12 September 2014

Sustainable Game Development

Some quick math...
A:60,000 x B:5 = 300,000
300,000 + C:15% = 345,000
345,000 X D:5 = 1,725,000
1,725,000 / (E:15 - 30%) = 189,560.44
~190,000 / D = 38,000 (Avg. units sold)

Why do you care?

I am a video game developer. I talk to a lot of video game developers. I speak in various high schools and what I hear pretty often is all the people who want to be video game developers. This guy, whose job is to photograph naked women, he wishes he was a video game developer. So yeah, it's a cool job and I get folks saying, "you're living the dream!" which I confess is pretty cool.

Here's the thing: pretty much without exception the (indie) developers I know want only to keep on doing it.* As a group we just plainly love what we do and would like nothing more than to keep on doing it as long as we can. I don't see folks highly motivated by fat paychecks (though they are great) or C-level titles or any of the more typical corporate ladder, upward mobility things. It's creative, it's challenging it's fun and it's easy to achieve a "what more could I really want" state of mind.

So I'm wondering what it would look like to build a business model around sustainable indie game development and I came up with the numbers above. Given 5 people at a modest wage and modest expenses it take less than $2m to make games for 5 years. If you can make a game a year and average ~40k sales on a platform like Stream, you can keep on rolling.

I realize that the numbers are incomplete and don't include a lot of traditional expenses like marketing budgets but I suspect that by making a few deliberate (though atypical) choices about location, priorities and business models it really seems pretty doable...once you can get be ball rolling of course.

It also makes me think about indie studios combining into some kind of co-op for mutual benefit. Some highly valuable resources like musicians and sound designers can really make a game shine, but it's not likely to be a full time gig in an indie shop. But if five shops were 'sharing' that resource then everybody might be happy. If one lean shop could run for five years on $2M, then 5 could run on $10M...which is not a big investment if that were to create a constellation of 25 interconnected, cross-promoting games. The likelihood that one of those 25 titles was even a modest hit makes the likelihood of recouping that $10M seem like pretty reasonable math. 

Taking a page from the VC handbook, if we assume a 1:10 ratio of hit to bust, and say the 2.5 hits generate a >10X multiplier, then we're looking pretty good and we're set to give everybody a fat bonus and sign up for anther slate of 25 games.

* minus the BS that can come with the trade like unending "crunch" and typical corporate lame-sauce.