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Finances of a Bare Bones Developer
by Kevin Maxon on 08/18/14 09:24:00 pm   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutraís community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

This is a post partially provoked by the call-to-action from Gamasutra, but also by my personal, emotional feelings about the public Shovel Knight budget—specifically, their quoted $10k/person/month cost to make a game. I hope to show how we funded and shipped a game with limited commercial reach and almost no budget, to understandably few sales, and how the company will be able to continue regardless.

 

I think our model is valuable because it allowed us not to compromise our vision, even though our vision does not resonate with a particularly large audience.

 

I’m going to be very detailed and honest, but hopefully also concise.

 

[This post focuses on the development of Eidolon, our first game as a studio, which released this month on PC/Mac/Steam and is a slow, exploratory, narrative-focused experience. Not exactly a market-driven hit]

 

 

Upfront Costs

 

I began Ice Water Games as an LLC in January, with Eidolon already half-finished, with an initial investment of $1500. Eidolon’s total budget, from the company account’s perspective, was about $650. This went to UDK ($100 upfront), Greenlight ($100), Flash ($250), Promoter ($50), Dropbox ($10/mo for ~5 mo), and various costs (travel, food) related to the two places we exhibited the game (~$100).

 

 

Wages

 

Eidolon was developed with a team of 10—myself (generalist), 3 programmers, 4 writers, a musician, and a graphic designer. All of us worked purely on a revenue-share basis. This was possible only because 9/10 of us were part-timers with other ways of supporting ourselves. I was the exception. I founded the company and decided to make this my full-time job. I was privileged to have enough money to pay my own expenses while I devoted myself to the company.

 

For the first half of development, we all worked on the project in a good-faith agreement with no contracts. Everyone always says this is a terrible idea, but we had no serious problems. It was honest to the nature of the project.

 

About halfway through, I asked everyone to estimate for themselves and every other project member what a fair % cut would be. At the same time, I had everyone approximate the hours they’d spent so far. The goal of this was to force everyone to realistically consider everyone else’s contributions relative to their own, and to set a baseline for our eventual revenue split. I shared an average of everyone’s approximations, and it seemed not to upset anyone. Team members almost always were granted a higher average percentage by others than they had approximated for themselves. This was a great sign. Our team was unselfish and everyone valued each other’s contributions highly.

 

About ¾ of the way through the project, I began the process of negotiating one-on-one contracts with each of the team-members. We used estimations of their hours worked (their estimations from before + estimations of the time between + estimations of time still-to-go) vs. my own to try to set up revenue %s that matched very closely our individual investments. To my knowledge, all team members are happy with how this worked out.


This means that it’s very possible none of us are making anywhere near minimum wage on this project, but regardless we’re all making about the same hourly wage, a wage determined by the relative commercial success of the game.

 

 

Success Metrics

 

The way %s worked out, a little less than half of our net revenue will stay with me to do what I will. In the case that Eidolon is unsuccessful and the company should fold, that money would just return to me. In the case that it makes enough to justify keeping the company alive, the money would stay in that account and I’ll be able to begin to pay myself a moderate wage from it during the development of future projects. This way I can get a realistic sense of my own “wages” and work towards a future where there are finances to pay further employees.


I estimate that my living expenses over the 20 months of development were around $13k. I’d like to be able to pay myself a wage of ~$1k/mo (around 2/3 minimum wage) for future projects, to accommodate a similar lifestyle. If, like Eidolon, those projects take up to 20 months to develop, that means that the IWG account needs to see a return of ~$20k to make this long-term viable for me.

 

 

2 Weeks of Sales Data

 

So far, including pre-orders, we’ve moved ~1800 units, which amounts to ~$28k gross (including Humble tips and OST sales, before distributor cuts or taxes). 75% of this is through Steam, 25% Humble, even though we include on the Steam store page a request that people buy through Humble, who gives us a better deal as well as funding charity. Here’s a handy chart from Steam showing the general trajectory of our sales:

 

 

The first spike is release, the moderate swells you see a few days later are from coverage from Kotaku, Giant Bomb, and Rock Paper Shotgun. Sales have died down considerably at this point, and we likely won’t see large spurts until we decide to put the game on sale or put it in a bundle.

 


Returns

 

Of the $28k, about $8k will go to distributors, leaving $20k for us to split. ~$10k of that will be split out to the 9 part-timers, leaving them each with a very small return on the work they put in. The remaining $10k will go to the company account, where it will stay while I decide whether to move forward on another game.


I see the likelihood of Eidolon earning enough to pay for another project as not unreasonable (future sales taken into account), and so plan to move forward with Ice Water Games. I will continue to pay for my living expenses out-of-pocket for the next few months until money comes in from Steam and Humble, at which point I’ll begin earning my $1k/mo wage.

 

Altogether, this is a somewhat exciting success for me. I’m making just barely what I need to keep going, which allows me to stay independent without the burden of success or wealth. Cutting so close to my bare necessities is frightening and unstable, but ultimately it’s an emotional trade-off.

 

~

 

I’m excited to be able to share with everyone what I imagine is a very low-budget way to develop a game, but I’m even more excited to read more about the full spectrum of financial situations out there. I know for a fact there are people doing it cheaper than us, and I’m sure there are many more somewhere between our own costs and that of big indies like Shovel Knight. If you’re not writing a budget post yet, why not take a moment and be transparent? There’s far too much about game development that’s concealed from the masses, if you ask me.

 

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Comments


David D'Angelo
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Thanks for posting all your numbers Kevin. One of the things that worried me about our post is that Shovel Knight was a big success and didn't leave room for smaller indies to process what it could mean for them. I hope for continued success for you all and hope Eidolon has a long tail. Do you have any plans to market it more beyond doing price drops? I'm curious what efforts went into informing everyone about the game.

I don't think as many people noticed, but I also created an open google doc so hopefully this kind of information will be easier to track down.

http://tinyurl.com/kfdwpwy

http://yachtclubgames.com/2014/08/stats-update-one-month-later/

Kevin Maxon
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Thanks David. The spreadsheet link didn't work for me, but I was able to find it on your website. A lot of really interesting information! Not that this doesn't make sense, but the most visible information is almost always about the most visible (i.e. successful) games. It's nice to see at least a couple of games on there I've never heard of.

W/r/t marketing: We sent a lot of press emails, made & released trailers, gave out review codes, and stayed active on social media throughout the development. We're all outsiders to the industry, with ~0 connections, and no money to put into marketing, so we didn't have a lot of avenues to get heard by the right people, other than just being noisy enough. My hope is that the game finds an audience and spreads to some degree through that, whether word of mouth, youtube, etc. I don't have many plans for marketing the game at this point, and am feeling ready to be moving on.

To be completely honest, my feeling is that Eidolon needs to be able to stand on its own merits. I feel proud having put this weird thing out into the world, and excited that it's bringing in enough money to fund future endeavors, but it doesn't feel right being aggressive about marketing it. I'd rather see it find its own audience or fail quietly than get an IGN review and draw a lot of "that's not a game" aggression.

Benjamin Quintero
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The single largest cost for any business is salaries. In essence, you paid your staff for maybe 40 hours of work each; how many hours did they put into making this game? I'm not sure I would call this a sustainable business model.

Kevin Maxon
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Here's the reality, though:
* I'm the only one who needs to worry about this game's sales to pay expenses, and it's making enough for me to do so.
* Everyone is being paid an approximately equal amount per hour of work.

Imagine if nobody else had worked on the game, and all the hours had been spent by me alone. It would have taken a proportionally longer time to complete, and taken a proportionally larger amount for expenses, but I would also get a proportionally larger chunk of the profits, and I would still be fine to keep going. It sounds sustainable to me.

Nobody (including myself) signed on to make Eidolon because it sounded like it would pay more than another job, and for most of us this wasn't ever really a 'job' per say.

Justin Pierce
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Not sure I'd describe it as sustainable. When I hear sustainable, I think "I can live off this without hurting my mental or physical health."

The truth is, if the part-timers invested more time, it would probably make them bankrupt (using current numbers). That's the opposite of sustainable.

Some people can and do continue to make games in their spare time even if it costs them money to do so (either actual money or lost time), but that's closer to being a hobbyist, right? I think the goal of most indies is to be able to do it full time.

Kevin Maxon
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It seems pretty rude to come in after I've bared our finances and suggest that because I'm not making as much as you'd like, I'm just a hobbyist. In case it wasn't clear (it was) I am doing this full time. I made this post to give other indies a more honest financial reference, not as an invitation for people to come imply that I need a job.

The truth is, if part-timers invested more time, the game would look dramatically different, we would have had more energy for marketing, we would have shipped earlier, and we would have had better post-launch support.

Also, since apparently this needs to be said, "I can live off this without hurting my mental or physical health."

Benjamin Quintero
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Kevin. I think there is a disconnect here. There's no need to get testy with the people commenting. I think you should view them as legit feedback, not a personal attack.

1. You claim that everyone is making the same. Rev share is not a bad thing, because IF the game had blown up, you'd all be equal millionaires. It didn't. Typically revenue share is added onto a reduced wage, not a zero wage. Which leads me to #2.

2. This "model" is not a model at all, period. A business model by every definition implies something that makes money. What is confusing many readers here is that you refer to the business as your own, but the profit as shared. You toss around more numbers than your sum total income adds up to which leads others to wonder where those other dollars are coming from (ie: out of pocket == loss). Regardless of how you feel about the "business" making $10k, it was at the expense of free labor that benefited only you. People are rightful to question your math.

3. Where do you see yourself in 5 years? I'm dead serious. Most business plans have a 5-10 year projection. Do you honestly think your friends will continue to fatten your companies wallet, and be paid in revenue share for ever? Especially if the games continue to only make $20k here $30k there.

I could see this as a 1-off passion project and not blink an eye. But a passion-project, again, is not a business model. It's just passion, which seldom has anything to do with business.

Kevin, I am very grateful that you had the courage to share your numbers, but I think you got your wires crossed in the messaging. For anyone else reading this, they see this as a near total failure while you seem to be glowing over the end result. It's kind of like laughing at a funeral; people are likely to roll their eyes...

Kevin Maxon
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Wow! For some reason, it sure comes off as a personal attack when you accuse me of using my friends to "fatten my company wallet." My bad!

Here's where I think the messaging disconnect is:

I see game development as analogous to painting, writing, art-making. We're making something we care about and trying to sell it, ideally for enough money to pay expenses. This is what a revenue-share model reflects, and I think it does so with incredible integrity.

Nobody had delusions about Eidolon making them a lot of money. For most people, maybe this was closer to a hobby, in that it was something they did a few hours a week for a few months. The company formed more than halfway through development, and had the interest been there, it likely wouldn't have been a single-member LLC but instead a group venture. The interest was not there, so I spent the time myself to go through the legal garbage that had to be done for us to ultimately sell the game. The "company" did not have funds to pay hourly wages, but that was never the nature of the project. It would have seemed completely bizarre for one of us to start paying the others halfway through the project, instead of continuing to treat everyone like equals collaborating on something we all care about and are invested in. The company is a formality set up by a group of people making a piece of art so that we have the means to legally sell it.

You don't call a full time painter who doesn't make salary wages a "hobbyist," and nobody claims some base level six figure cost per year for a painter to paint, or scoffs at the idea that one could live on less.

This is exactly why I posted the budget. The writing out there is so insanely privileged and delusional, it's obvious why people are too afraid to make interesting games, and why the people making interesting games don't think they can do so for a living. It completely blows me away that making enough to live off of is seen as a total failure, unsustainable.

Benjamin Quintero
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okay...

if you need $1k/m for 20 months as income, and all staff are getting roughly equal share, then you are implying that each of the 9 other staff are also getting roughly $1k/m. That means you are projecting a net of $200k over the next 20 months for Eidolon, but have already stated that sales have dropped to almost nothing after $28k gross.

Honestly, it doesn't matter. I was just trying to understand your logic but it clearly has upset you.

I'm happy for you. I wish you all the best on your next venture.

Justin Pierce
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I wasn't trying to be rude -- sorry if it came off that way.

I've been in your shoes. I'm basically still in your shoes. I'm not trying to discount you or your work -- I merely have small disagreements with the way you're talking about the finances of it.

You may have eked out a modest living (though it's still below minimum wage), but just like Benjamin's comment, I was referring to your contractors. It doesn't sound like current sales have afforded your contractors reasonable compensation for the work they put in. Maybe that's ok with them and they enjoy doing it anyway, but I wouldn't describe that as sustainable business -- if their compensation was below their going rate, it cost them money to work on your game (it should be the opposite). Unless they have reason to believe that revenues will have a good chance of growing to the point where they can take home a reasonable pay (plus interest for their additional risk and delayed payoff), they're doing you a nice favor by continuing to work under market value.

Kevin Maxon
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Alright. I might be able to clear some things up, then.

@Benjamin -
We're getting the same hourly wages. Some of the part-timers put in just a few hours per week for a couple of months. The percentages are worked out so that we're all getting similar *hourly* compensation.

@Justin -
I would love it if we made more money. We would all love for that to happen. (And for the record, our long tail seems to be staying fairly thick.) You're right that they're not making very reasonable hourly wages from thisónone of us areóbut that doesn't make it unsustainable, or just a hobby. This is absolutely sustainable, in that we could continue to do exactly this with similar profits indefinitely.

A different model would be: everyone quits their job, we get funding to pay expenses, and we try to make a game that recoups losses and gives us enough money to continue full-time. But that model is extremely risky for everyone, instead of just for me.

Forrest Smith
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Holy crap balls. I don't even know where to begin.

"Iím excited to be able to share with everyone what I imagine is a very low-budget way to develop a game"

Yes. Not paying people is a *great* way to keep your budget low! Your project didn't even earn enough money to pay people minimum wage. It is literally illegal to pay people less wages than this game paid the people who worked on it.

Kevin Maxon
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The "wages" section title is intentionally tongue-in-cheek.

It is not illegal to do contract work on a project for a revenue share. Another way to look at this is that every team member was a partial owner of the project.

Just going to reiterate that we're all making the same hourly pay here, so I'm not sure what injustice you're objecting to. Should we sue the game, which didn't make enough money to pay us what we could've been making had we instead been spending all of that time working in food service?

This is not a big company with deep pockets. Eidolon is not primarily a commercial venture. Eidolon is a thing we wanted to make, that we thought we could sell for enough money to keep making these sorts of things. Turns out that's true. Turns out it also pisses off a lot of people for developers to be open about not making buckets of money.

Forrest Smith
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"Eidolon is a thing we wanted to make, that we thought we could sell for enough money to keep making these sorts of things. Turns out that's true."


I'm not sure your conclusion would be any different if you released the game for free and made $0. This is basically a hobby project being worked on by 9 out of 10 people in their spare time. It's a side project.

Honestly I'm impressed as hell when *anyone* finishes a side project. I'd say almost 100% of people start side projects and probably somewhere between 1% and 0.1% of those are actually finished. So finishing such a thing is something to be *immensely* proud of.

We should celebrate that it was a creative and personal success for you and your team. But it was not a financial success. It was a financial failure. To pretend otherwise is not good.

Shannon Rowe
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Thanks for this honest and informative article. I had wishlisted this game for buying later, but have now bought it from your site to show my support and appreciation. And also because I really want to play it and can't wait any longer!

Kevin Fishburne
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Bet that metric ton of shit was unexpected. :) I think what your story really tells us is that if you're flat out determined to make a game--to do whatever it takes to be a force in the industry or die trying--that it is possible to do so in a way that more than one person is agreeable to and that for better or worse is fair to all involved.

As far as it being a viable business model, as long as everyone's on the same page, no laws are being broken and enough money is made to stay operational it is technically viable. It's a personal choice between a dull but stable job or doing what you love but barely surviving. Many success stories have been borne of the latter, while most who choose the former leave no real mark on the world save a headstone.

Best of luck, Kevin. Don't give up.

Soren Silkenson
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I really don't get all the negativity on this post. Kevin, thanks for sharing your story and numbers. It sounds to me like everyone knew what they were getting into and your numbers make sense to me. It was really great to read about a smaller dev that's happy making something they love and being able to continue doing so.

I'm in a similar boat but an even smaller one. I'm doing absolutely everything myself except the music for my game, Verde Station. My only goal is to make enough to keep working on games. Just wanted to let you know there are others in your situation so it's great to hear you're achieving your definition of success.

I'll be sure to buy Eidolon from your site. It sounds right up my alley. Best of luck on your next game.

Matt Mirrorfish
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Thanks for your transparency, open-ness and humility Kevin. I really appreciate your sharing numbers on something that aims for a more niche audience.

As far as the people offering critiques of the language in the post, I think it's un-generous and misunderstands the spirit in which you're sharing. I agree that it's up to you to define success and to say that people working on a passion project while keeping other jobs to pay rent are mere 'hobbyists' is absolutely insulting and disrespectful. As someone who has lived for many years as an independent musician and creative professional and done many different things to patch together a living and support my family I know that it takes ingenuity, guts, persistence and eye-bleeding hard work to maintain creative integrity and do the work you believe in.

If you have a model that you and your team agree allows you to continue and make another project then I don't think it's up to anyone else to call it 'un-sustainable'. I think this comes back to an upper middle class entitled idea of what life style we 'should' all be able to maintain while following our dreams, passions and creative impulses. Anyone who's ever lived the heartache, struggle and sacrifice of being an independent artist knows how humbling and difficult it can be, but also how worthwhile when you create something you're proud of. Choosing to live simply so that you can do uncompromising art work is not a less valid choice than pandering to the masses in order to create a 'normal' middle class lifestyle.

I've actually been waiting for the game to come out after seeing some stuff a while back and this post alerted me that it was out, I'm going to buy it now. Just wanted to say that it looks like a beautiful project and I really look forward to seeing more from you and your team.

Reed Law
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Thank you for sharing this. I would count it a sucess to have built a finished product on a shoestring budget. I was wondering if you could share about how you recruited the 9 part-timers? Recruitment seems to me like one of the main challenges facing indie or open source software.

Kevin Maxon
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I originally approached only 3 of them at the beginning of the project. I'd known these 3 from previous projects and knew I wanted to work with them more. We were all in school at the time, and all wanted to work on games, but needed teams, so everyone was very interested.

As we worked on the project I was very open about it, and the remainder of the part-timers were people I knew who asked whether there would be a way for them to get involved. I didn't actively seek out any of these people, but just spoke to them on their terms when they approached me. So I can't really offer a ton of advice.


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