Game Design, Programming and running a one-man games business…

Gaming deserves neither tax breaks, or arts funding

Yeah…nobody will agree, but sod it, here is my argument. Talk me round, tell me I’m wrong, I’m always interested in having my mind changed.

When I read about demands for tax breaks for the games industry, or more arts funding for the games industry I cringe, and I find it totally embarrassing. I wish people would not do this, and I feel bad when they do, and when such things happen. I think its actually not only a bad idea, but I genuinely believe this to be morally and ethically *wrong*. Here is my argument:

I love games, I think games are great. I love the games industry. I think both are a force for good in the world. If more people could make games and play games, I’d be happier. I think thats a pretty widespread view amongst readers of this blog. The problem is… I think government money should be spent on more deserving causes. As someone who studies politics a lot (no surprise given that i made this game), it interests me that the argument that the industry should have both tax breaks and arts funding generally comes from the left of the political spectrum. I find this slightly odd. In some respects, its understandable, as the left is generally pro-state-spending, and you can see the argument that the right opposes all government spending and the left wants to spend more, so its natural that the left hold this position but I find it strange because of the opportunity cost.

To put it another way, every government penny that gets spent on lower taxes for game developers, or on funding to make games, is a penny not spent on something else. Here is the UK, there is much debate about the huge rise in the use of food banks, and the reductions in benefit payments. Can we really make an argument that when the government cuts benefits that it should still ring-fence money to provide for game developers?

food

I often think that tech-savvy games people live in a bit of a bubble. I found the whole idea of ‘giving the poorest children in Africa laptops’ a bit ‘let them eat cake’. There are many problems in the world far more basic than access to portable IT. Education, decent roads, clean water, safe and cheap energy to name a few. I think the problem is that many well-meaning people who campaign for such things can only empathize with people ‘not having decent computers’, never with ‘actually hungry or in need of clean water’, because its just not in their experience.

If you gave me a hundred million dollars on condition I gave it away, I would not use a single penny of it to fund a non commercial indie game. Not one. This is because its very very far down on the list of prioritizes as I see it.

(You might think this makes me a hypocrite, because I invest in other games being made, but thats a commercial enterprise, not charity. The money earned from any games Positech makes gets taxed (and unlike most companies we absolutely 100% pay our taxes by the letter AND the spirit of the law), and hopefully spent to do good things. If I knew how to run a business that did something more worthy, I’d do it instead, but sadly it seems the thing I’m best at is this.)

If I was Prime Minister, and you insisted that I spend a hundred million pounds, it could not go to charity and had to be spent in the UK, then I’d probably spend it on a combination of Green Energy projects and Education grants for people from poor backgrounds. In some ways this looks again like hypocrisy, I’ll subsidize green energy, but not games? why? Mostly because the threat of >2 degree warming for the climate is potentially devastating, and the people who will be hurt first, and hardest are the poorest. Even if we took away every single game development job in the country, nobody is actually going to die. Its a matter of priorities.

This isn’t restricted to games though, I’m not ‘anti-games’ in some weird way. I’m against any major distortion in markets created by government which claims to be done for the ‘cultural good’. Although I think the people who back such moves are well-meaning and nice people, I think the outcomes are warped. One of the main reasons for this is I have become (in my forties) exactly the sort of person who benefits from this activity, and I see it as hugely unjustified, not to mention not needed.

In 2010, the London Royal Opera House received a government subsidy of just over £27m. Thats roughly $40,000,000. The royal opera house is not a food bank. Here is a picture:

opera

Sadly I can’t find up to date figures for the subsidy but I doubt they are any lower. By the way, if you want a ticket for tonight a brief check shows they range from £147-£184. (They make a huge play of the tiny number of ‘cheap tickets’, which was a concession to justify the subsidy). The idea that a country that has food banks subsidizes people like me to go watch Don Giovanni is just staggering, and frankly, quite disgusting.

Now you might make the argument that opera is valuable and enriches the spirit and soul of the people, and thus must be subsidized….yeah maybe, but how about we wait until everyone is warm, educated and not hungry first? And lets see if that argument plays well in the queue at a food bank, or if it plays well with homeless people? I suspect not.

Now obviously if you disagree with me, by this point you are fuming that I’m equating the excesses of the royal opera house with funding indie games or giving tax breaks to games companies. But I am going to go ahead and tell you they are the same thing. they are the ‘great and the good’ clamoring for public money (in other words, taxpayers money) to pay for something that they enjoy because….. they think its great.

This, to me, is undemocratic. Deeply. We have a way of deciding what entertainment people prefer, and its the free market. More people listen to Gangnam Style than go to the opera because that is what they prefer. The idea that the great unwashed masses would love opera if only they could afford it is bollocks. If it were true, TV shows about opera would be ratings-busters. If it was true that what people really wanted in games were experimental arty games, then those would be top sellers. There are plenty of such games available. I believe it is morally wrong to not only tell people what they ‘should’ like, but also to tax them to subsidize things they clearly do not want. This is definitely the case with such luxuries and frivolities as entertainment.

psy

Now I *know* that other countries subsidize games, and we have to compete, and thats the only argument I currently grudgingly accept, but I’d rather we lobbied to have others subsidies removed than add some of our own. The idea that there is a government department deciding which video games get funding is incredibly distasteful to me, and it should concern you too.

So yeah…I’m pretty opposed to arts subsidies for anything. If you want to spend your time as an experimental street-art troupe that depicts 1920s Romanian family issues, then thats great. Go for it, but don’t think I’ll applaud my tax money going to subsidize that. And if you want to make an experimental game with no interest in commercial appeal, then that sounds like a great hobby project, but again, don’t expect my tax money to subsidize that either.

Am I wrong? And if I am, argue me round. Don’t tell me I’m a fascist or an idiot. My politics are very complex, and not hard left or right. I think about these issues all the time, this isn’t an opinion I’ve picked off the internet :D.

 

New projects coming…

So I’ve signed on the dotted line for a new publishing thing, and am close to signing another one. That means that positech will this year have shipped Gratuitous Space Battles 2, and Big Pharma (as publisher) and will possibly ship another 2 smaller titles before the end of the year. Awesome.

I *may* get around to starting work on some new IP myself too. I might just fiddle around improving and tweaking GSB2 for the next six months. I’ll certainly be doing that for at least two more months anyway.

And I also have a little side-thing that I’m excited about, but nothing has happened yet, so I don’t want to announce it before I’m sure it actually will…

Also, hilariously this is supposed to be my ‘calm’ year where I chill out a bit and work out how to relax. So far I’m not doing that well, but then I had a tooth extracted this morning and am in agony, so maybe that’s not the best time to assess my relaxing skillz. From tomorrow onwards I’ll be gently easing back into the work I’m doing on adding linear campaigns to GSB2, then I plan on doing some extra feature support to the ship customization.

So how about that big pharma game huh?

So big pharma is now being played, in beta, by the general public. And apparently, by most of you, looking at the sale figures. Yikes. We had a few ‘eek the payment provider is overloaded’ and ‘errr…do we have enough keys’ moments over the last few days. And naturally you won’t hear too much from the designer/programmer Tim, because he is crushed under a weight of feedback and working around the clock to churn out a patch that fixes any major issues. Still, its a beta, and it seems to be extremely stable, and very, very popular, which is good.

Nobody who has not shipped a game can really understand just how stressful the first 2-3 hours are after you press the ‘for sale’ button. For Tim, its a case of finding out if his game idea was any good and if his programming is stable, with potentially hugely embarrassing consequences if it crashes for everyone and nobody likes it / buys it. For me (publisher) its finding out where the ball lands on a six-figure roulette wheel bet that was placed a year ago. Stressful either way.

But it turns out that everything is going to go pretty well, because people seem to love it. And obviously me and Tim both think the game is awesome, but you never know. You get too close to it. When I play Gratuitous Space Battles 2, all I see is stuff I want to fix. I have to force myself to step away from my own work and try to evaluate it, and that is HARD.

Anyway, in case you missed the news, Big Pharma is currently in beta, and its doing very well. We have a lot of lets play coverage already, and hopefully some websites will be doing previews. Get in touch with me if you are a site that needs a copy. And if you are a gamer that enjoys Tycoon games, Business sims, Strategy and maybe a side-order of puzzle, you will really like the game, so hit the big phat link below and grab a copy right away :D. (Windows only for now…)

Game Royalty Futures

Welcome to the futures market. This is (sort of) a thing now. Let me explain.

You are a farmer. This is a risky business. You plant loads of seeds, then do whatever farmers do while seeds grow, you harvest the crop and sell it. Hopefully, it makes enough to support a reasonable lifestyle. Classical economics suggests that your profit will be only high enough to prevent other people getting in on this ‘farmer’ thing, and pushing prices down. Theoretically,. you will earn the average wage, +/- some adjustment for skill requirements etc.

But hey. Hold on. Sometimes you have a good crop, sometimes a bad crop. Good crops are happy years, great years! but sometimes there is a bad crop. Sometimes a very bad crop. Some years, you are truly fucked. In theory, you save in the good years, and spend the savings in the bad years. Most people suck at that. Besides, what if your first 10 years are bad years? There is a solution, and some people think its fine ( I do) and some people think that its evil, and smells like predatory capitalism.

future

The solution is called Futures (although it sort of is, and isn’t, yes, this is very simplified).  Lets pretend I’m an evil mustache twirling capitalist. I go up to the farmer and say ‘Guess what! I’ll pay you for next years crop NOW. I will pay you 80% of what you probably get for it. Deal?’.

On the one hand, thats a rip-off, I’m creaming off 20%. On the other hand, suddenly the farmer has a completely risk-free job. he doesn’t care what happens to the weather and his crop, he can sleep easy at night. Basically the rich capitalist dude has leveraged his greater stock of capital to take a risk the farmer cannot afford to, or does not wish to (maybe the farmer is old, and risk-averse, and the capitalist is some young adrenaline junkie).

I LOVE things like this. I love the existence of such phenomena. I don’t know why. Something about the maths, and the calculation, and the balancing of risk vs reward just sets off serotonin generators or some-such. I find it fascinating. The same with options (which are risky as fuck) and other such financial messing around.

Anyway… is there a market for this in game development? I think there is. Its been with us (in some respect) as publishers for ages, and I hear people are doing this with finished games now too.

So look at it like this…. you have made your game, it took you two man years, you worked hard, its finished, its good. You think it will do well. You are hoping that it will pay for the development of your next game. Think through the scenarios.

Leonardo Dicaprio in The Wolf Of Wall Street

If I paid you $200,000 to take all the future royalties of your game right now, would you take the deal? (You keep the IP, sequel rights etc…). I get to control pricing and bundles.

If I paid you $180,000 to take 90% of the royalties would you take the deal?

Its day 1 on steam and the game has earned $2,000 in the first 24 hours. Both offers still stand. Interested? (I get that 2k as well).

It’s day 30 on steam, no discounts yet, and the game has earned $20,000. Yesterday it earned $150. Both offers stand. Interested?

Don’t forget that you get the ‘time value of money’ if you take the deal. In other words, you get $200k right now, which you can use right now, as opposed to drip-feeding in royalties over time.

I’m not saying thats a good deal or a bad deal, obviously it MASSIVELY depends on the game. I just find the poker-playing / calculation of such deals to be fascinating.

How much would you pay *me* right now to own the future royalties of Gratuitous Space Battles 2? (they aren’t for sale :D) or Big Pharma? :D

 

 

The impossible question: How many copies can you sell?

If you aren’t already aware, I’m the guy who made the Democracy series of games. They are my top selling games so far. Because they have done well, my natural timid brutishness makes me think I’ve ‘maxxed out’ their sales, but the occasional binge reading of Peter Thiel books or articles on silicon valley websites makes me wonder just what percentage of the market I have reached with that game.

A quick look at steamspy will tell you that there are currently this many owners of Democracy 3: ( I make no official comment as to their accuracy :D).

d3
So lets assume  assume its vaguely right and 370,000 people have bought it. Lets also assume that given the various discounts over the years, on average people have paid 50% of the face price of $24.95, so that gives a total income (gross) of $4.6 million. Sweet. Assume roughly 70% of that for the developer is $3.2 million before taxes. Thats a big hit in indie game terms, but exactly HOW big is it? Lets look at a few other stats, with the same data.
Space engineers has the same price, but 1.2 million owners, theoretically thats around $10.4 million for the devs. Jesus. Even more crazy but how high can we go? And are the games in any way comparable?

Space Engineers supports 15 different languages, Democracy 3 supports a lot less, and not too well either. Is this something I should improve perhaps? On the other hand, it has no DLC, whereas there are 3 expansions for D3, so I’m not comparing apples with apples here. Plus, is the market for a deep political game like D3 the same as space engineers?
Well lets look at other politics games on steamspy:

The Political Machine 2012: 87,000 * $3.99. $347k max 170k gross, 0.03 x Democracy 3.

Tropico 4: 1,200,000 * 19.95.  24 million max, 12 million gross, 3x Democracy 3.

Tropico 5: 383,000 * 39.99. Thats $15 million max, 7.5 million gross.  2x Democracy 3.

CIV V. 7,000,000 * $30. Thats $210 million max, $105 million gross,  22x Democracy 3.372

The production cost of Democracy 3 vs all of those games is obviously way lower, but lets assume, for arguments sake, that the total potential market for Democracy 3 is one tenth that of Civ V, given that we can reach EVERYONE who might buy it. Thats $10 mill gross, or in other words roughly $4.2 million of developer revenue sat out there waiting. Hmmm…

Its VERY easy to live in a developer bubble where you assume that because you’ve written 100 blog posts about your game and read 20 reviews, seen 100 lets plays, that EVERYONE knows about the game. Get this for context… I was chatting to one of my closest buddies recently. He is my age, he plays games, but isn’t much of a geek. He didn’t know what twitter was or how it worked.

HE DIDN’T KNOW WHAT TWITTER WAS.

God knows how many bazillion dollars of free PR, and this guy had never heard of one of the largest more pervasive companies on the planet. Such people exist. More than you think. When you have conversations like that, it makes you realize just how trivial the number of people playing your game is. Lets assume steamspy is spot on (and ignore everyone who bought it off other sites), and say that 372,000 people own Democracy 3. Lets show them on the map:

belize

There you go. That’s the entire population of Belize. Wohoo. There are a lot more people to sell my game to.
Right now, my facebook ad campaign for Democracy 3 tells me my target group contains 8,600,000 people, based on the countries, demographics and specific interests that I selected. That’s people who use facebook, which isn’t everyone. Assuming one tenth of those people *will* actually buy the game if I can get them to take a look at it, then thats an extra 488,000 copies to sell. In other words, I’m half way through selling Democracy 3.

Nuts isn’t it.

Problems:

  • Some of these people may already have pirated the game.
  • Some of these people may have tried a demo or seen a video and not like the game
  • Some of them may only be prepared to, or able to pay a price below which it make no sense for me to sell (due to alienating higher price customers). The $0.99 buyers.

I’ve already hopefully screened out everyone else. They are all pc-owning strategy game loving English speaking desktop pc users in targeted countries, of the target age. Lets say that even given all of that, that in fact 10% is wildly optimistic and say just ONE per cent are actually interested… thats another 48,000 copies at an average of $12 a copy. That’s a Tesla model S with all the optional extras :D.