing one. As a developer, if negotiation with a potential publisher fails, the developer could use Kickstarter or IndieGoGo to raise funds. Another option would be to use the Steam Greenlight program, a platform where gamers vote for the games they want to see receive a full retail or digital release. Today, there are more ways than ever for a game to see release. So if negotiations with publishers fall apart, the fate of game developers is not entirely sealed.