Whenever there are business stats released about games, I always find myself fascinated by what seems to be the huge gulf between the amount of money (and sales) the big games make, and…everybody else. Increasingly I get the impression that the mid-tier games, developed by 3-30 people, are just disappearing due to becoming financially nonviable.

In an ideal world, there would be a perfect path that led from part-time bedroom coder with a day job, right through to full-time bedroom coder, to bedroom coder with a few contractors, to smallish studio, to medium studio…to epic/activision/valve.

I don’t think this is the case these days, but I think its especially bad for the ‘small indie’. I think there is a valley between part-time indie and the BIG indie. lets call it the difference between the $10,000 budget game and the $400,000 dollar game.

At $10k budget, you are likely holding down a day job, or doing contracting part-time. You don’t bother with a website (you just use steam or the apple app-store as your exclusive store front). You likely use coder art, or free art or royalty free art, or a friend helps out. Your marketing budget is zero, you attend no shows. You use the PC you owned anyway, and the game is made in less than six months.

Image result for game developer tycoon
screenshot from gamedev tycoon

At that level, even a few sales can help you break even. Even a cheap $10 indie game *can* sell a thousand or two thousand copies without any marketing whatsoever, as long as you are skilled, you picked a decent genre, you did a good job, and you optimized your store page, did some social media marketing, and generally did the guerrilla ‘no-budget’ marketing thing in evenings and weekends.

At the mid-tier (in the valley). Things get tough. You are full-time, and have an office with 2-4 other people. You suddenly need separate work PCs because of the office, and office furniture, and need to pay rent, and office internet costs, and power, and likely some admin/insurance/employment related costs too. You now have a proper accountant charging at least $1,000 a year. You probably have a lawyer if you are American. You are now paying for webhosting, some unity subscriptions, some money each month to adobe, and to a few other bits of software that in 2020 are inexplicably subscription based.

Your 3 people now have no pension in the UK and in the US, no healthcare, so add another $1,000 a month minimum on top for that, and together with the rent blah blah, you are probably paying $2-$3,000 a month before anybody gets paid. Assuming nobody will actually starve, you can easily look at paying $150,000 a year for your people, and you need to get that back.

But hang on! a 3 person team is NOT 3x as effective as a single dev. They have discussions, disagreements, arguments, confusion. They are demotivated by implementing other peoples ideas. They are distracted by someone who slurps their coffee in the office. They want the office cooler / hotter / lighter /darker than anyone else. They are sad because their cat is no longer at work with them…

I guess a 3 person indie team is the equivalent of maybe 1.5 solo devs (at best). But they don’t cost 3x as much, they cost maybe 5x as much.

Eventually, as you scale UP and UP and UP things work out. Your 200 developer team now has 5 people working FULL TIME to make hilarious / amazing / exciting video and social media content that gets your name EVERYWHERE. Your game design and code is top notch because its got dedicated people working on everything. The number of devs who can compete with you is smaller because they simply do not have the scale or the marketing firepower. You can suddenly employ full-time professional HR and business-management experts who can actually handle people properly, so fewer arguments about heat / light / cats. Productivity has been achieved.

Image result for blizzard developers
Blizzards WoW team

I think WAY too many indies are stuck in the valley of financial impossibility. I’m not sure you can survive with a 3-5 person team any more. if you get ‘funding’ from somebody then maybe, or a grant, or some dumb hardware company has no clue and throws cash at you…yeah sure. But purely on the basis of the free-market… i’m not sure it works.

So how am I still going? (before you ask). Well I am a weird edge-case that is VERY hard to replicate. My magic powers are:

  1. Rural location so no sky-high-rent / distractions etc.
  2. Solo dev for most of career so working from home
  3. Back-catalog of pretty big hits, so cash not that much of a problem
  4. Actually earning decent money from stock trading so…see above.
  5. Age 50, child-free, 39 years coding experience, workaholic. Impossible to compete with that combo tbh..

BTW TOP TIP: people often make a critical business mistake. They look at other people doing X at a company and think ‘they are doing X it must be viable’. It often is not. That other company may be in debt/a multi-millionaires hobby/funded by a spouse/some sort of money laundering scheme. Do not think all those 3-5 person indie teams posting online are surviving. They may well be in serious trouble.

Are my numbers in this post COMPLETELY insane? let me know. Whats the running cost of your 3-5 person indie studio?

10 Responses to “Trying to avoid the small indie valley”

  1. Jack says:

    I think this is probably accurate right now, but with the internet getting faster all the time, and productivity apps seemigly popping up all the time, remote working could become the mainstream for indie companies. That means no office costs, and cheaper employment as theres no need to pay UK & US wages, when someone from Asia, South America, Eastern Europe, and even some parts of Africa will all work for less.

  2. Richard East says:

    Its not an Indie valley – its an Indie cliff.

    Particularly, if you cannot make a game of at least 3 hours length, and on multiple platforms (PC+Switch+Mobile or PC+Console), the economics are really stacked against you.

    Your game will be heavily refunded on Steam, due to the no-questions-asked 2hour refund window, and your marketing will not benefit from economies of scale in selling to multiple customers on multiple platforms.

    This level of complexity requires a team of 2-3 people and the results are certainly multiples greater than can be accomplished by one person. In particular, your one-man games are heavily reliant on when (and against how much competition) they launch on Steam, in order to get into the essential New and Trending visibility section.

    Additionally, the costs you mention like Unity Plus and Adobe subscriptions do not scale as your revenue or even your team does. Unity Plus is a fixed price independent of how many platforms you sell on, and you need it for solo PC games to avoid the splash screen and access cloud diagnostics. Adobe suite is necessary for Photoshop, Illustrator and AfterEffects and usually only one person will be using this anyway (the best artist in the team). Unreal scales with your gross revenue.

    Plus a lot of people are simply just more productive in a team. Getting out of your house and working in an office forces work to be done, and working with people in a shared setting allows really easy testing, direction and collaboration (essential for visual products). Getting an office setup for 3 people as opposed to 1 is not 3x the cost – you have fixed costs of internet, coffee machine, electricity… In fact there are very few single-person offices, you’ll have to use Coworking spaces which are noisy and expensive.

    Its a shame that the current setup of Steam Direct (yes, the PC platform is still the foundation of many Indie teams due to the easy of development) effectively discourages small teams, and instead prompts everyone to do their own thing since the launch fee is only $100 and there is no curation check to pass…

    • cliffski says:

      Interesting. I do think that the $100 fee was a mistake. I think $1,000 is far more sensible, and ensures the majority of steam games would at least be serious projects and not peoples first unity project. itch.io and other platforms exist to cater to hobby devs.

  3. Jon Shafer says:

    This is very much my feeling as well, although I think the issue is primarily on the revenue side rather than the costs side. Indie game development has always been hit-or-miss, but even so it was still far more predictable before Steam opened up. If you make an almost-perfect game and get a bit of luck then, okay, your game will probably attract attention and do pretty well. But the bar used to be a whole lot lower, even for a much larger companies. This is why everyone is moving to the huge franchises and subscriptions model. It’s just a lot more reliable. Big companies like EA and Activision used to release a ton of games. Now they just have a few core franchises and almost nothing else. It’s a pretty big shift.

    It’s not really a big surprise though, games have gone in the same direction as movies and music. The internet and other less sexy but still revolutionary technologies initially opened the market up, but now they’ve clamped way back down. People only have a finite amount of time and the competition is vastly greater than it was 10 or 20 years ago. The average game today is much, much better than back then, and players’ expectations have increased accordingly. That’s business though, and the core of the advice I give a lot of new or new-to-indie developers these days: if this life is something you’re passionate about and need to do, great, go for it. But it’s very unlikely you will succeed financially. The analogy I use most often is music. Playing in a band or singing is fun, but very, very few people make money from it, and it’s going to be much harder than you expect. The same is now very much true of game development.

    – Jon

  4. Progorion says:

    I don’t really have anything to add, but I totally agree with you. Unfortunately, the majority thinks otherwise.

  5. Jo says:

    Look at the flood of bad movies that come out of Hollywood each year. I would find only a few exceptional movies each year. I kid you not, I just watched one about a serial killer that is an old tire. There is no way anyone thought that movie would make money, so who who funded it and why?

    Steam is an infinitely growing catalog. It is like a magical supermarket where old brands never disappear. As new brands arrive in the store it doesn’t throw out the old ones, it keeps expanding its borders to contain them all. How would you ever find anything, if all the stock from the 1950s to 2020 existed together in the same time period, in the same store?

    I look at any industry as like a gold rush. If you are one of the first miners in the location, your chances of finding gold is better, than if you are one of the last miners to arrive.

    Products like Unity and Steam make it easier to produce more of a product and to sell it, so the value of the product must goes down, for the simple reason that the more common something is, the less valuable it is.

    I see the same thing happening to the IT industry in America. Soon it will no longer be a middle class job, because advances have made it so easy to make programs that any idiot can do it. Also when VR reaches a certain point, virtual offices will become a thing and the rates of pay will crash even further, because Google will be able to hire contractors for a couple of dollars an hour, from outside of America. Then if strong AI is invented, the IT industry will no longer be a place any human can make a living at, because the computers will just program themselves for nothing.

    So to get to my point, if you want to make big money find an emerging industry.

    • AnCap says:

      Back when music still made a lot of money, they had this thing called a record store. In this store they sold these round black things in fancy covers, that could not be copied by the general public. New round black things came in periodically to the store, to replace the old round things that stopped selling, and were thorwn out. They even had TV shows on weekends that promoted these round black things to the public!

      My mother used to say in gold rushes, it was not the miners who got rich, it was the companies that sold supplies to the miners that got rich. Sure, 1 in 1000 miners struck it rich, and then spent it on wine, women and song, that also was supplied by the companies who sold supplies to the miners.

    • Guntha says:

      Quentin Dupieux was already pretty renowned, both in the music and the film industry, when he made Rubber.

      It’s like saying “There is no way anyone thought that game about boring hikes would make money”. It’s not the hiking they founded, it’s the next Hideo Kojima game.

      • Jo says:

        Renowned? Are you kidding? I have never head of this guy in movies or music, but thats not hard, because the music industry has been dead for years.

        A quick squiz at his IMDb page shows he made two movies before Rubber. One of them has only one review. The other has 7 reviews and they are polarized between very high scores and 1/10.

        I honestly think Hollywood is a giant money washing scam at this point.

        Idea: Perhaps game devs can learn a thing or two from Hollywood, because they have no trouble getting bad movies made. :D

  6. Sweat equity companies are a thing now.. Not sure how they operate as a business.
    But when I see ‘indie’ I tend to think hobbyist in denial or in delusion…. Where are all the hobbyists?

    I don’t think there are many independent developers making a living let alone running a business… Most get publishers or platform advances… Which technically isn’t indie.

    And yeah the race to the bottom is inclusive and doesn’t gate keep.