Category: business

I occasionally read a fairly insane and crappy web blog about investments in silicon valley. It’s quite amusing in some ways, the way people think everyone on earth has an ipad and a smartphone, and is a venture capitalist or runs a dotcom startup. Businesses are either the next google, or totally doomed, and that can flip completely from one day to the next.

It’s silly, but the flipside is, if acts to put my own world in perspective. I hang out (virtaully) with quite a few indie developers like me. I’ve met a lot of them, and we tend to agree on a lot of stuff. Selling direct is good, finding reliable artists is a pain, selling games too cheap is bad etc…The problem with just hanging out with people who think like you, and are like you, is that it narrows your focus and you suffer from serious confirmation bias. If everyone you know charges $20 for their games, is a sole employee and all make $50k a year, you are very likely to conclude that ‘this is what people do’, and follow suit, in both strategy and outcome.

I try very hard to avoid this. This is why I sometimes to chat to guys like Nicholas Lovell, who disagrees with almost every aspect of my business strategy :D. It’s why I take a huge interest in the economics of MMOs and facebook games, despite not making one. I was always interested in the business side of gaming. I would LOVE to be able to look through the bank statements of zynga, or activision :D

One business decision that I really struggle with is the idea of re-investment in my ongoing business. It makes sense for me to spend a huge chunk of the profits from GSB into growing the business. I should probably have 1 or 2 full time employees right now, and I don’t. I have (at the moment)  3 contractors working on my next game, plus me. There will be at least 2 others working on it before it ships. But this is small fry. I could make a legit business case for a much bigger investment.

To that end, I *do* have a little side project in development, which I won’t talk about for a while, and I am also trying to persuade myself that I should invest a whole months profits in advertising one month. I’ve never, EVER done that. Jeff Bezos would think I’m an idiot. In the last year, my google adwords budget was £27,000. It sounds a lot, but it should probably have been a lot higher, given that it’s such a major chunk of my expenses.

Anyone who thinks it’s easy to know the correct business strategy for making indie games hasn’t really thought about it.

Just looking at the last 10 new indie releases on steam:

1. Fortix2  £5.39
2. Beeo £5.39
3. Dwarfs £7.19
4. Universe Sandbox £6.99
5. Capsized £5.99
6. Your doodles are bugged £6.99
7. The Tiny Bang Story £11.99
8. Sanctum £9.99
9. Anomaly £8.99
10. Hoard £6.99

Thats scary there is only ONE game there over £10, and these are new release, presumably full price games. What will they be in a sale? £2? £1? £0.01? How on earth are these games expected to make a profit at these prices? In direct sales, 20% of it is probably payment costs. It’s insane. Plus, my next game is unsustainable at £10. I can’t make my money back at that price. It has to be more expensive. People who hate DLC will have to accept that it’s the only way devs can make money if the core game is sold at these prices. If you can sell portal 2 exclusively from your site with no discount, at £29.99, and have an item store on top, then things probably seem much better.

Artists, programmers, software are not getting cheaper each year.

There seems to be an unwritten rule developing that indie games must be under £10, preferably under $10. This is MAD. Harry Potter was written by ONE person. just ONE. It’s production costs were tiny. Does that mean you saw the harry potter books on sale for a third the price of other books? Of course not. Nobody slots books or plays into an ‘indie’ category and tries to get them cheap, ditto music. Do you pay less for an Adele album than a Queen album, because Queen had more members? That would be silly.

I speak to a lot of indie developers privately. They are overwhelmingly worried about the pressure being put on them to sell cheaper, cheaper cheaper. In the end, you get what you pay for. I know quite a few devs who are cutting back the ambition of their games, making them shorters, cheaper to make and mroe casual, because they fear that nobody will ‘allow’ them to sell for >$10.

Is there not a market for a $26 indie game? Should I stop saying I’m indie now?

More next-game clues soon…

I came to the conclusion a while ago that retail selling of indie games was a total waste of effort. I have a bookcase to the right of me with a big pile of boxes of published games on it, I can see Kudos 2 (lovely box), Democracy 1 in English and German, Oval Office, and the e-games ‘Space Arcade Collection’. However, I have concluded that the long term utility of these deals is thus:

People who aren’t in the industry who visit my home-office are very slightly impressed.

As that number of people is somewhere between 0 and 2 people a year, and as I never care what they think, I wonder what the point is. Oh the money? Well… in theory yes, but the problems with retail are huge:

1. You need to spend 4 hours reading the 30 page contract 3 times, to spot the bit where they say they can deduct whatever they like as expenses from your royalties.
2. You do a ton of work up front doing stupid crap like animating publisher logos at the start of the game, and it only sells 6 copies.
3. You don’t get paid for retail until long after the end of the sales quarter. If at all. If the company doesn’t go bankrupt and then re-incorporate the next day owing you nothing (commonplace).
4. You have NO IDEA how many copies were sold. you have to trust a person you never met, in another country. He trusts the distributor, who is in a third country, in the developing world. Yeah right…
5. Your game is pirated immediately, as 50% of the staff in the packaging warehouse think they are ‘l33t’ because they are in some childish warez ‘scene’. *sigh*
6. You are now commited to providing tech support to peole for whom you have NO IDEA if they bought the game or pirated it.
7. People who bought the game through the Swedish branch of a French-owned store selling copies of your game made by the Belgian distributor for the Canadian publisher you signed a deal with through your agent in Los Angeles now email you saying they want a refund. They think it’s your fault.
8. Once a quarter, for the next 10 years you get mailed a $3 royalty check it costs $20 to cash.
9. Half the boxed copies you sell sold ‘second-hand’ on online sites turn out to be copies manufactured by some dodgy CD-replicator who pocket 100% of the cash.

When I get email from someone that says “greetings, we are a retail publisher of high quality…” I just bin it. I don’t care who it is. Retail blew it big time. I no longer care. I have enough boxes now. They are fab, but if you want to own Gratuitous Space Battles, buy it online :D. I had a poster made for my office instead.

I read an interesting, I may even say *insightful* post on a website recently. No wait! stop! I really did!

It was a debate about a new game, which had been released as ‘Free To Play’. There was some comment along the lines of how this was great because it meant there was no barrier to trying the game in this case, and that posters A and B would check it out. And then came the genius of poster C, who said something like this:

“So? Free isn’t a big deal any more. There are too many free / very cheap games. I have to weigh up whether the game is worth my time, rather than care about the cost”.

And I think this is going to be an increasingly popular view. I don’t blame people who put games on 90%-off sales. and I don’t blame people who immediately impulse-buy a game they haven’t even seen a video of, because it’s 90% off and sounds like it might be fun. I know how we have got where we are.

But where we are may not be sustainable.

A lot of gamers now complain about a huge game ‘backlog’. Games they bought for $1.99, which claim to have 30 hours of gameplay. There is this big thing of ‘backlog guilt’ where people try not to buy new games until they play all the ones from the past sales. It hasn’t happened to me, I’m very critical of games and only buy maybe 6 a year. The last two games I bought I played for maybe 8 hours combined. I do, however have absolutely no feeling that I *should* go back and *finish* them. I got my moneyworth, it’s not like I ‘owe it’ to the game makers to finish them. Most portals 2 buyers don’t finish the game, according to valve.

Clearly I’m a freak, and atypical, so going back to all these people with a big backlog of games and not enough time to play them, I think (hope?) we may see a change in mindset to this:

“I have limited free time. I enjoy games. I want to spend my limited free time getting the highest quality entertianment as possible. The fact that some games are very cheap is not an enticement, if I can afford to spend my limited free time playing the non-cheap stuff, and still have enough money to fill my free time in this way”.

It’s the way I think about food. I can afford to buy good food, and I know that there is only so much food I can buy, so I tend to spend more money than I have to on food. I don’t agonise about the economy / luxury decision when it comes to a chocolate cake (mmmm cake), because even if the economy cake is mega-cheap, there is only so much cake I can eat, so it may as well be good cake.

Do you think like this? or are you still drawn towards a game because it’s $0.99, even if you know it’s not as good as the game next to it, for $5.99…?

Given that amazons hosting systems recently fell apart (who really knows why), and now we hear that sonys playstation network has leaked customer details, possibly including credit card information, to hackers I think it’s time to clarify something that I’m very pleased is the case.

When you buy a game from me, I don’t see your payment details. I never handle the payment, and I have no database with your payment information on it. Nor do I want one. It’s all handled by a third party, either BMTMicro or Fastspring. Both of them are US companies.

Positech can’t be hacked and broken into and put your payment details at risk, because I never even see them. A dedicated company that takes this stuff very seriously handles it.

But better than that, we don’t rely on one-click ordering or customer purchase accounts. Nobody can steal your positech account and take away your games. Nobody can prevent you from getting at your games, launching them or running them.

I bet there are a ton of people who are absolutely furious at sony right now. To be safe, they should all ask for new credit cards. There are 70 million accounts. This is like an entire country being victim to identity theft. Scary stuff.