Editing Video game developer (section)

==Types==
{{multiple image
| total_width       = 400
| image1            = Shigeru Miyamoto 20150610 (cropped 2).jpg
| image2            = John Romero - Jason Scott interview (6951215353) (cropped).jpg
| footer            = [[Shigeru Miyamoto]] (left) and [[John Romero]] (right) are well-known game developers.
}}

===First-party developers{{anchor|First-party_developer}}===
In the [[video game industry]], a first-party developer is part of a company that manufactures a video game console and develops mainly for it. First-party developers may use the name of the company itself (such as [[Nintendo]]), have a specific division name (such as [[Sony Computer Entertainment|Sony's]] [[Polyphony Digital]]) or have been an independent studio before being acquired by the console manufacturer (such as [[Rare (company)|Rare]] or [[Naughty Dog]]).<ref>{{cite web|last=Ahmed|first=Shahed|title=Naughty Dog discusses being acquired by Sony|url=https://www.gamespot.com/articles/naughty-dog-discusses-being-acquired-by-sony/1100-2677654/|website=GameSpot|access-date=2018-05-26|archive-date=2018-06-29|archive-url=https://web.archive.org/web/20180629131447/https://www.gamespot.com/articles/naughty-dog-discusses-being-acquired-by-sony/1100-2677654/|url-status=live}}</ref> Whether by purchasing an independent studio or by founding a new team, the acquisition of a first-party developer involves a huge [[financial investment]] on the part of the console manufacturer, which is wasted if the developer fails to produce a hit game on time.<ref name=NGen30>{{cite magazine |title=Is Your Favorite Game Company Ripping You Off? |magazine=[[Next Generation (magazine)|Next Generation]] |issue=30|publisher=[[Imagine Media]] |date=June 1997|pages=39–40 |url=https://archive.org/stream/NextGeneration30Jun1997/Next_Generation_30_Jun_1997#page/n40}}</ref> However, using first-party developers saves the cost of having to make royalty payments on a game's profits.<ref name=NGen30/> Current examples of first-party studios include [[Nintendo EPD]] for Nintendo, [[SIE Worldwide Studios|PlayStation Studios]] for Sony, and [[Xbox Game Studios]] for [[Microsoft Gaming]].

===Second-party developers{{anchor|Second-party_developer}}===
Second-party developer is a colloquial term often used by gaming enthusiasts and media to describe game studios that take development contracts from [[platform holders]] and develop games exclusive to that platform, i.e. a non-owned developer making games for a first-party company.<ref>{{cite magazine|title=The Next Generation 1996 Lexicon A to Z: Second Party|magazine=[[Next Generation (magazine)|Next Generation]]|issue=15 |publisher=[[Imagine Media]]|date=March 1996|page=40}}</ref> As a balance to not being able to release their game for other platforms, second-party developers are usually offered higher royalty rates than third-party developers.<ref name=NGen30/> These studios may have exclusive publishing agreements (or other business relationships) with the platform holder, but maintain independence so that upon completion or termination of their contracts, they are able to continue developing games for other publishers if they choose to. For example, while [[HAL Laboratory]] initially began developing games on personal computers like the [[MSX]], they became one of the earliest second-party developers for Nintendo, developing exclusively for Nintendo's consoles starting with the Famicom, though they would self-publish their mobile games.<ref>{{cite web | url = https://kotaku.com/the-studio-behind-smash-bros-and-kirby-hal-laboratory-1687219609 | title = The Studio Behind Smash Bros. And Kirby, HAL Laboratory Turns 35 Today | first = Mike | last = Fahey | date = February 21, 2015 | access-date = March 25, 2021 | work = [[Kotaku]] | archive-date = November 6, 2021 | archive-url = https://web.archive.org/web/20211106052019/https://kotaku.com/the-studio-behind-smash-bros-and-kirby-hal-laboratory-1687219609 | url-status = live }}</ref><ref>{{Cite web |last=Devore |first=Jordan |date=2018-02-26 |title=HAL Laboratory's first mobile game is out today |url=https://www.destructoid.com/hal-laboratorys-first-mobile-game-is-out-today/ |url-status=live |access-date=2022-06-16 |website=Destructoid |language=en-CA |archive-date=2022-08-19 |archive-url=https://web.archive.org/web/20220819200051/https://www.destructoid.com/hal-laboratorys-first-mobile-game-is-out-today/ }}</ref>

===Third-party developers===
{{Anchor|Third-party developers|3rd-party developers}}
{{see also|Third-party software component}}

A third-party developer may also publish games, or work for a video game publisher to develop a title. Both publisher and developer have considerable input in the game's [[Game design|design]] and content. However, the publisher's wishes generally override those of the developer. Work for hire studios solely execute the publishers vision.

The business arrangement between the developer and publisher is governed by a contract, which specifies a list of [[Milestone (project management)|milestones]] intended to be delivered over a period of time. By updating its milestones, the publisher verifies that work is progressing quickly enough to meet its deadline and can direct the developer if the game is not meeting expectations. When each milestone is completed (and accepted), the publisher pays the developer an advance on [[royalties]]. Successful developers may maintain several teams working on different games for different publishers. Generally, however, third-party developers tend to be small, close-knit teams. Third-party game development is a volatile sector, since small developers may depend on income from a single publisher; one canceled game may devastate a small developer. Because of this, many small development companies are short-lived.

A common [[exit strategy]] for a successful video game developer is to sell the company to a publisher, becoming an in-house developer. In-house development teams tend to have more freedom in game design and content than third-party developers. One reason is that since the developers are the publisher's employees, their interests align with those of the publisher; the publisher may spend less effort ensuring that the developer's decisions do not enrich the developer at the publisher's expense.

[[Activision]] in 1979 became the first third-party video game developer. When four [[Atari, Inc.]] programmers left the company following its sale to [[Warner Communications]], partially over the lack of respect that the new management gave to programmers, they used their knowledge of how [[Atari VCS]] game cartridges were programmed to create their own games for the system, founding Activision in 1979 to sell these. Atari took legal action to try to block the sale of these games, but the companies ultimately settled, with Activision agreeing to pay a portion of their sales as a license fee to Atari for developing for the console. This established the use of licensing fees as a model for third-party development that persists into the present.<ref name="mj19821226">{{cite news | url=https://news.google.com/newspapers?id=nwsdAAAAIBAJ&pg=3635%2C1989311 | title=Stream of video games is endless | work=Milwaukee Journal | date=1982-12-26 | access-date=10 January 2015 | pages=Business 1 | archive-date=2016-03-12 | archive-url=https://web.archive.org/web/20160312093025/https://news.google.com/newspapers?id=nwsdAAAAIBAJ&sjid=QX8EAAAAIBAJ&pg=3635%2C1989311 | url-status=dead }}</ref><ref>{{cite web |url=https://www.gamedeveloper.com/business/the-history-of-activision |title=The History Of Activision |work=Gamasutra |first=Jeffrey |last=Flemming |access-date=December 30, 2016 |url-status=live |archive-url=https://web.archive.org/web/20161220122651/http://www.gamasutra.com/view/feature/1537/the_history_of_activision.php?print=1 |archive-date=December 20, 2016}}</ref> The licensing fee approach was further enforced by [[Nintendo]] when it decided to allow other third-party developers to make games for the [[Famicom]] console, setting a 30% licensing fee that covered game cartridge manufacturing costs and development fees. The 30% licensing fee for third-party developers has also persisted to the present, being a de facto rate used for most digital storefronts for third-party developers to offer their games on the platform.<ref>{{cite news | url = https://www.bloomberg.com/news/articles/2020-08-19/epic-games-fortnite-battle-with-apple-and-google-can-be-traced-to-nintendo-tax | title = Epic's Battle With Apple and Google Actually Dates Back to Pac-Man | first1 = Takahashi | last1 = Mochizuki | first2 = Vlad | last2 = Savov | date = August 25, 2020 | access-date = August 25, 2020 | work = [[Bloomberg News]] | archive-date = November 6, 2021 | archive-url = https://web.archive.org/web/20211106025128/https://www.bloomberg.com/news/articles/2020-08-19/epic-games-fortnite-battle-with-apple-and-google-can-be-traced-to-nintendo-tax | url-status = live }}</ref>

In recent years, larger publishers have acquired several third-party developers. While these development teams are now technically "in-house", they often continue to operate in an autonomous manner (with their own culture and work practices). For example, Activision acquired [[Raven Software|Raven]] (1997); [[Neversoft]] (1999), which merged with [[Infinity Ward]] in 2014; [[Z-Axis]] (2001); [[Treyarch]] (2001); [[Luxoflux]] (2002); [[Shaba Games|Shaba]] (2002); [[Infinity Ward]] (2003) and [[Vicarious Visions]] (2005). All these developers continue operating much as they did before acquisition, the primary differences being exclusivity and financial details. Publishers tend to be more forgiving of their own development teams going over budget (or missing deadlines) than third-party developers.

A developer may not be the primary entity creating a piece of software, usually providing an external software tool which helps organize (or use) information for the primary software product. Such tools may be a [[database]], [[Voice over IP]], or add-in [[Interface (computer science)|interface]] software; this is also known as [[middleware]]. Examples of this include [[SpeedTree]] and [[Havok (software)|Havoc]].

====Indie game developers====
{{See also|Indie game|Independent video game development}}
Independents are software developers which are not owned by (or dependent on) a single publisher. Some of these developers self-publish their games, relying on the [[Internet]] and word of mouth for publicity. Without the large marketing budgets of mainstream publishers, their products may receive less recognition than those of larger publishers such as Sony, Microsoft or Nintendo. With the advent of digital distribution of inexpensive games on game consoles, it is now possible for indie game developers to forge agreements with console manufacturers for broad distribution of their games. Digital distribution services for PC games, such as [[Steam (service)|Steam]], have also contributed to facilitating the distribution of indie games.

Other indie game developers create game software for a number of video-game publishers on several gaming platforms.{{Citation needed|date=March 2009}} In recent years this model has been in decline; larger publishers, such as Electronic Arts and Activision, increasingly turn to internal studios (usually former independent developers acquired for their development needs).<ref>{{Cite web|url=https://www.gamasutra.com/view/feature/130449/the_end_game_how_top_developers_.php|title=The End Game: How Top Developers Sold Their Studios - Part One|website=www.gamasutra.com|date=3 March 2004|access-date=14 October 2019|archive-date=23 September 2017|archive-url=https://web.archive.org/web/20170923193804/https://www.gamasutra.com/view/feature/130449/the_end_game_how_top_developers_.php|url-status=dead}}</ref>