Category Archives: business

Take a look at this:

gold

Thats a gold bar currently selling for £330,000. Thats roughly $475,000. Thats also roughly the price of an average house in Bath, UK.

Apple recently posted their profits. They made 18 billion dollars in a quarter and have $142 billion in cash reserves. 18 billion dollars in 3 months is $200,000,000 a DAY. Thats 421 gold bars, or roughly 17 an hour. A gold bar or average house every 3 and a half minutes. Like they are on a conveyor belt. Someone, somewhere is feeding the conveyor belt. And if you are entering the unwinnable war of trying to get in the app store charts its probably you.

How many app store games haven’t even sold enough copies to justify apple making a payout? How many have made less than the unjustified yearly fee apple charge just to even play the game? The app store is a casino where they charge you just to walk in the door.

There are HUGE profits to be made with a hit game on the app store, especially in the F2P business. We never bore of hearing stories about the fabulous riches to be won. The problem is, with all the apps chasing the same users (basically ‘everyman’), your chances of getting a decent return with your sub-one-million marketing budget are zero. Why are you still playing?

Democracy 3 is on the app store and does nicely. I make a few thousand pounds here and there, and thats great. I price it at $5 and there are 3 optional DLC purchases. The thing is, the whole dev cost was paid for by the PC build anyway, so the sales only have to cover porting and marketing.

Forget the app store. Lets look at PC.

I said about a year ago that we were going to hit some indie meltdown when everyone realized they can’t be notch. Its happening right now, but indies don’t admit it, because most people don’t like to admit failure, so lets look for third party evidence. How many bundles have you seen selling 10 games for $1? I’ve seen loads. TEN games. Those games are getting ‘their cut’ of $0.10. Lets be honest, thats insane. There is no point in putting a decent game in such a bundle, its silly.

dollar

If you really think shovelware works as a strategy, ask yourself who the shovelware billionaires are. Anyone? Whereas Activision Blizzard seem to do VERY nicely with their policy of extreme polish and high quality. I don’t see any blizzard games selling for a dollar.

The shovelware billionaires are not the people making the products, they are the stores. Like The Dollar Store or PoundLand. Selling stuff other people have inexplicably made for a dollar is very profitable, just ensure you are the store, not the producer.

Niche games command higher prices. That is a fact. So why is everyone trying to sell the same product, and then getting knocked down to $0.10 a copy? because….¬† It is SO MUCH EASIER to make a bad game now. You don’t have to learn C++ or DirectX or how to code a web store, and you get an asset store, and simple exposure through steam, so everyone’s first game looks AMAZING and they assume it will make money. So they sell it, and it makes fuck-all, so they discount it. And again, and again…and again. Note: Some of these people are kids, with zero living expenses. Some live in the developing world, with VERY low costs of living. You CANNOT compete.

The real problem only comes when actual talented  and experienced game designers who made something cool, interesting, original and special see all those cheap games and think they have to compete on price.

You don’t. Those games are nothing like yours. Ignore that price war, don’t commodify your game. Right now the steam sale is on, and this game of mine:

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Is sat there selling very nicely without even being in this sale. I bet there are lots of 95% off games in that sale earning a LOT less per day even today.

TL;DR: If you sell your game to a generic audience at commodity prices you are making someone rich. Its just not you.

Indie developers, especially ones working on their first game are always very interested to know how much stuff costs, and whether they should spend more money on X or Y. It can be a bit intimidating and scary when you have no idea what you are doing and its your first game. To try and help with this, I thought I’d release some data about the last full game I shipped as the developer, which was Gratuitous Space Battles 2. For those who aren’t aware, its a top-down 2D space strategy game with more lasers and particles than you can shake a stick at, and it looks like this:

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Or in video form like this:

Anyway, here is a pie chart breakdown of the cost (EXCLUDING MY CODING TIME) for Gratuitous Space Battles 2.

b1

And for those who hate marketing, here is the same chart but without any:

b2

Obviously you have to strongly remain aware that there was a LOT of coding time by me which I have not included here, because obviously as the owner of the company its hard to work out how much I should value my own time at. Regardless of this, maybe some people find this useful;. If you want more insight into why the costs are the way they are, you probably need to check out the game. GSB2 is a VERY GUI and visual-effects intense game. It has a lot of very complex GUI elements, and thats why its such a big chunk of the cost. It also has very good dramatic music. If you are making a 3D game, costs might be different. If you are working on mobile or ipad, again it might be different. This was a hardcore PC strategy game designed for huge monitors and hardcore players. How does this budget breakdown compare with yours? Share in the comments :D

I’ve worked in two different AAA companies, so I’ve seen what game producers roles are like from the developers end. To a coder, a producer is that slightly annoying person who keeps asking you how long stuff will take, and when it will be done, and how sure you are about that, and fussing about task-lists and todo lists and ‘the schedule’ which is this almighty document that is basically like the 2001 monolith as far as they are concerned, such is its importance to them.

tma1

As a coder, I always entered thrilling and enthusiastic, occasionally even sarcastic debates about how long a feature would take. My best guess was always somewhere between a day and infinity years. Basically, we are always doing stuff we don’t know how to do. if we’ve done it before, we will just copy and paste or re-use existing code. If we have *not* done it before…then things get interesting. We aren’t just typists. A good coder is basically a researcher, who works out how to achieve things. Knowing how long that takes is HARD. It might not even be possible.

With gameplay design, its even harder. Nobody knows whats in the design document is fun. It might not be fun, and then the whole schedule turns quickly to bollocks.

Now thats all kinda fun as an employee coder, but as a producer/publisher, I realize now its fucking mayhem. For example, ShadowHand and Democracy 3:Africa are both appearing at the PC Gamer Weekender show. This is aiming to be close to when both games ship, but will they? I may need to book some advertising in advance, can I do that now? Will they definitely ship? Will the coders hit their targets?

I feel like the producers that I worked with must have felt, standing behind someone who is typing away, wondering if they are about to turn around and say ‘this won’t work’ or alternatively ‘it’s done’.

Publishing games is basically a bit of a roulette.

 

GoG, of ‘good old games’ fame, are very very clever, in a way it took me AGES to discover. Like many indies, I have to go through a number of different reporting sites and tot up how much money my games have made on them all now and then, primarily so I can give myself huge endorphin rushes and waves of serotonin boosts that can only ever come from pie charts.

Anyway, something that I used to regularly roll my eyes at and go ‘for fucks sake’ to, was the way GoG report sales. They report the amount of money a game has made, and ALWAYS report it as if the game was sold at full price. This is infuriating, because you think you have made more than you have. The next column is called ‘marketing deductions’, and thats where you find out how much of that was ‘given away’ in discounts.

gog

Thats fucking genius.

Because when you think about it, thats what a discount it. Its a marketing expense. You are forgoing some revenue in order to get more sales. What, in any real sense, is the difference? I guess its true to say there is ‘less risk’ to some extent, because you are not putting money up-front. You cannot come out of a sale with less money than you went in with, that is true, but psychologically it *is* a very interesting way to think about it.

Put it this way, assume a big sale on GoG or Humble, or Steam or your own site is about to start. You normally sell 100 copies a week at $20. You discount the game to $10, in the hope of selling more. That *may* work, and you may make more money overall. However, the alternative strategy is to keep the game at $20 that week, and instead of a sale, spend $1,000 on promoting the game. That $1,000 might be in online ads, it might be promoted tweets, it might be hiring someone to do some new art or add a new feature you release to the game ‘for free’ to get press…there are a lot of ways to spend $1,000. The thinking is, you sell more copies, and that compensates you for the $1,000. There really isn’t much difference.

Now the obvious flaws are firstly you need money up front this way, and secondly, you still are not able to reach customers that will only pay $10 for the game. Although the first point has clear merit, I’m not *that* sure the second one is as strong as it sounds. There are VERY few people who cannot, when they need to, find $20 for a PC game they *really want*. I’d love to know the percentage of steam gamers, for example who have *never* spent $20 or more on a single title.

Our way of capturing those sales is often to just cut our price, but the alternate strategy is to spend money to elevate your game into that niche of ‘games people *are* actually prepared to pay $20 for’.

In some ways, thats still marketing. And it makes for interesting maths. If you have sold 10,000 copies of your game at $5 which was 75% off, you just ‘spent’ $150,000 to get those sales. Imagine the PR campaign or huge free expansion you could have added to the game for that money :D

Food for thought maybe.

 

In a sudden fit of spreadsheet fun, I looked at steam spy data for 26 indie games that were released roughly a month ago. I then calculated their approximate revenue. Then, I looked at a recent game positech released (Big Pharma) and worked out what percentage of the last 7 months revenue was from month1. Using that, I extrapolated the final income for the first 6 months for each of those games. I assumed each game had cost $100,000 to make. (Possibly an over-reaction, but don’t forget the time involved). Anyway, the profits, and ROI are shown below…

stats1

So lets assume I was being crushingly silly here, and instead look at a very long tail of a game, such as Democracy 3, and use the stats from its month 1 vs total income and use that to calculate ‘lifetime’ income, assuming multiple patches, DLC releases, sales and so on, given month 1 income:

stats2So what non-scientific stats can be drawn from this? well… even if you are prepared to wait for two and a half years to see the money come in, 69% of indie games are going to lose money. Looking at those stats, the overall income was 13 million dollars so the ‘average’ game made a half-million dollars profit. WAHEY! But obviously thats bollocks, because the median game made a 55% loss. Without any mitigating factors, you are statistically likely to make a loss.

Here is another way to look at it. Chop off the top 3 selling ‘hits’ and the ‘average earned by the remaining games is a profit of $40k over two years. Thats actually not that bad a ROI.

Another way to look at it: there is a 34% chance that you will lose 75% of your money if you make an indie game.

Figures are fun.

 

edit: Forgot to take off steams percentage soo…. assume the figures are even less optimistic, or that your game costs $70k to make :D