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Why monetization is our industry's next big problem - and opportunity
Why monetization is our industry's next big problem - and opportunity Exclusive GDMag Exclusive
April 15, 2013 | By Patrick Miller

April 15, 2013 | By Patrick Miller
Comments
    23 comments
More: GD Mag, Design, GD Mag Exclusive



In the April issue, Game Developer magazine editor Patrick Miller sees promise in free-to-play -- if it's done the right way.

"Free-to-play is killing video games!" If you've heard it once, you've heard it a thousand times. From a business perspective, free-to-play is a useful tool because it can offer smaller studios a shot at an extraordinarily wide audience and higher overall revenues than the pay-once model - which, in turn, means more stability and job security. But nobody likes playing - or making - a game that feels like it's powered by your wallet, either. Rather than wish f2p would go away, we'll just have to get really good at using it.

More (money, problems)

Judging from the comments from this year's Salary Survey, monetization is on everyone's minds these days. But while devs and consumers alike aren't shy about heaping disdain upon free-to-play games, it's worth pointing out that over the last three years of salary surveys, we've seen a gradual decline in layoff rates and an increase in average salaries. Certainly, not all of those gains are necessarily due to the rise of the f2p model, but if you think about some of the hidden costs incurred with the traditional pay-once development cycle, you might be a little bit less skeptical about f2p.

Traditional game development, as we think of it, is somewhere between the entertainment industry/Hollywood model, where you assemble a one-time team of people to produce one project, and the software development model, where you have a team of developers focused on building and improving a product for as long as that product is sold. If you're a developer making, say, Microsoft Word, you can be pretty sure that once you've shipped a version of Word, you'll still have plenty of work left to do with fixing remaining bugs, releasing new patches, and working on the next version of Word. If you're a game developer, though, at some point your game will be "done," and your studio might not have another project for you to work on. Essentially, game devs end up with all the liability of a film worker, but without any of the unions or support structures that make that model sustainable.

On the other hand, many f2p games launch as early as they can put together a minimum viable product in order to start getting revenue coming in, and then gradually add new features and content after launch. As long as there is something to add to the game, there's a reason for the dev studio to keep people employed and working on the game, which simply isn't true for pay-once games. (This is also true for subscription-based games, but their success tends to depend on their ability to monopolize a player's attention for a long period of time, which is tricky.) Logically, that means we should see fewer layoffs in f2p game dev (when the games are performing well, anyway). As my film editor buddy Brian put it, "Pay-once dev is like working on a blockbuster film, free-to-play is like working on a TV show."

Fun-to-pay?

Free-to-play proponents like to mention that arcade games were the first example of monetization design. What many people seem to miss is that some of those games actually hit the Holy Grail of monetization design; they made paying fun. Play Final Fight on free-play mode and it gets dull fast because there's no cost to failing. Play it with a fixed amount of lives and continues and things get more interesting, but you end up playing through the same segments over and over. Play at 25 cents per continue, and you'll find yourself marshaling every last pixel in that health meter, asking yourself whether it's worth another 25 cents to see the next level, and so on. The experience is actually enhanced by the presence of actual, real-world stakes (the quarters in your pocket).

Another unorthodox example of effective monetization design is the time-honored "money match," where two players bet on the outcome of a game. The fighting game community has taken these to rather ridiculous extremes (see the Marvel vs. Capcom 2 $50,000 money match between Toan and Fanatiq), but as an enthusiast myself, I love upping the stakes by putting a dollar or two on the line just to give each in-game moment a little bit more real-world weight. I lose more than I win, but the extra thrills make it worth it. And as f2p models continue to develop, I suspect we'll see more going on in f2p than just sticking a price tag on in-game content.

Make the world go round

Nobody wants to play a game that makes you feel like a cash cow. But pay-once games are harder to sell than they were 10 years ago, and those business models also gave us wonderful workplace practices like "crunch time" and "laying everyone off after ship" - both of which make it harder to attract, cultivate, and retain talented developers. If we want to see the game industry become a place where developers can reasonably see themselves supporting their families, buying homes, and sticking around until retirement, we're going to have to solve The Money Issues in a way that makes everyone - devs, suits, and consumers - happy.


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Comments


Dave Hoskins
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There are some beautiful games out there, but when the daunting feeling of increased difficulty creep after a few minutes of play, and then being blocked, I just delete it. My main problem is that you don't ever know how much it will cost to actually complete a game, they can't even be honest about that!
I like the days of unlocking a demo, but if the suits and bean counters don't like it, then tough!
What amazes me is that they spend all that money on cut scenes that gamers skip through, now that's a waste of money, but I'm sure many will disagree, especially the advertising dept. - "But I want a film, not some computer game!"

Kyle Redd
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I can't even remember the last game I played that actually let me skip the cutscenes. Apparently they now spend so much time and money on that one aspect that it's actually offensive to suggest you might not want to sit through it.

Alex Leighton
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Free to play can't ever be consumer friendly, just it's title alone is deceptive. Imagine how pissed people would be if a town called their transit system "free to ride", but then only went two stops for free. It's bait and switch.

Mike Griffin
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Coming to theaters soon: Free to Watch movies!

Well, the first half hour is free. Then you must pay to continue watching, or the seat electrocutes you.

[ps: The first half hour includes 15 minutes of advertisements.]

N C
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I believe you are not getting the point that this article tries to make.

F2P can be extremely good and user-friendly IF done correctly.
To name a few examples of this, look at League of Legends, Dota 2 or Team Fortress 2, all those are F2P and highly successful as well.

What you are talking about ("bait and switch" F2P) is actually one of the "wrong ways" of doing F2P the article warns us about. As a matter of facts, I don't think it's real F2P at all. It's more like a "demo" disguised as "a full game".

Torben Jorba
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There are games on Android/IOS now, who call themselves Freemium. You can play them until some (increasingly) hard levels where only a fraction of people can beat the level without money-only "special items". And even then lots of people grind over 100 times to finally achieve victory, only to experience a "full stop" another hard five levels down the road where you are forced to pay *anyway* to continue.

Thats a very ugly way to do Freemium, its more like a free demo. And sadly, it works. Many of those games are top grossing, because they use all the psychological tricks to keep you "in" until you have a hard time not to pay.

A good Freemium should make you pay voluntary. But it seems that only a few teams have the required skills to create such a title. The rest simply goes the simplest route possible, as seen with lots of bad asian MMPORGS that resorted to less-than-hidden Casino-mechanic; or even features where other people can extort money from you or your character gets wiped because they have a true Pay2Win mechanism with vastly overpowered "deletion" weapons.

David Klingler
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That's a very interesting way to look at it, but honestly there are ways in which a free to ride system could actually be preferred, despite how weird that sounds. If I lived in a city that had a free to ride system in which I had to watch advertisements the entire time I was riding, I would be completely fine with that. Mike Griffin's post about free to watch movies might also actually be worth it in some cases (excluding the ads and the electrocuting seats). If I didn't like the movie I was "previewing" for that first half hour, I could leave and not waste my money on it. If I liked the next movie I saw, even if it cost more than a regular movie, I still didn't waste the money on the previous one, so therefore could end up with more money and a better overall experience in the end.

As N C said, the specific implementations of "free to ride" and "free to watch" that you're making analogies of to free to play are examples of bad ways to do those things, which can be compared to the bad ways of doing free to play. There are good ways to do free to play.

Jeremie Sinic
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I wouldn't say it can't be consumer-friendly, but Free-to-play will always impact the fun of a game, because all the creative energy the game designer is spending on monetization mechanics is that much energy taken from focusing on making a fun game. Also, monetizing efficiently indeed often comes in contradiction with making a game enjoyable.

Plug: http://www.ethicalvideogames.com/2013/04/16/can-games-be-free-to-
play-ethical-and-fun/

However, the fault for the current trend of free-to-play games is not only developers', but also players'.

I just hope developers and publishers remember there will always be people ready to pay upfront for quality games like the latest Bioshock.

John Gordon
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I think the arcade model of "pay a bit as you go" is better than either free-to-play or pay all at once. Consumers are willing to shell out a few quarters to see if a game is worth it, and if they like the game, then they'll keep paying. Game rentals and resales exist largely because consumers are afraid to buy a brand new console game. They aren't sure if the new game is worth the full price tag, so they want to try it out first. On the other hand free-to-play devalues games in general. Gamers get used to games being free, so they don't think they have to pay at all.

With the arcade model everyone wins. Consumers get to cheaply try a game out, and developers don't have to worry about games being devalued.

Garrett Thompson
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There's always a flip-side.

The arcade model has an inherit downside in that it simply isn't very accessible. An arcade game that limits lives and continues based on how much money you're willing to shove into it feels punishing to learn, since you're penalized financially by making mistakes. That means that getting your hands dirty in a game with limited continues carries some real risk that likely prevents many people-- myself included-- from being able to fully immerse themselves in the game.

If a game's core mechanic becomes charging you more money, then the game stops being fun.

That's not even getting into the sticky "ownership" issue. If you have to constantly wager quarters to play a game, can you ever say you truly own it? Not really. It's problematic to say that "arcade is the way to go." Arcades are going out of business across the nation. I think that's proof enough that the model is flawed in some way.

It might be workable from an incremental perspective, like you were getting at (pay a little bit at a time until you've unlocked the full game) but I believe there should always be a "Pay full price from the get-go" option. And certainly never exclusive reliance on incremental monetization.

Jeremy Reaban
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The arcade model could be awfully exploitative at times, too. Especially the games in the mid-late 80s.

Maybe not as bad today, where games are designed like slot machines, to be like skinner boxes, so people constantly give them money. But certainly to eat quarters.

N C
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Perhaps what made the Arcades so successful is that gameplay never changed in quality. What changed was quantity (time/lives you had), but not how the game should be played. You still had the same the exact same goals (complete the level + don't die) no matter how much money you spent.

And an in the unrealistic case you managed to pull a "perfect play", then you would be able to complete the game without spending anything more than the first coin. It felt fair, it felt that it gave you the chance to make things right. If you failed and died, it was your fault.

There were a few exceptions of this, such as Gauntlet (each quarter gave you more time, and winning the game with less than a docen of quarters was not posible, not even if "perfect played"). But I believe this helps to make the point even clearer; after all there is a reason why this kind of games were so uncommon.

Torben Jorba
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@NC I can second that with a title from Sega called "Ghost Recon". It is one of those Dual Shooter arcades. My friend and I finished the whole game first time for about $14 in money (about 45mins of playtime). After some month we were able to finish it with just $4.

But you really had to learn and train just for the the ugly moments of the game, where they designed it that you practically lose one of the three credits/$1 quite quickly if you don't know what you are doing.

John Gordon
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@Garrett Thompson

"The arcade model has an inherit downside in that it simply isn't very accessible. An arcade game that limits lives and continues based on how much money you're willing to shove into it feels punishing to learn, since you're penalized financially by making mistakes. That means that getting your hands dirty in a game with limited continues carries some real risk that likely prevents many people-- myself included-- from being able to fully immerse themselves in the game."

I can see what you mean that some people might not like to pay for every play. However you cannot say that arcade games are less accessible than consoles. Lowering the cost to try a game always makes it more accessible. Back in the day a person who wanted to try Pac-Man in the arcades need to pay $0.25. A person who wanted to try it at home needed to pay $30. (And that is assuming they owned a console. Otherwise they would need to a couple hundred dollars more.) The arcade version is far more accessible.

That is the biggest advantage F2P has: accessibility. I don't even like F2P, but it's easy to see that it has a huge advantage in accessibility. Everyone can try these games out, because they cost nothing.

Console gaming, in contrast, only works when there is a large base of passionate gamers. Consumers will readily shell out a lot of money up front when they expect the games will be good. When the consumers have low confidence that the games will be good, then they play it safe by sticking to sequels and used games, or they just stop playing altogether.

Gil Salvado
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Honestly, while I was studying Game Design & Art I never thought to end up at a browser and mobile games studio. I never thought to work on a f2p title, because I despised the very idea. Just like most of us devs still do, and I guess for the very same reasons I had. But I changed my mind.

The whole team put so much effort into a game to make it fun to pay for. Just like in the days of the arcades. Don't let yourself be blinded by nostalgia. There where some really bad arcade games back in the day. We just remember the good ones. The games we clustered around to be next in line. To dump our precious pocket money into.

There has been a free-to-play apocalypse already. And most of should remember it, although we were still kids. And the industry survived and thrived in the decade after during the golden age of gaming. Those were the days of the arcade and we survived them.

If you do f2p, do it the arcade way.

Tobirama Tendo
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This is an interesting topic and even though I do not consider myself Pro enough I decided to create the account to share my thoughts about it:

First I'd like to mention this article seem to skip the 'Non-MT Monthly Pay to Play' model applied primarly to MMOs which was surpassed by F2P but was more fair and honest towards the players:
-No P2W of any kind, as Paying is taken for granted as an entry fee instead of something that is considered an investment on the player part, that means that players can still lose and the game is more about the Players rather than the size of their wallet.
-Each user can only pay a fixed entry fee each month and in return get monthly game updates , Developers moderately happy, Users are happy.

What really happened after that is that Developers realized they can make even more money by running the F2P scheme and Players still ate it up without realizing the long term implications, but we all know that we can't go back to the above mentioned P2P and on the other hand we can't offer games really for free.

I also think its an issue that once a person(any person) earns more money and raises lifestyle, they would not willingly go back to previous lifestyle just to be more fair. That is to say that it is unlikely that someone would go make a more fair model if it doesn't bring them Equal or Greater amounts of money because they need to support their current lifestyle(family too) so if there is any new development in this arena it will probably come from the direction of the meek indie developer.

However the problem with monetization goes even deeper than that, because Pro-Microtransaction(multiplayer) often raise the issue that some players have more time on their hands and since MMOs are typically some kind of Cold War Race to the Moon , these players with more time are allowed to get ahead faster and players with long-hours-high-pay jobs compensate for this by buying Microtransactions. And Most if not all Multiplayer - RPGs are like that since they are progression dependent and Developers+Players have a taboo against limiting the player's ability to gain power over a set amount of time.
Could you have an interesting persistent game without this sort of time+money dependent progression? if not I think it makes the 'monetization vs fun' problem all the more difficult.

Maybe this comment will inspire someone to approach a solution.

Torben Jorba
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I think there is a huge fragmentation in the market, and there is nothing bad about that. Catering to different player bases is a good thing. If someone has only 4hours a week to play with friends, he wants to maximize the "fun" aspect and he maybe pays for that. If he only plays against similar "strong" players, those who don't want to spend money and such having a slower progression rate don't necessary feel "left out", since they don't really meet.

Maybe someone just wants to hang out in the game and doesn't go into the hard dungeons raids or ultrahard clan fights. Different tastes, different reasons to play. Some newer F2P Games even have special servers for special paying customers. There is, on the first view, no harm to that.

Some F2P suffer from (unintended) pay2Win situations, where one pay-weapon in a certain class is overpowered, and such, the ones that pay have an unfair advantage. And when companies suddenly see a raise in microtransaction by their own designed unfairness, it takes lots of balls to correct that. Some just give up and let that foster until you only have those people in the game that are vicious and like to exploits the rules including cheats/hacks and other bad stuff.

Hakim Boukellif
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The problem with adapting the arcade model is that with arcade games, the player is making use of a facility owned by someone else and when the player is using that facility, no one else can, so it makes sense that he has to pay for every usage and more if he lost and wants to play more. But when the only resources being used when playing are the player's own, earning money that way no longer makes sense.
Also, Final Fight in free-play mode is boring because you have infinite continues, not because you didn't spend any money on it. Money could be easily replaced by any other sufficiently finite resource, so it's not the spending of money itself that makes it more fun.

As for the "money match" thing... if there's one thing that can be learned from professional sports, it's that if you care about the industry you're in more than just as a source of income, don't get involved in betting. Don't encourage it, don't add explicit support for it in your products and certainly don't build your business model around it. On an industry-level, it'll do a lot of harm and no good and on a company-level, it's a sure-fire way of getting involved with dodgy characters and dodgy practices, whether you want to or not.

Anyway, while I have a strong dislike for the less-than-ethical way many F2P games try to ...ugh... "monetize", the reasons I "wish f2p would go away" has more to do with its more fundamental problems that can't be solved just by getting good at it. Not the least of which are unnecessary full service dependency and asking for money during playtime. Now, although I say "fundamental", it is of course possible to make a game where you give away the base for free and purchases work like unlocking DLC and are sold from a store front separate from the game. Such a game might even exist right now. But given that that makes it much harder to convince players to actually make purchases and its susceptibility to piracy, I doubt that will ever become a common way of doing F2P, no matter how good people get at it.

Lastly:
"those business models also gave us wonderful workplace practices like "crunch time" and "laying everyone off after ship""
That's a bit of a dishonest statement, isn't it? It's not like the model is to blame for poor management.

David Klingler
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This is a nice article, and the comments are wise. I think for f2p it really comes down to small details in the game design. Yea, there are lots of games that do it poorly, but there are many avenues for games to be f2p and still be good in their game design. I was watching a video put together by some designers at some successful f2p game studios that were saying to keep in mind that you don't want people to buy when they're unhappy, you want them to buy because they're happy. "Delight" was a word they used a lot.

I think that the concept is easier said than done, but I know it's possible. The concept itself of free to play is NOT a bad thing, it's just unfortunate that many of the implementations of it have a negative effect on the players. It doesn't have to be that way just to be profitable.

The mention of arcade gaming is very fitting here. I especially like the comparison that John Gordon made with the $30 try of Pac-Man compared to the quarter try of Pac-Man. F2p has many positive qualities if it's just done well, and I feel like the industry has to evolve to take advantage of those positive qualities.

I played Puzzle & Dragons for a little while and enjoyed a lot of it, until I got to the point where it's almost impossible to proceed at a decent rate without paying for things (I stopped playing at that point). Still, if I had paid $1.99 for it, and this didn't happen, would I still have enjoyed it as much? I think the fact that something is free actually has an effect on our opinion of its quality, of course because the expectations are most likely lower. If I pay $1.00 for an arcade credit, I will probably expect something more from the game than one that only requires a quarter.

Puzzle & Dragons has been hugely successful financially, but I think that because of my own experience that it didn't quite hit the "good implementation of f2p" level of design. That feels like a whiner complaint to me though, because you don't even have to pay for Puzzle & Dragons to enjoy it. That's something it did successfully, at least for me.

My friend started playing Clash of Clans, and tried to play as long as he could without spending money. However, when he did finally spend $5 (or something around that amount), he wasn't unhappy about it. You could say that Clash of Clans was a well implemented f2p game for him in that case. He still really likes the game.

Free games have many advantages that the industry can use. I think as we continue to learn more about f2p monetization and user activity in relation to it, the issue that many of us have, that it seems more important to monetize than to give good quality gameplay, will go away.


...Hakim Boukellif's comment makes a very interesting observation about a problem with adapting the arcade model. If I go to an arcade, I have to pay to play Donkey Kong. If I'm at home, I have a Donkey Kong cabinet, and can just press the button on the inside of the coin box to get a credit. That doesn't make the game any less interesting, however I had to pay a lot more for my machine than I would have for the total plays I've done on it would have cost at an arcade.

When Moon Patrol released in arcades, it was one of the first games to allow paid continues. When you play the game so that you don't actually have to pay to continue (on MAME for example), the game is not very interesting. However, it has the potential to be more interesting in an arcade setting where you have to pay to continue.

Looking at this, Moon Patrol should have made a lot of money. It made money, but was nowhere near the amount of money better games made. Most of these better games did NOT allow paid continues. They got more money for being better. I think that as time goes on, it will end up being the better games that make more money in f2p, not just ones that focus on monetization over gameplay.

Erin OConnor
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Monetization isn't the problem, Greed is.

Alexander Symington
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Even on quality of life issues, I don't believe that focusing development on service-based models (such as F2P) instead of product-based games is going to in itself bring about any improvements.

First, let's consider "laying everyone off after ship". Yes, for product-based games there may be a somewhat predictable risk of layoffs because there is a defined end to the production cycle. However, service-based games are certainly not free of such a risk, and its timing is much less predictable, as we've seen this week with the EA Facebook shutdowns (there is a grace period of a few months, but this is much briefer than typical product shipping schedules). The recent article on the end of City of Heroes gives another example of highly unpredictable layoffs occurring under a service-based model.

Product-based games can of course be terminated during production, but this becomes less and less likely as development continues, since shipping is the only means of making a return on growing sunk costs. For a service-based 'minimum viable product', there seems to be a much larger risk of a game at a similar point in development being hastily shut down if it is still in the red. (I am not saying that this course of action necessarily makes sense, as the game may eventually become profitable through iteration, but that politically it is an easy option when metrics provide some actual negative evidence of its commercial viability that would be unknowable for product-based games ahead of release.) So as competition heats up in the F2P sector, I would expect to see faster cycles of layoffs for service-based games; faster, I believe, than has been typical for product-based projects.

Now for "crunch time". If crunch is caused by either disorganised, short-termist planning of known features, or external shocks from previously unknown problems, it is likely to be exacerbated by service-based models that have much smaller planning horizons as they proceed in reaction to metric data. It is not impossible to manage this situation well; just comparatively harder than it ought to be for a product-based game with a coherent vision. Negative patterns like feature creep close to the ship date can now happen every week (or however often you update), creating a huge additional source of risk and stress if you are not willing to compromise on quality or burn bridges. Then consider the further risks caused by running a live environment - think about what the experience of the SimCity technical team must have been in the weeks after launch, for example.

F2P may be in some senses a TV-like alternative to the AAA blockbuster, but from what little I know of those other media industries, TV workers such as writers are just as dependent on unionisation to ameliorate their liabilities as their cousins in film. Whether or not that approach would be effective for improving QoL in games is a matter of debate, but from my experience I doubt service-based models are a meaningful way of addressing the issue, and may in many respects make things worse.

Tyler Shogren
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A good game is the only monetization solution you should need. This isn't corporate banking.

Mike Scott
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F2p hurts devs of rival games in the industry, but benefits the players. Only the really large titles can compete with free. It makes non-F2P games hold a much higher risk of failure, and encourages a whole lot of risk reduction exercises, like running with a sequel, or spending tons on advertising. Many MMO's switched over to F2P simply because they couldn't compete with games that allowed you to wander-in and est drive for as long as you wanted to. Imagine how many car companies would survive if a F2Drive model were established by a competitor. Imagine how well that company would do if they could monetize it successfully and not irritate their customers.

For those not familiar with the industry workings, the cycle mentioned previously, about the "big layoffs right after a title ships" has nothing to do with poor management, it's just the expected end of everyone's contracts. Most of the larger games have everything created in overlapping contract cycles. Which is why the credits for a game like Halo can take hours to scroll through. It takes many different disciplines to make a game, and generally speaking, one person doesn't do all of the other disciplines, so they're only hired to do their bit and move on... unless they happen to be great at what they do, the job is needed after ship date, the game does really well, AND the company wants to extend or take them off contract into full-time just to make sure they don't get snatched up by someone else when the next title comes through. Its standard workflow for a ship-only title with limited DLC.. who needs a guy that can make 3d characters, when all the characters have already been made?


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