• Guillaume Hansali, CEO, guitarist, and wine lover

How to improve salaries and why

Wizcorp’s mission is to bring back magic to game development, and an essential part of this mission is to improve overall working conditions.


I talked about overtime in my last post, and the invisible, yet pervasive human cost it incurs to companies.

Now, overtime is not unique to Japan; it is a global problem of epidemic proportions in the gaming industry. Low salaries, on the other hand, seem to be a more systemic issue in Japan, with very deep roots.





As I explained in my CEDEC presentation, the consequences of low salaries for game developers cannot be overstated.

Every year, a significant number of talented creatives leave the gaming industry because they have to decide between doing what they love or supporting their families by receiving a decent salary that is on par with their skills and experience.


The gaming industry brings billions in revenue every year, steadily growing.

We should be able to afford to pay our people more.


So, how come we are not?


Problems

I am not naive enough to believe that I can summarize the systemic complexity of our industry in a few words. Still, some symptoms can be clearly identified.


No clear market price

Maybe I’m not well informed, but I don’t think I have ever seen anything that looks like a standard for market price (salary) per domain, level of expertise, and seniority in the gaming industry.

This may not seem that important, but without a standard, salaries are defined very arbitrarily, often based on hearsay or previous personal experiences. Not only companies don’t know how much they should pay their employees (so to be at least on par with the market), but employees themselves don’t know what they should expect, making the salary negotiating process even harder (Wait, negotiating salaries in Japan??).


Moreover, project budgets are based on obsolete costs that do not reflect the reality of the market and are often under-financed, making it harder for subcontracting companies to increase their rates over time. I personally know publishers (whom I will not mention) who haven't changed how much they budget per headcount in 20 years ...


No competence at entry level

I mentioned this point during my CEDEC presentation as well, but the lack of formal training programs in Japan results in a usually very low competence level when new graduates join the industry.


While this is not unique to our industry, I haven’t seen many companies with a good training program. Most juniors have to learn on the job or during their (very limited) spare time.


This results in an increased cost for companies because:

  1. New hires can’t contribute to projects as much as they could have if they had enrolled in a training program or had formal training before joining

  2. Senior staff don’t have time to teach juniors because they are doing the work that juniors can’t do on top of their own work


Most projects are usually a couple of seniors away to collapse.



The romance of game making

OK, maybe this is not as true as it used to be, but I still believe that many companies cultivate what I would call the “romance of game making”.

Put simply, game making is not just a job; it is a calling, and you shouldn’t be in for the money. You should already consider yourself lucky to make a living (although as poor as it may be) doing what you love, and not having to work 10-7 doing soul-crushing desk work.


Well, that may have been true 30 years ago, but I think we can all agree that the gaming industry is now wealthy enough to pay decent salaries and offer growth opportunities.



Solutions

What I’m going to say here will be justifiably perceived as perfectly obvious, but sometimes, obvious things need to be said.


Companies need to be profitable, so how much they can spend on a game is directly correlated to how much revenue they can expect from that game.

There are roughly two types of cost:

  1. Production cost (including overhead)

  2. Marketing cost


Improving efficiency

Unless you are working on hardware production, the vast majority of production costs is salaries. To be able to afford higher wages, companies need to be as efficient as possible.


Efficiency, or productivity, is defined by output / time, in other words, how much value can be created within a given amount of time.


Overall, too much time is spent on projects due to a lack of competence, a lack of tools, and poor planning. Everything being equal, more time spent on a project translates to a reduction in the hourly rate it can afford.


I shall mention here that the hourly rate is the only real indicator of actual salary. If someone has a monthly salary of 400,000 yen, but with 40 hours of pre-included overtime (very common in Japan), the hourly rate becomes 400,000 / (160 + 40) = 2000 yen.

So if your salary is raised 10%, but you are also doing 10% more hours because of included overtime, your real salary has stayed the same.


Until companies stop seeing time as a cheap commodity, salaries will never improve.


How to improve efficiency?

  1. Better tools

  2. Better planning and process

  3. More expertise (<= the most important!)


These should be the primary focus of any company involved in production.


Reducing marketing

Any money spent on marketing is money that cannot be spent on production. In an ideal world, every single penny would be spent on production, so as to develop the best product possible.


Now, some promotion will always be necessary to create market visibility for the product and catch the attention of players who are already overloaded by an endless supply of content.


But often, more marketing spending is necessary because of weaknesses in production.

Marketing spending can be reduced by

  • Better strategy: clear product vision, proper risk assessment, market analysis

  • Better management: release games on time so that marketing budget doesn’t need to be spent to cover up for missing a market opportunity

  • Better quality: higher quality products (creatively and functionally speaking) simply sell better


Again, I’m stating the obvious here, but a high level of competency in strategy, management, and production is the best way to reduce marketing spending, and allow for more spending on production, therefore creating a virtuous loop.

More money for production => can afford higher salaries => incentivize expertise and competence => develop better products => needs less marketing


More turnover (within the gaming industry)

As unfortunate as it may seem, turnover is the number one pressure for companies to increase salaries to stay competitive and not lose their experienced staff.


For most people, changing jobs is the opportunity to reevaluate their career and negotiate their salary up.


Having some turnover in an industry is a good sign, as long as the turnover happens within the industry, and that people don’t leave it to a more prosperous one.



Takeaways

  • To ensure that our industry continues thriving, salaries need to improve over time

  • Career development focusing on competence building and meaningful experience needs to become a priority

  • Efficiency and continuous improvement are key to increase value

  • Let’s spend more on production and less on marketing!


Ultimately, improving salaries need to be a priority that is understood and shared at all levels of the company.

We need competent people to develop good products. Competence needs to be paid for.



About Wizcorp

At, Wizcorp, improving salaries over time is part of our core values and a challenge we actively confront on a daily basis.


We are a work-for-hire game development studio, and our business is pretty simple: we are paid for the work we perform for our clients, and that is our only source of revenue.

The flip side of our relatively safe business is that we do not have many ways to increase our revenue streams because we are not publishing our own games.


To pay better salaries, we need to increase the value we are offering to our clients: a higher degree of expertise, better efficiency, smoother management, and overall more peace of mind.


Ultimately, this is what drives us to become better at our jobs every day: increasing value for our clients, so we can justify charging higher rates to afford better salaries.


If you want to know more about our philosophy and benefits, please visit our career page.

Interested in joining? Please have a look at our job openings. We are actively looking for new team members.

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