Monday, September 21, 2009

Making Money in Indie Games?

Over on Gamasutra, Jeff Ward asked this question: "Is there money to be made in indie games?" He discussed a few platforms, a couple revenue models, and concluded, basically, that it doesn't look like it with those platforms/models. Acknowledging that he's probably missing something, he ends by asking if it's really so bleak, if maybe there are other models that could work. This is my response....

Money

A good question to start with is: Why do you want to be an indie developer? The next question is: How bad do you want it? What sacrifices are you willing to make?

Jeff used the figure $40,000 per developer in his calculations. $40,000 is NOT much, like he said, especially for someone like me who has 6 kids. But in reality, you can get by on a LOT less than that. We have a monthly budget of $100 for household items, including formula, a few food items, shampoo, etc. We buy dry beans, wheat, oatmeal, cooking oil, rice, honey, sugar, and salt in bulk. Raise a big garden in the summer and can a bunch, and that will supply veggies year-round. People lived for thousands of years before grocery stores and on-demand fresh food were "invented". We moved to the country and bought a home on several acres of land for a fraction of what our suburban home costed us. We have high-speed internet, and that's all we need to make games.

We don't have health insurance yet, and that's not something we can do without forever, but if it means getting your indie studio started, are you willing to make the cut?

How bad do you want it?

I'm tired of eating beans and oatmeal. Having grown up in the suburbs, I miss having things around to go out and do. Jeff's post demonstrated why cutting costs is so important: it can be really hard to bring in money. The less money you need, the more quickly you can become independent.

Opportunity

It is my opinion that there has never existed a greater time to be an indie developer than right now. Tomorrow will be better, but so far today is the best yet. Everyday, the tools we need are getting better and cheaper; the distribution channels are getting better and cheaper; the market is evolving and becoming more and more conducive to indie development.

There are 2 trends in particular, driven by the internet, that are beginning to emerge in society at large that are making the biggest difference for us. First, big corporations are a liability. They can't move quickly. They can't react quickly. They can't innovate. Some can better than others, sure, but most can't. We indies can't compete with big corporations in the market they are designed to dominate. But we can go where they can't. Because of the internet, we can tap into and find markets that are new or previously hidden.

The second trend is the death of the middleman. Retail stores are more and more irrelevant. Are they still a significant source of revenue for big companies? Of course. But they're on the way out. We indies don't need them. The rising generation doesn't care if their fun comes from the store down the road or the store they type in. It's the same. Actually, it's not the same. The store online is easier and faster.

Publishers are becoming irrelevant. They're a long way from actual death, but they're past their prime. They're becoming obsolete. Publishers used to be important for 2 things: manufacturing (which we don't need anymore) and advertising (which doesn't work anymore). The only thing they have left to offer developers is money, and if you take it, you're suddenly not so independent any more.

One middleman that is relatively healthy right now is the internet portal. The internet enables global competition that keeps any single portal from being very big, from a market perspective. A single portal may have millions of players a month and may make millions of dollars a month, but it's just a single player in a huge playing field, no more than small fraction of the market share. Portals talk big and demand big cuts, but they're nobodies. As entrepreneurs develop new technologies to make filtering the noise of the internet easier, portals will die too.*

Console makers are middlemen, but they're also platforms, so they're a little different. They are big corporations designed for working with big corporation developers. They'll keep making new consoles every few years, and they'll continue to sell, but we'll never need them, just like we don't need them now. We have open platforms with cheaper tools, no middlemen, and zero distribution costs. Console makers will make their platforms more indie friendly once they realize what they're losing with their current policies.

A New Paradigm

Jeff Ward is right that the revenue models that are industry standard don't work so well for indies. There are many great games that don't become hits, only because they didn't get the chance. The right person needs to see it at the right time and pass it on to the right people for the word to spread to the right places for people at large to hear about it. As technology improves, more games will have that chance. Eventually, every good idea will find an audience. We're not there yet, but it's coming.

Flash portals are currently the best tool we've found for getting our game in front of people. People go to portals and play many games. There are thousands of new game out every month. Many portals have ratings that allow good games to float to the top. Good flash games spread virally, as web masters copy them from other portals. It's working great for us. We sell a downloadable premium version via upsell ads in the flash game. We use Adobe AIR for the download version, so it's exactly the same code base and assets as the browser version. Cheap to make, cheap to distribute. We continue to make more than we need to pay the bills a year after release. We recently got raises. We have 9 months of salary in the bank. We've paid contractors for music and story for our next game. It's building. Pretty soon we won't have to eat beans every night. We haven't had a huge hit, only modest sales. Our next game won't have to be a huge hit either for us to continue doing what we love and maybe even get health insurance.

I'm sure there are other models that work, and I'm sure even more will be discovered soon. The Industrial Revolution brought us the "bigger is better" mindset. The Information Revolution is changing that. We have more opportunity than ever before, and it's only getting better. We just need to think in new ways, to look at the world through new glasses.

How bad do you want it?

* I don't mean portals will actually go out of business. They'll just be forced to charge a reasonable fee for the eyeballs they attract. Their inflated egos will die. They'll recognize that they are actually small fish in a huge sea. (Any relation between that metaphor and any existing portal is purely coincidental. I don't mean to single out any one portal in particular.)

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