Of course, not all $20 million went to Double Fine. Typically, when a smaller studio produces a game for a big-name publisher, the studio receives some money up front and then more when it meets major milestones. Some of the cash pays actors, production costs, marketing, and so on. And, once the game is published, there's no guarantee the studio that created it will see any of the profit.

"Publishers might pay themselves back at a royalty rate, like 20 percent," Schafer says. "Once they make their money back, they consider that breaking even and begin splitting the money with you."

He continues, "The hard thing is, they don't pay themselves back at 100 percent, so it takes a long time for them to recoup the cost. It causes developers to end their development process with nothing in the bank, and then you have to pitch again and hope you get something before you run out of money. You get desperate."

Tim Schafer
Joseph Schell
Tim Schafer
Greg Rice, Double Fine’s PR manager, is also the producer of the game to be named later.
Joseph Schell
Greg Rice, Double Fine’s PR manager, is also the producer of the game to be named later.

During production, Brütal Legend became a Spinal Tap-like nightmare. Activision merged with Vivendi and Blizzard, acquiring the rights — and then dropping them. Redwood Shores-based Electronic Arts picked up the game in late 2008, but Activision/Blizzard challenged the deal and sued Double Fine, blocking publication and claiming the studio owed them money. Double Fine countersued, charging that Activision dumped the game in part because Schafer refused to turn Brütal Legend into a Guitar Hero sequel. At the time, Schafer told the website GameSpot, "Hey, if Activision liked it, then they should have put a ring on it. Oh great, now Beyoncé is going to sue me, too."

It was everything Schafer didn't want when he founded Double Fine, named for the "double fine zone" signs on the Golden Gate Bridge. He had hoped to get closer to making the videogames he wanted to make — and gain better financial control. But Double Fine's size — it has 60 employees today — puts it in a strange position. It's too small to be considered a major studio, and too big, with too many industry ties, to be considered independent. "It's fun, because we can do crazy things like Kickstarter, and also games with Jack Black in them," Schafer says.

Many in Double Fine's stable of writers, artists, and programmers grew up on Schafer's graphic-adventure games and were thrilled to work with one of their videogame heroes. "It's ridiculously fun," Skillman says. "He's super easygoing, funny and friendly, and he gives us a ton of freedom to explore our ideas."

However, Schafer frequently sends his artists back to the drawing board, and his computer science background gives him the means to challenge his engineers to innovate, according to programmer Paul Du Bois. "Tim definitely understands what kinds of things are difficult. He can call you on things when he thinks you're playing it too safe."

Schafer's close relationship with his workers strengthens the games, but it also comes in handy when times get tough. While Brütal Legend was in publisher limbo, Schafer called an "Amnesia Fortnight," where everyone was ordered to forget all about the game for two weeks, split into four teams, and each create a demo for a new videogame. Then, they put their noses to the grindstone again. Brütal Legend launched in 2009 and sold roughly 1.4 million copies by early 2011 — not a blockbuster, but still the most successful sales Schafer had ever seen.

By that time, Schafer was weary of running the gauntlet of big-name publishing. The problems had started with Double Fine's debut, Psychonauts, in which a gifted boy named Raz crashes a summer camp where campers polish their mind-hopping techniques. Schafer had been kicking around the idea since Full Throttle, after LucasArts nixed a segment in which Ben Throttle trips on peyote.

Microsoft planned to publish Psychonauts exclusively for Xbox in 2004, but pulled out of the deal. Double Fine negotiated a new contract with Majesco that would put the game on Xbox, Windows, and PlayStation 2. After many delays, the $13 million game hit stores in 2005. It won plenty of awards — including Best Original Game at the 2005 Electronic Entertainment Expo — but was considered a flop after topping out at 400,000 copies sold. Still, fans adore it and often ask Double Fine for a sequel.

These struggles with the major publishers forced Schafer to re-evaluate. "Those conflicts made it clear how powerless you are in that relationship, when they have all the money and you need it," he says. "If they stop giving it, your company will die. It makes you feel so helpless and insecure."

Like a player in one of his own games, Schafer was stuck. But he realized he still had a few items rattling around in his inventory. After Brütal shipped, Double Fine pitched the "Amnesia Fortnight" demos to publishers, winning contracts for Costume Quest and Stacking with THQ and Iron Brigade with Microsoft. Doing smaller games on smaller budgets took some of the pressure off Double Fine, and Schafer began to feel freer again.

Another breakthrough came when the rights to Psychonauts and Costume Quest reverted to Double Fine. Investor Steven Dengler chipped in to publish both on Steam, which distributes games digitally. Even after splitting revenues with Dengler, Double Fine was earning income from a published game for the first time. Schafer got a taste of financial freedom. He wanted more.

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