Humble Bundle's Alan Patmore Talks Publishing, Gamedev & Indie Games

Intro

80.lv: What does Humble Bundle do? Why did you decide to tackle game publishing? How does it work on your side?

Alan Patmore, EVP/GM at Humble Bundle: First things first, let me give you a little bit of history about me and Humble Bundle because I came in three years ago to co-work for Jeff and John who were the founders. One of the things that really interested me about Humble was the mission, the force to do good through gaming and raising money through charity. I thought that was all awesome, and I always had an eye on Humble, being in the industry after that point in time. But I was in free-to-play prior to that and running the digital storefront, the e-commerce platform was interesting from the economic standpoint, and it also appealed to the qualitative side of me and the product development side of me in terms of how you improve your funnel and get more people to purchase more things.

That was interesting to me when I was looking at the opportunity, but then there was also this amazing publishing world that had started through late-stage investment in games at the late stages through finishing funds and had had some success. And at the time, I think a handful of games have been released that they were investing in, quote-unquote publishing at the time. And my background prior to free-to-play was development, so before I was on KIXEYE and Zynga in the free-to-play, but before that, I was at Double Fine, and before that, I had my own studio for 20 years, and so I was sort of a developer at part, and I saw this opportunity on the publishing side to create the developer’s centric publisher.

So, having been on the developer side for the majority of my career and seeing the good and bad of the developer-publisher relationship, I saw this opportunity to build this publishing group into a true partner for developers and that’s how it started. And then when I was looking at the overall Humble business and looking at growth opportunities: digital storefront business, e-commerce platform and distribution side of it, ready business but, you know, it doesn’t have the growth potential that game publishing has. So, I really saw an opportunity to grow the overall business’ revenues and profits by investing in publishing.

The thing with Humble is the more money we make, the more money we generate for charity. So, I saw this as a great opportunity to amplify Humble, and it’s grown tremendously in the last three years. We went from a team of three of four people, working and publishing four to five games a year to a very indie late-stage investment to now we have a team of thirty-four people, we do full product life cycle publishing, investing very early in the development cycle, full production support, localization, QA, PR, marketing, all through-life, post-launch support, etc.

We now have the infrastructure and capabilities to do that. But it is, honestly, one of the biggest growth factors for our business. But it does fit in it with our Humble ecosystem because we’re kind of unique in the space and we do have an e-commerce platform and we’re a content creator. So, we can leverage the content we’re creating through publishing, and sell it directly to our customers on our e-commerce platform, and we just announced that Moonscars is gonna be released day-and-date in our subscription product. We’re really taking advantage of the content that we’re building and leveraging it.

80.lv: So it’s a little bit like a content creation thing?

Alan Patmore: Yeah, and beyond the big platforms like Microsoft and Activision, nobody in indie is fully into it. So, I think it’s a real competitive advantage for business and customers because we do have a community around Humble where people like to buy from us because a portion of the proceeds goes to charity. So, we can connect those people directly to the content we’re creating.

Humble Games

80.lv: What game is a Humble game?

Alan Patmore: Interesting you just asked that. I was talking to Becky, who is our Head of Content Strategy, to really define it. And I think the three characteristics are: unique voice, and it means a lot of things, it can be through the gameplay so it can be a unique mechanic, it can be the developers that are creating. We look at developers that have unique stories or are from marginalized groups, things like that. So, it’s one area that is sort of consistent because if you look at our games, our portfolio, it’s not genre specific. If you like what we’re showing today, we’ve got Midnight Fight Express, which is a new beat ‘em up, reminiscent of John Wick or something like that. And then you have Mineko’s Night Market, which is this sweet tale based in Japan, with a lot of cats.

So, we have this very diverse portfolio but there’s something distinctly humble about each of these games and I think it is the unique voice and quality. I know, everybody says quality, but if you look at our track record, in 2021 we were the number 3 rated Metacritic game publisher, previously we were number 8. You know, for being only in existence for less than 5 years and hitting that level of quality across our portfolio, I think it shows that quality is toward what we are doing. And ultimately, we do want to partner with developers that want to have a social impact and/or want to be involved in the charity. And we’re finding that we attract through the Humble brand and being the force for good developers that wanna be part of that. So, I think those three things capture what Humble Games is. But it’s not going to be a set genre, and it will have one of those three pillars that will help decide whether we will fund the game or not.

The Importance of the Game's Genre

80.lv: Does genre influence sales at all or have you found a way where you can basically sell anything?

Alan Patmore: Without a doubt, a genre, the theme, and mechanics do impact the, let me use a business term, TAM – Total Addressable Market for any given title. There are certain games that because of their theme, art style, and mechanics may have a much narrower audience. And I think historically, we’ve taken a lot of risks with those because sometimes you never know what is going to resonate with people, but we’re willing to take the risks.

That’s one of the advantages of having a fairly diversified portfolio, cause that we can invest in those games that have large potential audiences, we have a high degree of competence, and we can attract a large audience which translates to sales. But then we can take X on some of the smaller or unique titles if we still feel we can make our money back. And with a fully integrated e-commerce platform, we have an advantage of monetizing our products, so this isn’t just digital sales that are gonna be the success criteria for games, you have this kind of unit, and you generate this much revenue.

We can monetize our games through different channels so we can take risks on products that others wouldn’t and that are a little bit more niche. But again, those games have to fit our criteria: unique voice, high quality, those are always important. But yeah, there are games that have higher potential based on their genres and mechanics. 

The Publisher-Developer Relationship

80.lv: Can you tell us a little bit about the deal with the developer? I know it’s individual, there’re different approaches but usually, it’s 30/70 or 50/50, how does it work? Also, how does charity work?

Alan Patmore: We work 50/50. And it varies plus or minus a little bit, sometimes we’re less if developers have been with us further long but if we’re just starting from scratch, typically 50/50, after we recoup, once we get our money back from the developing costs. But we wanna be true partners with developers. It’s one of the things that I wanted to set up from the start, you know, I mentioned this earlier, coming from the dev’s perspective, I was in situations where I was getting 15-20% and spending three years building this game as a developer and felt like: "Wait a minute, I’m not getting any money from this game, publisher’s gonna make all the money."

So I want to economically align our interests and I really do view that as a partnership, so the high level is very much built on the 50/50 principle that every dollar we make, we gonna split 50/50, of course, there is nuance to that depending on the scale of the investment because our average investment two years ago was probably at a million dollars and now we’re spending tens to twenties millions of dollars on different games. We’re investing more, we’re investing earlier, and with that, there are certain risks that we’re taking, but we still in the end wanna align economically and be a partnership, so based off of the 50/50 principle. 

80.lv: If a developer signs with you, it means they are tied to your distribution channel, or can they go everywhere?

Alan Patmore: So, as a publisher, we’re open in terms of what channels we will try to maximize, every channel possible. So, while we do want to leverage our own internal channels, whether it be our subscription, eventually bundles are a store where we have great deals, like with Microsoft and Game Pass we had a huge deal a year or so ago where we got, I think, we got 20 of our games in Game Pass.

So, we vary our philosophy because we are actually on the e-commerce side working with other publishers and developers on this. The more ways you can get games in front of eyeballs the better. It is not a zero-sum game. Every channel is opening up a tunnel for new customers. And I think Microsoft understands this, they’re okay with having games in Game Pass, in our subscription service and another one is Sony. I believe that also, the more access the customers will get, the better for the developer.

We full-heartedly believe in maximizing every channel possible for developers. And I think this is one of the things Humble is bringing to the table, not only we can get you in the Humble ecosystem, with our channels and direct to our customers, but we have relationships with Sony and Microsoft and others, and we’re constantly exploring alternative channels to sell our bundles through

80.lv: What do you think about this idea when developers want to sell on their own, putting the product on their website? What are the drawbacks of that approach and at the same time what are the benefits of working with the publisher?

Alan Patmore: I think it’s interesting because there are a lot of developers who don’t need access to capital. They’re not used to being the primary reason you would get a publisher, I need money to build my game. Now there are a lot of different ways to get money, and the level of entry into building games is lower. A lot of the developers we work with have had products that are successful in the past, they don’t need money to develop a game, but I think where we add the value is on the services side which includes the marketing and PR.

So, what we’re finding is that connecting customers to the product, the discoverability aspect is really the value because ten thousand games get released a year so if you publish an unknown brand and unknown name, you’re lost, seriously. I think in those areas that’s where we’re really adding a lot of value. We’re actually ramping up that side of our business based on the demand because the access to capital is a big proponent of publishing and people appreciate it because even if they’re funded it amplified the product by adding more cash but it’s the marketing and PR in association with the brand and then access to those channels that I was talking about that we’re adding a lot of value. Not every developer has relationships with Sony and Microsoft, where they can get into Game Pass or they can get into Sony’s subscription, so that’s where we’re adding a lot of value.

Thoughts on Indie Games

80.lv: With gamedev becoming more and more expensive, do you think there is this new layer of high cost in indie games that are not really indie anymore?

Alan Patmore: I think indie is, and we’ve done a lot of research on this, like what does indie mean from a customer perspective, and wanted to find what indie is but there’s no definition of indie, is it tied to MSRP, is a 9-dollar game technically an indie game or is it a 49-dollar game? We’ve looked at it from a lot of different angles and the way we look at it is there’s a range of games from “I”, which is truly indie from one to two shops, pretty small budgets, all the way up to “AAA”, so “I”, “II”, “III”, “A”, “AA”, we sort of ranked it based on MSRP and investment and how much the dev cost is. And our portfolio invests in a range of games, so while our budgets and our investments have gone up, it’s for one or two games within a given year’s portfolio, we will always invest a percentage of our capital in the ”I” space and then we go more and more up, yeah, it’s very true, it’s like part of the deal, we counted it, customers don’t really identify indie to AAA, it’s all about the content, and really what’s we’re all about too.

So, getting them compelling, original content, I think, that’s kind of what’s separating indie from AAA. You look at AAA, there’s not a lot of new IPs coming out of the big companies anymore, they’re not taking the risk, we’re taking that risk, we have a really balanced portfolio, we’re comfortable with investing 10-20 million dollars on studio titles that would still fit the quality and innovation, but it’s really about new IP, I think that’s how you define it.

Defining an Interesting Game

80.lv: What are the drivers that make you think that it’s an interesting game? Is it the art style? Maybe it’s something else?

Alan Patmore: Well, again it goes with that unique voice, piece of it, that’s what connects us. I’ll use Midnight Fight Express as an example because it was actually a game that we signed right when I saw it, it was one of the first games that came to my desk, and there was something about it that resonated with me, it was the fluent fighting mechanics and that actually was something that I have wanted to do in my career at one point in time, that unique, like being able to capture the visceral combat of an 80s action movie or John Wick or something like that in the actual gameplay cause I got was a white box demo, didn’t know what the story was, didn’t have the art style, it was like a stick figure ray box dude but it was doing all these, like, taking the knife out of a guys hand and stabbing him in the neck. And I was like: “That I haven’t seen before”.

That is compelling to me as a gamer and that unique hook, so there’s always something unique in the games that we choose to fund, other times the story or the art style, like with Mineko’s I think it was the cats that grabbed the attention. My wife loves cats and when it was pitched to us there was a bunch of cats and it was all being a beautiful tale, running around and befriending all these cats and things like that. That’s gonna resonate with people. It’s not like we’re like doing focus groups and studies but the entire publishing team, there’s something magical about the games, it has to have this spark, and it’s hard to define that X factor but you know it when you see it. That’s where I trust the team that we’ve built to have the eye to find these games, and we’re not right all the time.

We’ve built the sourcing team to sort of capture to be able to identify that X factor, and I think that what is unique about Humble Games is that we’re not looking at studies that say that we should have an open world or game with this, and we’re building from a business perspective, I’m managing the portfolio based off the fact that a percentage of these games will not be successful. But it’s like portfolio management from the actual perspective, we gonna have a lot of games that don’t do well, but we gonna have several good returns and these will help, that’s how we manage it.

Alan Patmore, EVP/GM at Humble Bundle

Interview conducted by Kirill Tokarev