A game-making contest has been announced jointly by a OpenGameArt.org, the Free Software Foundation, and the Creative Commons. As you can guess from the organizations involved this is about creating "free-as-in-freedom" software.
The Liberated Pixel Cup has two stages. The first runs throughout June and is to create "free culture" licensed artwork - i.e artwork that can be freely applied, copied and or modified by anyone for any purpose. In the second phase, which starts July 1st and ends July 31st, the challenge is to write "free software" games using it. Again "free" in this context means that users can run, copy, distribute, study, change and improve the software.
To get the competition started the organizers are trying to raise $7000 by April 30th. This will be used both the provide a prize fund and for the preliminary artwork used to set the style for the competition.
As you can see, for this competition we're working on an overhead 16 bit rpg inspired style (technically: front-facing overhead orthographic view) with 32x32 tiles. The selection of this style is intentional: we're trying to build something easy to collaborate upon on which a wide variety of games (overhead shooters, RPGs, adventure games, strategy games) can be built.
Participants in phase one of the contest are required to make artwork that matches this style and a style guide will be provided. Winners will be selected on judgements of quality, how well they match the style guide, etc. In phase two the challenge is to build GPLv3 or later games that incorporate artwork from phase one. Entries, from teams or individuals will be judged on fun factor, innovativeness, and how well they incorporate assets built for the contest. For more details see the contest rules.
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