Making games is a creative business. As most developers understand the creative part is something hard to define and grasp. I believe that especially indie developers feel that the business part is also hard to grasp and define, how to make a business out of your game.
Cooking up a plan to fund
Having spend a lot of my career in IT business unrelated to games and now as an owner of my own game studio I know business is not magic, it's all about cooking. There are recipes, flavours to play with and things that just don't work and make no sense.
A common recipe for any software production is:
As you can see nothing specific to the game industry is in the recipe. That is not to say the game industry has very specific ingredients that need to be taken into the mix. The importance of fun in an accounting application is less than it is in a game. However the process, or the steps involved in making a product for the two are very similar.
By looking at game development as a business venture, even if you're developing indie games, you can apply common business sense and product development rules. So when it comes to funding try to always start by looking at it from a business perspective. This avoids common pitfalls like running out of money, getting into debt or disenfranchising your fans or funders by not delivering what you promise.
The benefit from using the business angle is that when you do ask for money there is a clear story about what you're trying to achieve with the money. You can explain how you go about spending it in a way that contributes to finishing your game and why that makes sense. Use your recipe to help people understand how you plan to make money. In stead of saying "If you give us more money, we can make it more fun", you could say "We identified that our type of game benefits greatly from adding LAN multiplayer and we need to get some one in to do the networking code.".
The recipe for Tenshu General
When we release our first title Tenshu General this year in August, it will be the outcome of a recipe that began its conception in 2008. Now I don't mean we worked 5 years on the game, but 5 years ago I wanted to get serious about producing a game. Since by that time I had a number of years experience at working in a IT consulting environment and two years at the IT department of our local university I had a very good understanding of software development. I sat down and began sorting through the recipes I learned so far and try and come up with one for making a game. I came up with the basic recipe I mentioned before and tried to apply it to game development.
Here's the list of resources and constraints I had in 2008:
I sat down with my friends and we talked about what it would take to make a game. Together we were able to come up with at least the general ingredients of what we feel makes a good game:
So the next step was determining how much resources each of these items requires. This is by far the hardest skill to learn and get right in game development. Good estimates give you control, calm and room to change your mind and deal with set backs. Before I go into the numbers for Tenshu General a quick word about effort and duration. Effort I define as the amount of time you spend actually working on an item, duration is the time how long it takes you to spend the effort on an item.
My conclusion was in 2008 based on the list of resources I had and the scope of making a game, that I was pretty much a noob game cook. That said, through my professional experience I could see a clear way to improve my cooking skills in some key parts of the scope. What I mostly needed was the freedom to decide my own career path. So I set out to find a way to get more control. The best way I figured was to become an independent contractor selling IT skills I already had and investing time and money in developing skills I needed to become a game developer. This was obviously a bit of a risk, leaving a steady job, especially when later in the year the crisis hit. But I saw that as an opportunity to try something new in a changing market. I hit some good fortune with the first job I got, so I set out the following estimates:
At the end of 2011 I felt I had leveled up my skills enough and had a financial buffer to fund a real game. I was able to limit my contracting work to 3 days per week, so I had 20 odd fixed hours in the week for game development. Then I came up with the estimates for my first game production:
In my contracting job I regular have to lead teams of developers and are familiar with various reporting schemes. Even though I don't like administration I have come to appreciate their importance to get jobs done properly, if applied and executed appropriately. So I setup a spread sheet and made a detailed allocation of all these estimates.
Let's talk about the money a bit. My initial estimate was 2500 Euro. This was a educated quess based on the following assumptions. Most money would be required to setup shop, this included getting incorporated setup legal documents and administration required by law (ca. 1500 Euro). Music, sound and the development infrastructure (code/asset versioning, webhosting etc.) was something we decided early on was something we should buy so we reserved 500 Euro for this. Lastly, we wanted to do the marketing for under 500 Euro.
4) Match resource with estimates
I set my high level estimates before we had the concept for Tenshu General. I did this on purpose because looking at my resources I knew I could fund the high level gaps by my self. However any extension of them would require outside investment and gave me less control over the process.
I did research outside funding possibilities. It's interesting when you talk about game development in a corporate or consulting world, people can be very interested in what you do even if they don't play games. This interest is invaluable in helping you with a professional attitude towards game development. I was fortunate to get some great advise from a CIO I've been working with for a number of years. He spotted gaps in the business plan, the order in which to do things, but most importantly stressed the importance of the creative process and making sure your business context caters to it. He presented me with options of outside funding, but we concluded in the end we really didn't require that much financial resources to start.
I also find that constraints stimulate your creativity and create focus. Look at games like Colonisation, Minecraft or Flower, what they have in common that they all were constraint in some area, available technology, manpower, lack of a reference to an existing genre. But I think we can agree they are successful and fun games in their own way.
Back to matching the estimates with what I had for what would become Tenshu General.
First, I needed to find a graphics artist and some one to co-design with. As I mentioned in the beginning I have friends with similar interest in game making and since 2008 I have been doing projects with them of and on. Joost Driesens, who has build up his graphics skills from scratch and has been responsible for all the art in Tenshu General. He also studied a lot of game models and mechanics using his university background. Eric Wout van der Steen was my co-adventurer on the attempt at the ultimate MUD game and a hardcore gamer, where I'm more of a casual gamer. I sat down with them to discuss their willingness to go into business together and publish a game. The three of us together had enough skill to pull it off, but before I started I followed valuable advise and recommend the same to any one: before you start designing and building a game for money with friends, talk money, business and responsibilities. If you don't, you chance ruining friendships. So we had, let's say, animated talks and worked out something we could all feel comfortable and exited about. This process has worked out as planned, since we have now an all but published game.
Having "funded" the team I moved on to assessing the amount of hours we had to spend on the game. I would spend 20 hours a week, Joost 6 hours a week and Eric Wout would be an adviser and participate later on in testing without any commitment on hours. With the overall effort around 800 hours (excluding contingency) this gave us a rough duration of 42 week, well within a 52 week year. Given my experience in many IT projects this felt comfortable and had room for stumbles. Which turned out to be just as well. An underestimated area was for sure taking the game to a finished product and doing all the marketing and game specific business activities. Something we kind of anticipated since it was something we would be doing for the first time.
Looking back, the build and test estimate was pretty close on target with a final tally around the 900 hours. Also coming up with the concept took us close to 40 hours as expected. In short, the areas we had tried out in the years before we could estimate accurately. Even though my business skills are very proficient, there are some specific thing in terms of taxes, corporate structure and legal aspects to game development that took more time and money then I had estimated. In the end, the duration went from 1 year to a year and a halve, the total amount of effort went from 800 to about 1200 and the investment went from 2500 Euro to around 6000 Euro. All of which we have been able to self fund by utilising what we had, planning ahead and using common business sense: does the investment contribute to the goal in way that can be recovered by increased success.
We set out a policy to approach everything from a professional angle, covering risk and spending effort in proportion to the expected success. A decision that has worked very well for us. Spending money on getting expert help in areas we know little about and lie far from our core business gives us the most added value to our game. This meant talking to tax advisers and legal experts before placing our product in the market to make sure that when the most likely scenario's occur, we are prepared, our business is prepared and we understand the financial risk and don't loose our house.
This policy came at an increased cost compared to the estimate and came primarily from the company structured to work together as business partners and to be able to leave as friends if things didn't work out. The estimated cost of music, sounds and infrastructure however remained within the limits we set out with.
I learned that your network is a great source of funding not only in the financial sense, but also for skills you are lacking, people offering different perspectives on your business and project approach. Some of the more valuable tips came from a business associate who has been a spokesperson for farmers for 40 years, explaining me about the fundamentals of marketing and PR. Any question we had during the process we were able to answer by utilising interest from our network and also we were able to get useful feedback on our game concept. From hard core gamers, casual gamers and non gamers.
5) Funding the gaps
So what gaps needed funding? Not a lot. Working with a business plan and setting hard constraints gives you control and keeps it fun!! Stressing about time and money is hard to combine with a creative process like developing your own game.
The great thing about this industry for me is that there are so many (new) way to fund your business. The danger is however, to choose a funding option before you have a proper recipe for your business.
If you're cooking a kick starter, be sure to study what is expected by the people who fund you and how that should translate to your business setup and game development strategy.
If you want a VC for your Michelin starred game, understand their world and taste, in the end they will want to stir the pot and look into the kitchen.
Banks are very isolated institutions, they mostly only understand a recipe written in numbers, if you don't have evidence and a sound business case they won't give you money.
Getting your friends and family to support you, can put strain on relations and prompt demand to change your work or approach. Talk about it beforehand and even better, put it on paper.
Any funding scheme that is combined with a day-to-day approach in game development, is a risky business and can end up in a hotch pot gone sour.
Finally, my choice was keep a part time day job to fund my ambitions. To do it my way and be smart about the art of game making.