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Investigating the Words of Michael Pachter

Looking into the analyst's recent comments on overtime, unions, profit pools and salaries.

Michael Pachter is easily the most vocal, well-known analyst speaking on video games.

Michael Pachter making headlines? Never!

Of course, now I've just added to the pile...but stay with me for a second.

The Wedbush Securities analyst has never been one to shy away from a bold statement. When a Pach Attack! viewer asked him about the reports of extended crunch development at L.A. Noire's Team Bondi and what it says about the rights of game creators, Pachter had no shortage of opinions on several topics--overtime, unions and more.

I'm not here to offer my own thoughts on Pachter's comments. Instead, I've plucked the statements that generated the most response elsewhere, and tried to prove, disprove or, at least, provide some context to them.

"I've never heard a developer say I don't work overtime and I don't work weekends. I do not think the game development process as having employees that qualify for overtime."

The concept of paid overtime is a contentious one, the argument in favor stemming from the industry's struggles with crunch, where a development team ends up working insane hours--nights, weekends--to finish a project. It's reported Team Bondi operated on crunch hours for more than a year to finish work on L.A. Noire.

Hourly employees can earn overtime pay, while salaried employees are not legally entitled to overtime.

"While compensation is certainly part of the equation, the fact is the problems extend well beyond compensation," said Brian Robbins, chair of the International Game Developers Association board of directors and founder of mobile developer Riptide Games. "At best, extended crunch becomes unproductive for the team, and in the worst cases causes physical and mental harm on the people involved."

The IGDA is a non-profit industry membership organization meant to connect developers with one another and to advocate for issues affecting the industry workforce. It is not a union, a subject we'll touch on a bit later.

The extended crunch time alleged by current and former Team Bondi employees is on the extreme end of the spectrum.

"Crunch and overtime in gaming is, as any experienced developer knows, a part of life in the games industry," added Haunted Temple Studios co-founder Jake Kazdal.

Kazdal is currently working on the strategy game Skulls of the Shogun, recently picked up by Microsoft for Xbox Live Arcade. He previously worked on Rez at United Game Artists and the cancelled Steven Spielberg project LMNO at Electronic Arts, among other projects. He's well on the way to the home stretch of Skulls of the Shogun now.

"It is expected, but the idea that people aren't 'entitled' to overtime pay is simply ignorant," argued Kazdal. "People sacrifice time with their children and spouses, miss important events, completely exhaust themselves for the sake of the project, why the hell shouldn't they be compensated?"

Pachter wasn't saying developers shouldn't be compensated at all, but that it shouldn't come through overtime.

"If a game is good, and LA Noire was really good, there will be a profit pool and there will be bonuses. If you're good, and you hit it big, you make a ton of money."

L.A. Noire might have a profit pool. It might not. It actually doesn't matter. According to the latest annual salary survey published in the April issue of Game Developer, 77% of developers polled--sans business and legal--received income on top of their standard salary.

Profit pools definitely exist, but there are risks associated with them--and they're not common.

31% earned a bonus after a project or title shipped, 14% received royalties in addition to their salary and 16% engaged in profit sharing. Some developers had a mix of these, including stock options and regular annual bonuses.

All told, the average additional compensation was $12,712.

"I've been in the industry for 15+ years, worked on lots of cool projects, but not once have I ever received any money from a profit pool," said Kazdal. "Rez was a great game, but that doesn't automatically mean we made a ton of cash and that cash bled out as far as the artists and programmers. To suggest that all good games make the developers rich is just ridiculous. That is reserved for the mega-titles, which my eclectic career has not put in my path."

Kazdal does have friends who've benefited from a profit pool--but they worked on Gran Turismo.

Former Infinity Ward co-founders Jason West and Vince Zampella had an ugly split from Activision last year, an impasse that's still to be resolved in a splashy lawsuit. Amongst other things, West and Zampella are suing Activision over more than $100 million in unpaid royalties. It's not chump change.

There are no guarantees with a profit pool, either as one anonymous developer who once participated in one told me.

Call of Duty? Gran Turismo? There's a distinct pattern with profit pools: very, very big games.

"Even if there is a profit pool, it's incredibly unlikely you'll see anything, let alone the whole amount," said the developer. "Most likely the threshold to go into the pool is too high to ever pay out. If it does pay out, the less reputable publishers will find ways to bend terms to reduce or cancel the payout. The payout is almost always staggered out over multiple years too, and they'll almost definitely only be tied to your employment, so if you leave before the payout finishes, you won't get the remaining royalties."

That final point--getting no money because you've left before payout finishes--is one of the egregious allegations in the Infinity Ward suit, in which Activision was allegedly locking developers into continuing to work at the studio in order to receive payouts for the previous game's royalties.

"We're talking about a games industry where the average compensation is well above $60,000 and often above $100,000 a year. I just don't think people who make $100,000 a year need a whole lot of protection because they have to work overtime."

Pachter brings up two points. First, the average salary of a game developer. We can pull applicable data from the same Game Developer salary survey, which proves Pachter partially right.

  • Programmers: $85,733
  • Artists and Animators: $71,354
  • Game Designers: $70,223
  • Producers: $88,544
  • Audio Professionals: $68,088
  • QA Testers: $49,009

The overall average? $72,158, definitely above $60,000. "Often" above $100,000? Not necessarily. Based on the survey, earning at least, close to or more than $100,000 is definitely possible in every department except QA, but you need to be at the top position within your field (i.e. technical director vs. programmer) and have more than six years of experience.

Just working at a big studio doesn't guarantee a massive salary. Experience makes all the difference.

Lastly, there's the concept of organizing into unions, in order to collectively force publishers to treat developers more fairly.

It's a polarizing topic that, like all these subjects, really deserves its own story to be fully explored.

That said, the results of the most recent IGDA "Quality of Life" survey presented at the Game Developers Conference last year suggested there is support for unionizing game developers, albeit support that's hardly across the board.

Of 2,506 surveyed, 35% were for unions, 31% sided against unions and 34% either didn't have an opinion or preferred not to say. More than one-third isn't a number to scoff at, but there are significant challenges to actual unionization.

"Ignoring whether or not it makes sense to have a union for game developers, the reality is it would be very difficult to create one," said Robbins. "The vast geographic diversity of game development, makes for a significant challenge to unionizing, even before you start looking at the realities for what unionization would mean for developers, and trying to see if a significant number of developers support the idea."

Pachter later better clarified his position through an editorial on Industry Gamers. He reiterated that working conditions at Team Bondi seemed indefensible (a point he made in the original video, to be fair), but there was little to suggest that these employees deserved overtime or that unions would have a natural way of integrating into the video game industry.

Either way, Pachter's just the latest to weigh in on a controversial topic that's swirled for years. He won't be the last, either.

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Posted by patrickklepek
Michael Pachter is easily the most vocal, well-known analyst speaking on video games.

Michael Pachter making headlines? Never!

Of course, now I've just added to the pile...but stay with me for a second.

The Wedbush Securities analyst has never been one to shy away from a bold statement. When a Pach Attack! viewer asked him about the reports of extended crunch development at L.A. Noire's Team Bondi and what it says about the rights of game creators, Pachter had no shortage of opinions on several topics--overtime, unions and more.

I'm not here to offer my own thoughts on Pachter's comments. Instead, I've plucked the statements that generated the most response elsewhere, and tried to prove, disprove or, at least, provide some context to them.

"I've never heard a developer say I don't work overtime and I don't work weekends. I do not think the game development process as having employees that qualify for overtime."

The concept of paid overtime is a contentious one, the argument in favor stemming from the industry's struggles with crunch, where a development team ends up working insane hours--nights, weekends--to finish a project. It's reported Team Bondi operated on crunch hours for more than a year to finish work on L.A. Noire.

Hourly employees can earn overtime pay, while salaried employees are not legally entitled to overtime.

"While compensation is certainly part of the equation, the fact is the problems extend well beyond compensation," said Brian Robbins, chair of the International Game Developers Association board of directors and founder of mobile developer Riptide Games. "At best, extended crunch becomes unproductive for the team, and in the worst cases causes physical and mental harm on the people involved."

The IGDA is a non-profit industry membership organization meant to connect developers with one another and to advocate for issues affecting the industry workforce. It is not a union, a subject we'll touch on a bit later.

The extended crunch time alleged by current and former Team Bondi employees is on the extreme end of the spectrum.

"Crunch and overtime in gaming is, as any experienced developer knows, a part of life in the games industry," added Haunted Temple Studios co-founder Jake Kazdal.

Kazdal is currently working on the strategy game Skulls of the Shogun, recently picked up by Microsoft for Xbox Live Arcade. He previously worked on Rez at United Game Artists and the cancelled Steven Spielberg project LMNO at Electronic Arts, among other projects. He's well on the way to the home stretch of Skulls of the Shogun now.

"It is expected, but the idea that people aren't 'entitled' to overtime pay is simply ignorant," argued Kazdal. "People sacrifice time with their children and spouses, miss important events, completely exhaust themselves for the sake of the project, why the hell shouldn't they be compensated?"

Pachter wasn't saying developers shouldn't be compensated at all, but that it shouldn't come through overtime.

"If a game is good, and LA Noire was really good, there will be a profit pool and there will be bonuses. If you're good, and you hit it big, you make a ton of money."

L.A. Noire might have a profit pool. It might not. It actually doesn't matter. According to the latest annual salary survey published in the April issue of Game Developer, 77% of developers polled--sans business and legal--received income on top of their standard salary.

Profit pools definitely exist, but there are risks associated with them--and they're not common.

31% earned a bonus after a project or title shipped, 14% received royalties in addition to their salary and 16% engaged in profit sharing. Some developers had a mix of these, including stock options and regular annual bonuses.

All told, the average additional compensation was $12,712.

"I've been in the industry for 15+ years, worked on lots of cool projects, but not once have I ever received any money from a profit pool," said Kazdal. "Rez was a great game, but that doesn't automatically mean we made a ton of cash and that cash bled out as far as the artists and programmers. To suggest that all good games make the developers rich is just ridiculous. That is reserved for the mega-titles, which my eclectic career has not put in my path."

Kazdal does have friends who've benefited from a profit pool--but they worked on Gran Turismo.

Former Infinity Ward co-founders Jason West and Vince Zampella had an ugly split from Activision last year, an impasse that's still to be resolved in a splashy lawsuit. Amongst other things, West and Zampella are suing Activision over more than $100 million in unpaid royalties. It's not chump change.

There are no guarantees with a profit pool, either as one anonymous developer who once participated in one told me.

Call of Duty? Gran Turismo? There's a distinct pattern with profit pools: very, very big games.

"Even if there is a profit pool, it's incredibly unlikely you'll see anything, let alone the whole amount," said the developer. "Most likely the threshold to go into the pool is too high to ever pay out. If it does pay out, the less reputable publishers will find ways to bend terms to reduce or cancel the payout. The payout is almost always staggered out over multiple years too, and they'll almost definitely only be tied to your employment, so if you leave before the payout finishes, you won't get the remaining royalties."

That final point--getting no money because you've left before payout finishes--is one of the egregious allegations in the Infinity Ward suit, in which Activision was allegedly locking developers into continuing to work at the studio in order to receive payouts for the previous game's royalties.

"We're talking about a games industry where the average compensation is well above $60,000 and often above $100,000 a year. I just don't think people who make $100,000 a year need a whole lot of protection because they have to work overtime."

Pachter brings up two points. First, the average salary of a game developer. We can pull applicable data from the same Game Developer salary survey, which proves Pachter partially right.

  • Programmers: $85,733
  • Artists and Animators: $71,354
  • Game Designers: $70,223
  • Producers: $88,544
  • Audio Professionals: $68,088
  • QA Testers: $49,009

The overall average? $72,158, definitely above $60,000. "Often" above $100,000? Not necessarily. Based on the survey, earning at least, close to or more than $100,000 is definitely possible in every department except QA, but you need to be at the top position within your field (i.e. technical director vs. programmer) and have more than six years of experience.

Just working at a big studio doesn't guarantee a massive salary. Experience makes all the difference.

Lastly, there's the concept of organizing into unions, in order to collectively force publishers to treat developers more fairly.

It's a polarizing topic that, like all these subjects, really deserves its own story to be fully explored.

That said, the results of the most recent IGDA "Quality of Life" survey presented at the Game Developers Conference last year suggested there is support for unionizing game developers, albeit support that's hardly across the board.

Of 2,506 surveyed, 35% were for unions, 31% sided against unions and 34% either didn't have an opinion or preferred not to say. More than one-third isn't a number to scoff at, but there are significant challenges to actual unionization.

"Ignoring whether or not it makes sense to have a union for game developers, the reality is it would be very difficult to create one," said Robbins. "The vast geographic diversity of game development, makes for a significant challenge to unionizing, even before you start looking at the realities for what unionization would mean for developers, and trying to see if a significant number of developers support the idea."

Pachter later better clarified his position through an editorial on Industry Gamers. He reiterated that working conditions at Team Bondi seemed indefensible (a point he made in the original video, to be fair), but there was little to suggest that these employees deserved overtime or that unions would have a natural way of integrating into the video game industry.

Either way, Pachter's just the latest to weigh in on a controversial topic that's swirled for years. He won't be the last, either.

Posted by phrosnite

Pachter! Sometimes I love him, sometime I hate him.

Posted by Castiel

Da da da da da da Pachtman!

Posted by SleepyDoughnut

Clearly the most important part of this article is how great Pachter's goatee is.

Posted by Metal_Mills

Pachter's always interesting even if I do think some of this comments are kinda stupid.

Posted by kermoosh

cool

Posted by Khann

Meh, been discussed to death on the forums.

Edited by Napalm

Good story, Patrick. I think you brought more clarity to this story. That was what was missing in all of the message board discussions. It was more like shit-flinging. Or well, people who have their own, strong opinions always seem to be contested heavily on the internet.

Posted by AldoTheApache

I absolutely support the idea of Unionising the game development teams, that they aren't already as far as I'm concerned is a disgrace. Pachter is just an idiotic right wing market analyst who gets almost everything wrong and doesn't even get Video Games, I am shocked so many take him so seriously. 

Posted by Chris2KLee

Great article. It's definitely a complex situation, and hopefully the Team Bondi mess will lead to some more in depth discussion and analysis on the matter.

Posted by natetodamax

One of the image captions says "but their are risks associate with them"

UUURRRRGGGHHHHHHH

Posted by Make_Me_Mad
@natetodamax said:
One of the image captions says "but their are risks associate with them" UUURRRRGGGHHHHHHH
Oh god, now I can't not notice it.
Posted by Munkatten

"Profit pools definitely exist, but their are risks associate with them--and they're not common."

Very hard on the eyes.

Posted by Milkman

Good article but it seems a little late. This has been done to death on the forums so this article isn't really telling us anything we don't already know.

Posted by LiquidPenguins

It's hard to care about a story if you don't care enough to proof read it.

Posted by pyj4m4r4m4

I'm done with Pachter and hope GiantBomb doesn't invite him again. Maybe he tried to tone thing down but what he said first his what he thinks really. Sure is he can speak is mind but I don't need to ear is savage capitalism survival of the fittest rhetoric so I'm done listening.

Posted by Scylo

"but there was little to suggest that these employees deserved overtime"

Fairwork Australia's website states that "Overtime is often defined in an award or agreement as time worked in excess of 38 hours or outside of ordinary hours". I imagine if Fairwork Australia found out people were working 80 hour weeks, they would probably decide that these people deserved some overtime pay.

Posted by ptys

I left a comment saying "loosen your corporate tie, it's cutting off circulation to your heart" and that was the last Pach Attack I've watched since. If anything it kind made him look naive and I think he doesn't really think through his rants because of his incredibly large ego, not at all aided by cover stories like this.

Posted by TheKing

I wonder how much Pachter makes and how many hours he "works".

Posted by HoboZero

I would be very interested in reading some sort Pachter Predictions analysis. While I'm sure he doesn't make all the analyst advice he gives to investors public, it seems like two thirds of the predictions he makes, at minimum, turn out to be absolutely incorrect. Not necessarily his opinions on current industry pay, standards, etc. as in the above article, but more his E3 prognostications and the like. While he certainly seems like a smart guy, I wonder how much of that is just cultivated image and tailored suit.

Posted by adz117

Damn, Pachter can grown a mean goatee.

Posted by FireBurger
@natetodamax said:
One of the image captions says "but their are risks associate with them" UUURRRRGGGHHHHHHH
Yeah, I noticed that. Pretty rough ha.
Posted by mosespippy

When I saw the title I was expecting a retrospective of Pachter's predictions and investigation of just how accurate he is. This is good too.

Posted by mbr

This shill should stop commenting on other peoples jobs when he has one of the most bullshit jobs in the world.

Posted by lizzard2

Old, get some news for the news.

Posted by Bravestar

The numbers of the Game Developer salary survey don't say that much, unless we get the standard deviation too(I don't know if it was included in the survey) or atleast the median. An average of 70 to 90 could mean most of them earn above 100k, when you have someone like indie devs in the pool, who earn next to nothing and who pull the average number down. But without some more numbers it's impossible to say.

Posted by warxsnake

@mbr said:

This shill should stop commenting on other peoples jobs when he has one of the most bullshit jobs in the world.

A thousand times this.

He does it poorly too. He said on his show that BFBC2 PC sold "probably" 10% of total sales, which he "guessed" was around 8million.

A 5 minute google search indicates that BFBC2 has sold over 9.5million, and the PC having 3.2million users (PS3 around 2.7 and XBox around 3.5) means it more aorund 30% of overall sales.

I stopped watching his dumb show after that, because I can assume as well as him, and when research is needed, at least I actually do it.

Posted by NTM
@lizzard2 said:
Old, get some news for the news.
Posted by RazeEverything

Love the quality of the news content lately. Keep it up!

Posted by MadLaughter

Good article, Patrick.  I think that this issue isn't going away anytime soon.  If you follow any of the Bioware developers on Twitter, you'll notice a lot of them talking about cars, new and used.  Beamers, Porsches, things like that.  It's a little unsettling.

Posted by Rolyatkcinmai

affecting*

Posted by RagnarokRed
@Milkman: Not all of us live on the forums.
Posted by ClaritySam

Oh look it's mister rent-a-quote again.

Edited by cyraxible

Affect, effect 
 
there, their 
 
I love Pachter, it's hard not to when he seems like a really fun guy judging by all of his appearances on GB and other places, however he really lets whatever the fuck fly out of his mouth and is consistently off base. Pettifogging and acting cagey whenever the time comes when his wild ass predictions, that seem to be held in high regard, are held under scrutiny.  
 
I really don't think he knows what he's talking about most of the time.

Posted by Sunspots

Probably the most unbiased video games article I have ever read. That is rare in the video games industry.

Posted by art_monkey79

I got an idea, if you work overtime you get paid for you busting your hump to get something out. That's a management issue. Its not like they haven't made a game before. You have a good idea how long its going to take.  
 
Whats with creative industries, video games included? The guy sweeping the floor expects to be paid more for working late because, hi boss didn't hire another guy, that he knew they needed for months. Same thing with the developer. 

Posted by DharmaBum

"Just working at a big studio doesn't guarantee a massive salary. Experience makes all the difference." Cue picture of Halo 3 player model holding a shotgun. What?

Posted by Tennmuerti

Slow week huh?

Posted by artofwar420

More than anything this just drives the point that if you're going to be in the games industry, you have to love it and not just be in it for the money. Still, overtime should be compensated.

Posted by kookoo

Not everyone in the games industry makes 60K+. I`ve worked for 3 years as a concept artist - I make 46K and OT is banked as time off, you don`t get paid for it.

Posted by Brendan

@TheKing said:

I wonder how much Pachter makes and how many hours he "works".

Physical labour isn't the only type of worthwhile work. I'm not making a judgement on Pachter because he very well could be poor at his job, but being an analyst generally takes a lot of research and sometimes significant travel, not to mention intelligence and education to get your foot in the door. I think it's a pretty narrow perspective if you're saying that analyst jobs are easy or aren't worthwhile.

Posted by Sammo21

I like Pachter but I think a lot of what he says is to stay in the headlines...I mean look at the stuff he said at the pre-E3 podcast. Stirring shit up brings people to the top to talk and that's what he does. No shame in it.

Posted by Arath

As someone who works in the industry I don't feel that paid overtime is the way to go. I have only been working in the industry for a couple of years, but it can encourage very sloppy productivity as people know they get paid for the excessive hours (or I have seen it happen). Compensation I agree with, however there are other ways a company can reward its employees for long hours and hard work. It is not all about monetary compensations. Long holidays afterwards, or other benefits can help alleviate crunch stress.
 
Unions I think are an issue that I think is not a problem but would simply require a change in the employment systems found within the US. I have worked in Europe thus far and depending on the country everyone gets a Union even qualified professionals. Just because we are educated does not mean we don't want a large body to support us for any wrong doing, it just makes sense. 
 
Wages are always up for discussion, as long as they provide good quality of life for the effort put into work I don't think that's the issue. In general I think the average for permanent employees is correct as stated by pachter, still it doesn't mean we don't deserve unions or organizations to fight for our well being at work.
 
Finally regarding the reason peoples salaries should cover the work they do is because profit pools, bonuses, etc can be very selectively offered to specific people, which is really not fair, when games take the effort of everyone involved to pull their weight. Even for Mega titles, do you think everyone who helps build and support World of Warcraft is privy to profit pools? I somehow doubt it.

Posted by jkuc316
@TheKing said:

I wonder how much Pachter makes and how many hours he "works".

I think he mentioned before how he also deals with crunch time
Posted by outerabiz

People said unions would ruin the film industry as well, and that the commies would take over if it unionized.  
Poor film industry they must all be living off water and bread and donations from their communist communities... 
oh wait. ? hmm i guess they're doing alright 

Posted by lockwoodx

@MadLaughter said:

Good article, Patrick. I think that this issue isn't going away anytime soon. If you follow any of the Bioware developers on Twitter, you'll notice a lot of them talking about cars, new and used. Beamers, Porsches, things like that. It's a little unsettling.

They dipped into that Lucas money. Every studio is tempted, but then they are cursed with making another shitty Star Wars game.

Posted by lockwoodx

Also, the fallout doll in his picture is really bugging me because the fallout guy isn't suppose to have a nose.

Posted by Baal_Sagoth

Very good approach to the topic. I really like the "reality check" attitude towards some contoversial and strongly contested topics that has the potential to possibly calm down the discussion and lays down some facts.

Posted by darkjester74

Great article as always Patrick.  I personally have absolutely no love for Pachter and his tirades, but this is a thoughtful well balanced discussion on his opinions.
Posted by PXAbstraction

Interesting article. Shame you went out of your way to give Pachter more attention while carefully avoiding any attempt at actual criticism of his statement which like most things he says, are largely twisted and in many cases outright wrong. I don't know why the gaming press has such a fear of criticising this hack.

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