What was your indie game development cost

How to fund your indie game


Between the long hours of work, unhealthy eating habits and the overwhelming feeling of insecurity, developing a game can take an almost heroic effort that paralyzes Kratos, Link or Cloud with fear. And as if that wasn't enough, most indie game studios aren't exactly flush with the financial resources. In order to keep the fortune going and to keep the internet active, most development teams are being pulled back to seek outside funding sources.

Fortunately, it is still a daunting challenge not to necessarily achieve the acquisition of seed capital, as it was the case in the dial-up age.

Prepare to Become a Professional Fundraiser

They say indie game developers have to wear a lot of hats. Well, if your studio needs a cash infusion, it's high time you started adding another Fedora effect: that of the pro-fundraiser. But before you call your long-lost loved ones or sell your Blu-ray collection on eBay, be sure to activate your development budget. And that takes a little guesswork.

Here are a few helpful tips to make the process easier:

  • You need to know that everything costs money:From new computers to development kits to personal bills to stress balls, your game development budget should include everything related to the development process. A game is much more than just art, design and code.
  • However, the majority of your costs will be directly related to game development:There are many ways to market your game for free thanks to social networks and open source resources like presskit (). Please see our Marketing Checklist for more information.
  • New features cost more than you might think:Note that for every new feature you implement, more money will have to be allocated to each development department. Worse still, new features take time, and as the old saying goes, "time is money". Also, keep in mind that every month you spend developing a game is another month if you are not availing a salary.
  • Developmental delays will occur:Whether your programmer is hijacked, the code is lost, or your artist suddenly stops, production delays are a natural component of the game development process. Expect them, hug them, and always be aware of them.
  • You should write a game design document before doing a budget calculation: I cannot stress this enough. The game design documents will give you a much clearer picture of the number of assets and the time required to complete your game. Without one, you might as well pick a number from a hat. The more quantifiable and detailed the design, the more accurately you can determine the man-hours required.

Even if you stick to certain parameters, predicting development costs accurately is still a bit of crap. So when in doubt, be on the safe side. It is better to have a lengthy, disastrous game development process rather than a smooth flow.

Another point: the vast majority of indie games costunder $ 200,000 to develop. Hits likeAngry Birds, BraidandWorld of goowere all produced for anywhere between $ 120,000 and $ 180,000. I've personally made games for less than $ 2,000. Never let yourself be fooled that you need a triple-A budget to create an indie game.

The business plan

The potential for raising funds through a crowdsourcing platform or an accredited investor improves significantly once you've developed a prototype or demo. However, to get to this point, you need to address what is commonly referred to as in the investment world Seed capital. There are a few ways to do this, but all of them start with a solid business plan.

Business plans are not the 200-page torture exercises they used to be. In fact, most investors prefer business plans that are straightforward and to the point. It should include a brief description of your company and its structure (you started a business, right?), A market analysis of your preferred industry and direct competition, an overview of your product line and how you intend to sell it, and an overarching marketing program. Finally, you want to make some financial projections and state how much money you are currently looking for.

Conducting market research isn't as daunting as it might seem at first. For example, if I were to create a retro RPG (which is what I am) I would first reach out to other developers who have done the same and ask them a few questions about their development costs, sales, how it works, and what not worked. t. You will be surprised how much most developers want to reveal this information.

And while getting this data proves difficult, there are plenty of developers who write postmortems and detail their profit margins. Indie RPG developer Zeboyd is a prime example.

Pre-demo financing

Now the fun part. With your hands-on business plan and household documents in place, it's time to raise some cash. Here you start:

friends and family: There are a number of benefits associated with personal money, and it is not the least that your friends and family members are often not out to make money. Even if they are required to show a small position of equity or a full repayment for cash, it is a small price to pay compared to a lender's potential pitfalls.

The downside of borrowing from friends and family members is that you run the risk of breaking ties, especially if the repayment terms are not fully known. To counter this, make your equity partners aware that they could lose money on the deal, or at least see some return on their investment. Unfortunately, most companies are not profitable for the first three years.

Personal savings: There is some risk involved in using your personal savings. Unexpected circumstances can arise and while you think you have enough money to fund a game on your own, a major life event can change that in a rush. For example, if you lose your day job, pay medical bills, major development delays ... these things happen, and without a safety net, they can prove disastrous.

Instead, use just a portion of your personal savings on your game development projects and keep them separate in an account that is separate from your emergency funds. Ideally, working capital would be held in your company's personal bank account.

Business Loans: Business loans are not without their drawbacks. Since the 2008 financial crisis, lenders have tightened their belts and generally refused to approve your pre-sales company unless you have exemplary creditworthiness.

The approval process itself can be a lengthy, months-long affair, especially if you are applying for an unsecured loan (no collateral). Also, the high interest rates often associated with loans of this type can match those of credit cards.

Still, business loans have certain advantages. They provide your team with a substantial amount of money so that you don't necessarily have to look for additional sources of funding. They also put some pressure on you to complete your game on time, if only to repay the loan faster.

Credit cards: Similar to corporate loans, your credit score will determine the amount of loan you will receive. Credit cards are another viable option. Even if your credit report is clean, obtaining a credit card can be a risky business.

Think of it this way: if you buy a credit card with a limit of $ 10,000 and a 19.9% ‚Äč‚Äčinterest rate and then hit it right away, you'll have to pay nearly $ 200 a month a month to get the offset. Alternatively, you can only apply for credit cards with low or nonexistent introductory prices, but these usually expire after a year. Be careful.

Financing through non-monetary means: Not all financing models require you to accumulate tons of personal debt or deplete your savings. A little creativity goes a long way here. For example, you can use free or inexpensive rapid prototyping tools like Game Salad.

Another option is to find employees willing to work on a small revenue share or on a volunteer basis. Admittedly, some volunteers tend to be on the unreliable or inexperienced side. However, you will be surprised at how many talented creatives are willing to trade free work to strengthen their portfolio.

If you find a gem under construction, entice them to stand their ground by indicating that you are currently raising money and you will be offered a decent paying position as more options become available. Or just bite the bullet and start paying them now.

Doing independent part-time work yourself is also another viable route. Try to take jobs that will deepen your knowledge of the game development field. For example, if you work as a game programmer, you need to use the same skills to create your own game. Working as a journalist or game developer yourself can pay off financially as well as through knowledge gained. This is also a great way to build a reputation.

The biggest disadvantage of doing freelance work is that it eats up your time. Time that could be used to create your own game. Regardless, it's still one of the safest, most rewarding pre-demo funding routes you can take.

By now, you may have noticed that any vehicle used to finance launches has its drawbacks. This is just an unfortunate truth. The good news is that after building a prototype or demo, less risky options suddenly arise.

Post demo funding

You created a demo but it is still buggy, used some programming skills, and only shows five percent of your game. You need more money and you need it quickly. Here are some of your options:

Kickstarter: Kickstarter is one of the most widely used fundraising mechanisms in the world, enabling game development companies to raise funds without taking a lot of risk. All they ask of you is keep your promise to produce a game and reward rewards. There is no need to repay loans, no high interest rates, and no need to give away parts of your business. It really is a match made in indie heaven.

Well not quite. If you fail to live up to expectations, you will suffer a significant reputational loss and face the contempt (and potential class action lawsuit) of your funders. In addition, you will likely need to reserve a significant portion of your donation funds for backer rewards.

One final note: whatever you do, don't fall into the trap of asking for less money than you really need. The only scenario where requesting a percentage of your household needs is acceptable is when you already have some alternative funding route to make up the difference.

(See also: A No-Name Developer's Guide to Success on Kickstarter.)

Crowdfunding 2.0: A new model is emerging whereby individuals residing in the United States, whether or not they are an accredited investor, can purchase shares in a startup. Crowdfunding 2.0, made possible by the JOBS Act of 2012, could potentially prove to be a financial avenue for development teams seeking $ 1 million or less.

I say $ 1 million because the US Securities and Exchange Commission has strict restrictions on how much capital a company can raise in a calendar year. Investors also face constraints the severity of which depends on their financial portfolio.

Crowdfunding 2.0 is infinitely more attractive to investors than its vanilla counterpart because it gives them a potential return on their investment. For this reason, it can happen that funding portals such as Crowdfunder may replace the popularity of Kickstarter.

Indie Fund:Indie Fund is a mishmash of several successful independent developers who all share the common goal of helping ambitious developers achieve their goals. Their model is simple: the Indie Fund finances the development costs of a game in return for a full repayment of the original loan plus 25 percent license fees until it has either made double the initial investment or two years have passed. If a game does not generate enough income to cover the repayment costs over a period of two years, the loss will be offset by the Indie Fund.

Be warned: Indie Fund manually selects its candidates, with only games receiving good reviews from the press or from gaming festivals. Still, it's ideal for innovative developers who have at least some industry experience.

Angel investors, venture capitalists, and publishers: I am summarizing these because they all belong to the old guard. Venture capitalists in particular are very suspicious of investing in companies that do not have a long-term plan. However, if your startup has plans to release a commercial engine along with two or three games in the next few years, approaching a VC suddenly becomes a viable option. Same goes for angel investors.

Publishers are typically in the money making business, not games, and have been known to write off niche or quirky indie games that may or may not succeed in the marketplace. For this reason, Tim Schafer turned to Kickstarter in the first place. Since portals like Steam and the Google Play Store, together with consoles, show an increased willingness to publish indie games, traditional publishing models are quickly falling out of favor.

Alpha funding: Alphafunding is essentially a vehicle that allows players to buy and play your game before it's ready for commercial release. PC gaming portals such as Desura have implemented the model with some success. Alphafunding is also a worthy marketing tool as it puts a near-finished version of your game in the hands of buyers.

Conclusion

There is a wealth opportunities for game development companies looking to raise funds for their next venture, with more alternatives becoming available each year. With so many options available, there is little need to be limited to a single source.

Even so, it's important to consider the best route possible. With financing comes the possibility of debt, loss of justice and reputation and of course stress. Take a deep breath, be careful and know where there is a will, also a way.

References

  • Preview Image Credit: Money designed by Luis Prado of the Noun Project.