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

Will the indie games market crash and burn?

cliffski

This is something I give a lot of thought to. Partly because I see other people talking, sometimes worrying about it quite a lot. I should put my own position and experience into perspective here, for anyone who is new to the blog. I started making indie games in 1997. Since then I worked for about 5 years in total in AAA dev, the rest of the time I’ve been part or full time indie, and I’ve been full time for a good nine years. I made Kudos Democracy and Gratuitous Space Battles.

The market for indie games has changed beyond all recognition since I started. When I started, the site you aimed to get on was not steam, but download.com. The other big site was Tucows, and later came Yahoo Games and Real Games (remember the real player?). Buying online was treated with suspicion. Online sales services paid you by a mailed check. Everyone bought direct from the developer, and normally got a code to unlock the game, which came packaged as a zip file.

a simpler time...
a simpler time…

How times have changed!

The market for games in general, but indie games in particular, has snowballed since then. The general short-term lazy answer to this is ‘because of steam’. Sure, steam helped, but selling indie games online paid off my mortgage before I even got a game on steam. Sites like Yahoo Games and Big Fish Games did very well indeed for the developer. I remember getting a $20k check for ONE MONTH from yahoo games. happy times… The reason I’m, saying this is not to boast, but to point out that the existence of online portals that market and sell indie games and make good money for developers isn’t that new. The thing that is new is the scale. Those $20k checks are no longer a big deal. You know whats cooler than $20k? $200k! or maybe even more!!!!1111.

The problem is, we have a LOT of indie developers who have joined the story in the third act, when the $200k is the norm, and $20k is nothing to write home about. Not for them the idea of coding from your spare bedroom with expectations only of meeting the bills. Now the indies expect to get that $200k a month. They cut their clothes accordingly, with rented offices, new PC’s, appearances at all the trade shows at around $10k a time after travel & marketing stuff is taken into account. The minimum team size now seems to be about 4 full time devs, plus contractors, voiceover talent etc. Budgets start at $50k and go up and up and up. But it’s fine, I hear indie games make $200k a month…

A small indie team circa 2014
A small indie team circa 2014

And the thing is…. some do, or they have done for quite a while. There are plenty of stories about the money indie devs are making. I’m not doing bad myself, and the only reason I keep quiet about the money my games make is I think it’s VERY misleading data for people starting out. I read a great article recently about devs who worry when they ‘inspire’ people to quit their job. This is indeed worrying. People suffer from enormous confirmation bias. They want to hear that they can get rich making games they love, who wouldn’t want that? I did my bit by giving two really downbeat and depressing ‘de-motivational’ talks at world of love and its follow-up where I point out the harsh business realities of selling an indie game and making a living. Generally, people don’t want to hear that.

indie attitude
indie attitude

The stories about steam and humble-generated millions, plus notches sales stats have persuaded a huge number of people to go full-time making indie games. Good luck to them, I wish them all well. I love indie games, I’d rather the next Call of Duty game was cancelled and the money spent making 200 small indie games instead. That would be great from my POV as a gamer. But…. I worry that the current setup is not sustainable, because so many people have entered the business during boom time.

Bluntly put, Boom time is where the middlemen get rich selling services to the suckers who just joined in before the crash. Do I think there is a crash coming? Yes. Why? Well it’s got nothing to do with steam ‘opening the floodgates’, which is firstly just exposing the reality of the market (and hopefully calming the boom) but secondly going to be fixed by them soon anyway…

The guys selling shovels got rich...
The guys selling shovels got rich…

The simple problem is a lot of indies are running at a huge loss and they don’t even realise it. Their expectations are sky high and their experience of the business is zero. Your first game will probably LOSE money. Mine did, and my second, third, fourth and fifth. The good news is, I made them all part time and had no kids to support anyway,m and the budgets were tiny. I used coder art for them all. Once I finally worked out how to do things I did my first full-time games, then my first with non-coder art, and so on. At each stage, I spent another 25% or more than the last game, and expected maybe 25% or more sales. I NEVER assumed the next game would make the same as the last, let alone more, and I certainly never required it to in order to pay my bills. I was slow-and-steady, and cautious.

And I’m still here.

But I strongly suspect a lot of indie devs won’t be in 2017. The ratio of developers who will earn $100,000 next year to the percentage who think they will is…probably quite scary. If you are new to the business, and are making your first game, and expect it to make money, don’t forget that many of those devs you read about are like me, with 17 years experience selling indie games (and in my case 34 years of programming). Keep your confirmation bias in check and look out for developers with the same experience and background as you to draw real conclusions about expected sales.

the average indie biz plan
the average indie biz plan

I encourage people to reach for the stars and follow your dreams. I do, but I also make damn sure I’m prepared. I always like to be assured of victory and guard against any possible failure.  You *can* be ambitious AND cautious. I think there *is* a crash coming, when all those ‘first indie projects’ finally ship….to not *that* much in sales, and a whole swathe of developers realise that they need to go work for a bank programming stuff they hate for a while as they build up the experience.

I don’t like to be the prophet of Doom, but I do see a lot of business plans and projections from indies that are frankly terrifying. Do your homework.

13 thoughts on Will the indie games market crash and burn?

  1. This doesn’t sound so much “the indie market will crash” but rather “unprepared indies will crash”, which honestly would be long overdue (but I guess we’re still in the gold rush era). In fact, I’d argue nearly every one of those get kicked out right after their first game (if they even finish it!), there just happens to be too many people still trying to get in.

    I’ll be honest I’m probably reckless how I’m handling the development my game, but then again there’s another source of income in the house so for now I’m just relying on that. Basically my expenses on my game until now have been zero, and it’s nearly finished. My biggest hurdle will be having it perform decently, not so much worrying if I can survive out of it.

    I’d say the biggest thing to worry about right now is not those unprepared indies eventually going away (that’d be a good thing), but if we risk that such a thing would leave any side effects for everybody else.

    1. Food for your thought, so please don’t take this the wrong way:

      You say that your expenses are basically zero, but in reality they are nowhere near zero. You effectively have the kind of biz plan Cliff mentions.

      You are currently relying on your partner’s income whereas you normally would have your own to contribute. Let’s imagine for a moment that your income is normally 50k after taxes, just to use an easy number. Let’s also imagine that you will have been working on your game for a year. Is your game going to make 50k of revenue with which to pay you (and your partner) back for your invested time? I’d bet you have either not looked at it that way or you have looked at it that way but then chose to dismiss the reality of the situation.

      It’s okay to proceed. Just don’t kid yourself about the financial aspects.

      (Source: I went solo for a year, though on an app/service as opposed to a game. I planned ahead enough to set aside about two thirds of the budget in advance and after things wound down without revenue I set to work on recovering the remaining third.)

      1. The other source of income is my mum’s job :P She is not involved on this at all and would have kept continued working regardless of what I did, and will continue regardless of what happens later (you could argue she could get fired, but this would be a risk with the suggested method anyway).

        The problem though is that some indies literally abandon whatever source of income they have thinking that their savings will last enough until they have profit… it won’t.

      2. While I basically agree with everything that you’re saying, there’s much more to opportunity cost than income. The value of a job is more than just the salary you bring in – you also have to factor in benefits, working conditions, hours, and whatever else might be important to you. The same goes for any kind of business venture. How much is financial independence worth to you? What about the ability to set your own hours and the freedom to work from wherever is convenient? Most businesses are going to fail, and most people will make more money with traditional full-time employment, so it’s absolutely necessary to place some kind of actual monetary value on perks like this.

        Speaking as someone who went freelancer a few years ago, the value of those intangibles to me is very high. I’m lucky enough to be doing well for myself, but I’d probably have to be facing imminent starvation before I’d consider picking up another traditional 9-to-5 job. Even then, it’d be a tough choice and I’m sure my long term career goals would amount to “find a way to get out of the workaday world again.” You have to be realistic, but comparing your potential income as a business owner vs. your current salary is too simplistic and will inevitably lead to unrealistic expectations and disappointment.

  2. Not being “full-time” Indie isn’t the end of the world. Making games is an astoundingly more efficient process than it was 10 years ago.

    I plod away on a franchise game for my day job, then when my time permits it, I tinker away at personal projects which intrigue me. What’s saddest about this indie gold rush, is that the process I’m currently running is considered a dirty term; the hobbyist.

    This kind of ambition many new indies are showing possibly see it as a remedy to their problems, but I’m afraid it’s going to become their poison.

  3. Looks at image of huge office, reads caption “A small indie team circa 2014”. Oh I laughed!

    I just released on Steam yesterday and got 1000 installs (most from previous sales) in the first 24 hours (which has just gone by minutes ago). Better than I was expecting for a niche and very traditional strategy title enitrely made by myself and funded by the loose change I found down the side of the sofa.

    The last time I even earned enough to pay income tax was in 1992 … so I expect to be scraping by. (disclaimer I did spend quite some time abroad – but it was MUCH cheaper to survive than the UK so had a higher standard of living than the current “wearing a thousand jumpers just to keep warm” as I do here)

  4. Interesting read. I’m starting to do an indie game myself but I’m being realistic about it.

    For instance I’m developing it in my spare time while I still have a full time job doing big-team games. I don’t expect it will do terribly well given my art skills and the fact its going to be relatively niche turn based game, but if it does well then great. If it doesn’t I’ll have invested my spare time and the cost of a laptop.

    What I worry about would be devs that quit their day job to go indie and have no backup plan for when (if) it all goes tits up.

    Kickstarter is an interesting one because you could get the investment first and then quit your day job. But the only kickstarters that seem to succeed are those that have a swish video and a big-name dev or IP behind them. The one-man band indie kickstarters seem to get lost. Or maybe I’ve just not seen them *shrug*

    1. Quite a few “unknown”s have managed to fund indie games through Kickstarter and its assorted sister-sites, although it does seem to be a bit pot-luck who gets funded and who doesn’t. It certainly helps to get some notice from one of the bigger gaming sites/blogs, although it’s neither necessary nor a guarantee.

      But the (mostly successful) indies I’ve backed on KS have a number of things in common:

      They’ve all been people/teams who had a really strong – often very niche – idea and presented it well. That presentation might be a demo, or lots of artwork and a good explanation of the mechanics, but they’ve been clear on what they wanted to do.
      They’ve generally been low-budget, and low entry price. If someone I’ve never heard of wants a million dollars total and is charging $50 for a copy of the game, they’re very unlikely to get my money. Someone who wants $10 per copy, and $20,000 total, is much more likely to get enough interest, so long as:
      They’ve provided at least an outline budget/financial plan for completing the game using their KS goal. This one is basically a must. Someone who says “I need £20k to make a game” might well be living in la-la land. If they say “I’ve put in x hours so far, and the game is y% complete, which means z months full time work left, so allow y*[reasonable monthly sum] to complete. Plus [plausible amount] to pay a composer, plus KS fees plus 10% paranoia margin”, they’ve clearly thought about it. They might still be completely wrong, for one reason or another, but they’ve made a realistic attempt to work out what finishing the game will actually cost and asked for that.

      There are plenty of successful indie kickstarters out there. But they aren’t making the devs rich, they’re paying basic living costs while someone finishes an already-started dream project. And I have seen quite a few crash and burn because they assumed that anyone could raise a million with no effort. Like any other business strategy, KS works much better if you have a good plan and proper preparation.

  5. It’s astounding how many indies I know that hardly make any money nowadays, especially with recent releases on Steam. And these are guys that have been in the business for years. It’s tough to adapt to a market when the carpet’s been pulled out from underneath you (I’m referring to Steam’s floodgates opening up). Releasing on Steam is not an instant win like it was a couple years ago.

    There definitely are indies making money, but it’s much harder if you’re not doing everything perfectly, or getting extremely lucky, with so many games fighting for attention.

  6. I think there is (but am happy to be proven wrong) a bit of a correlation between the indies making no money, and those who had set aside zero budget for marketing and promotion, and just assumed mere listing on steam would take care of that. This seems to be the general view now, which I think is very wrong.

  7. Hmmm… What if the expenses of two full-grown adults working full time for a year could be covered by a budget of $40,000? (a significant step up from current circumstances) Would that be more reasonable? We’ve given it a lot of thought and making 40k in a year is what we would consider “wild success”.

  8. At Monkube, we’ve started out doing VC funded projects that where 100% our IP. The first game, the iOS game 6th Planet (now 3 years ago), doubled its money. But before our second (co-owned) game was out, business models changed and advertisement companies started ruling the market. And they still do today. Most of the profit successful developers make goes towards advertisement.

    My 2 cents, combine forces as indie-studios, big or small, and push each others game and share each others press contacts. The only thing is, that strategy will fail as soon as indie debs with under-developed or copycat games start to join (nobody wants to burn his press-contacts lists by misusing it). So we’d have to uphold a high standard, and in group, become some kind of PR vehicle where you help out 100 times, and when your game releases, 100 fellow indies help you.

    The self-funded only strategy was unsustainable, so right now, Monkube does 1 in-house game in parallel with 2 work for hire games. The good thing is, we can re-use tech we made for a client, as well as have to make Zero money on our games and still keep doing in-house games. It’s a building process. As long as your games are good, more and more players & journalists will remember you. Until one day, you reach the tipping point and the self funded games bring in more than new ones cost to make. Indie devs who never reach that point will always come and go, so I’m not really bothered by the amazing amount of good games (but not necessary commercially viable) games out there. It just means that Monkube will have to work longer before the tipping point is reached.

    Feel free to hook up through Twitter or Skype or drop me an email. If your game is worth supporting, I’ll put my shoulders under it when you go live. And in turn, you’d have to do the same for me.

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