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100k, some good ideas, and a burning desire to start a game company.


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#1 redfella   Members   -  Reputation: 144

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Posted 04 July 2012 - 02:02 PM

So, I basically put it all out there in the title for this thread.

I have 100,000 USD to invest in a new business. I think I have some decent ideas for some interesting games/game mechanics. And I have burning desire to build a new game company from the ground up.

Basically, I'm posting here to fetch some ideas about what would be the best strategy to get my company off the ground and on the way to becoming profitable.

I am looking for specific, detailed and technical ideas/thoughts about how I should exactly use my startup capital to accomplish my goals.

These are my goals:

1 - To complete and release one game by the end of the first year.
2 - To earn enough money to fund projects of future interest.
3 - To complete a highly-polished, buy modestly-budgeted, MMO, FPS, MOBA, or hybrid game (with interesting new game mechanics).

I have a ton of experience with FPS games (specifically on the PC), and a good knowledge of RPG games. I also am learning and becoming a fan of MOBA games (Smite) and I think this genre may have a lot to offer in terms of Return On Investment. I am interested in either a free-to-play model or low-priced DLC for all of my releases.

Thus far, my idea is to hire a programmer, modeler/animator and an artist (I can do design). I was thinking of offering 10-15k for a year's salary plus a 25% royalty for up to the first million dollars of net profit (dropping to 10% royalty after that). This puts the potential incentive for each employee at 260k+ - if the game clears a million net profit. Salaries will be re-considered/extended after the first year. Using this model I will only be out 30-45k (3 employees at 10-15k each) the first year in business and I will have 55k+ to work with for subsquent years/challenges.

Now. All employees must relocate to my location in Raleigh, NC and must work from my house (to begin with). This will keep overheard low and the team on the same page. Office space may be acquired in the future dependant upon income.

Ultimately, I would like to have a nice office with a team of 20-30 employees or so working on ground-breaking AAA titles. These titles would require some budget, but not insanely crazy budgets (probably in the ballpark of 1-2 million). This is my ultimate goal - just so you all know where I'm intending to end up.

Well. What do you guys think? I am looking for feedback on any and everything that I posted above.

Just FYI: I would prefer not to have to make a casual game/phone game for my first title as I have absolutely no experience in this catagory and this catagory is not necessarily something that interests me. An ideal first game would be more along the lines of say Braid, or Limbo, or World of Goo (2d side-scrollers) or even a game like Minecraft.

Ok, thanks then.

Edited by redfella, 04 July 2012 - 02:05 PM.


Sponsor:

#2 Tom Sloper   Moderators   -  Reputation: 10060

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Posted 04 July 2012 - 02:21 PM

I have 100,000 USD to invest in a new business.
I think I have some decent ideas for some interesting games/game mechanics.
I would prefer not to have to make a casual game/phone game for my first title
An ideal first game would be more along the lines of say Braid, or Limbo, or World of Goo (2d side-scrollers) or even a game like Minecraft.


Investors require that you inject 25% of the startup capital. So you can start with $400,000 when you show an impressive business plan.
Problem is, a game like Braid or Limbo can't be made for that little. You'll need much closer to a million, since you don't want to go for the cheaper platforms.
Game ideas are a dime a dozen. What you need is a business idea that's unique. A new way of monetizing, a new way of earning money, a new plan for marketing, something that'll make your company stand out in the crowd.
-- Tom Sloper
Sloperama Productions
Making games fun and getting them done.
www.sloperama.com

Please do not PM me. My email address is easy to find, but note that I do not give private advice.

#3 redfella   Members   -  Reputation: 144

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Posted 04 July 2012 - 04:21 PM

Investors require that you inject 25% of the startup capital. So you can start with $400,000 when you show an impressive business plan.
Problem is, a game like Braid or Limbo can't be made for that little. You'll need much closer to a million, since you don't want to go for the cheaper platforms.


Not sure where you came up with a million. Braid was made for 200k.

http://www.escapistmagazine.com/news/view/90505-Braid-Cost-200-000-To-Make

Using my model in my original post I could make it +/- 100k. So making a game like Braid is definately doable.

The question then still remains. Is my model a good model or not? Are my numbers good or not?

#4 Tom Sloper   Moderators   -  Reputation: 10060

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Posted 04 July 2012 - 05:04 PM

OK, Blow made Braid for $200K. Then how long did it take to get the game on XBLA, how much was spent doing that, how much was spent traveling to game competitions, how much was spent on marketing. Or did the $200K include all those costs (not just the development cost).
What's your plan - how much for development, how much for marketing, how much for incremental costs and cost of living during the time it'll take after completion of the game until money starts coming in, how much money will be coming in at what rate, how long will it take until you reach the breakeven point.
-- Tom Sloper
Sloperama Productions
Making games fun and getting them done.
www.sloperama.com

Please do not PM me. My email address is easy to find, but note that I do not give private advice.

#5 jbadams   Senior Staff   -  Reputation: 19018

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Posted 04 July 2012 - 06:38 PM

You'll almost certainly have to re-think your proposed salaries of 10-15k/year; you need talented developers to achieve your goals, and you'll have a tough time attracting them if they could make more money than you're offering by flipping burgers or some other un-skilled employment. For reference, I made around 30k/year (double your offer!) working as a pizza delivery boy while going to university.

Royalties are generally not considered attractive unless you already have a proven track record.

You'll need a business plan, and a much more specific idea of what sort of game you want to make and how you plan to distribute and monetize.

#6 SimonForsman   Crossbones+   -  Reputation: 6166

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Posted 04 July 2012 - 06:43 PM


Investors require that you inject 25% of the startup capital. So you can start with $400,000 when you show an impressive business plan.
Problem is, a game like Braid or Limbo can't be made for that little. You'll need much closer to a million, since you don't want to go for the cheaper platforms.


Not sure where you came up with a million. Braid was made for 200k.

http://www.escapistm...200-000-To-Make

Using my model in my original post I could make it +/- 100k. So making a game like Braid is definately doable.

The question then still remains. Is my model a good model or not? Are my numbers good or not?

There is a huge difference between playing games and designing games and an even bigger difference between designing games and producing a game, Anyone can come up with ideas for games that appear fun, most people can also get the design done reasonably well, designing fun games that can actually be produced with the talent and time available is far more difficult.

The best route when starting any business on a tight budget is to do the heavy lifting yourself, make sure you have the skills required to do so. (With a 4 person team (you + 3) and the compensation plan you suggested i would expect you to do atleast 30% of the work (Which, in a 4 person team means that you have to do alot more than just design), (if the game is a smash hit you're taking up to 70% of the net profit, and you get the money you invested in salaries back before the team gets a dime for their investment so you will have to show the investors(i'm not going to call them employees when they work for peanuts and promises) that you will deliver the goods)

Edited by SimonForsman, 04 July 2012 - 06:59 PM.

I don't suffer from insanity, I'm enjoying every minute of it.
The voices in my head may not be real, but they have some good ideas!

#7 CRYP7IK   Members   -  Reputation: 985

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Posted 07 July 2012 - 08:51 AM

You probably won't be able to get someone full-time for those salaries (Not really enough to live on) so allow them 2 days a week to work other jobs or something. You will be an indie studio, embrace it.

At a few studios I have worked at skilled people have worked for free (work experience program) for a while before getting hired. Look at intern-ship programs from local Universities or Colleges (If that exists at all) and people who just graduated. While this will give you people who kind of know what they are doing you will really need to make sure you have the technology to back yourself up.

I recommend getting Adobe Creative Cloud subscription for at least one artist (Very cheap, every Adobe product and avoids legal complications.)

Then I would recommend Unity3D (With SpriteManager2 and EZGUI) or Game Maker Studio to create your games with.

Relocation is also kind of bad (And limits your options), I would allow people to work from home until the first game went live. However track progress using something like Trello and have fortnightly performance reviews to catch problems early.

I would recommend to help pay employees salaries you stay in your current job or get a casual one, this should increase your hire time for each employee by a small amount. This will be hard work and very stressful, however that is business!

Just FYI: I would prefer not to have to make a casual game/phone game for my first title as I have absolutely no experience in this catagory and this catagory is not necessarily something that interests me. An ideal first game would be more along the lines of say Braid, or Limbo, or World of Goo (2d side-scrollers) or even a game like Minecraft.

.

This kind of thinking shows me you aren't willing to make good business decisions and let personal feelings interfere. That is deadly and you should re-think why you wouldn't enter a market where a game can take 2 - 8 months to make and is becoming the biggest profit margin for game developers. IMO It's a lot easier to monetize iPhone and Android games compared to almost everything else (Maybe barring web games).

Keep in mind, your first game will most likely not be profitable, in fact it will probably not make more than 1 dollar a day for the first few months, if that. Last piece of advice: Make a tiny game scope and polish the hell out of it.

Good-luck and have fun.
To accomplish great things we must first dream, then visualize, then plan...believe... act! - Alfred A. Montapert
Gold Coast Studio Manager, Lead Programmer and IT Admin at Valhalla Studios Bifrost.

#8 Orymus3   Crossbones+   -  Reputation: 9914

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Posted 07 July 2012 - 07:52 PM

I'd use http://www.kickstarter.com/ as I think you'll end up needing more than that (you've mentionned MMO...)
Also, making 1M net profit on your first game... really? What kind of industry experience do you have?

And as said above, for your currently listed goals, you'll have to rethink your salary plans as you'll need more than novice people.
A programmer, on average, earns a LOT more than 10-15k USD$ (It's arguably one of the best paid position in the industry).
Besides, your initial crew won't be 'regulars' you'll want people that have wider skillsets especially in the field of communication and proactivity to name only these two.

Ultimately, I would like to have a nice office with a team of 20-30 employees or so working on ground-breaking AAA titles. These titles would require some budget, but not insanely crazy budgets (probably in the ballpark of 1-2 million). This is my ultimate goal - just so you all know where I'm intending to end up.


While not entirely impossible, we're talking probably decade(s) before you get there if you do. I'd suggest having a short-term and a mid-term plan to achieve that.
An interesting event occured here a few weeks back where the founders of three different successful studios in our area were brought up as guests to speak about their experience and give advices to potential new studio starters.
All three of them had one thing in common which they've discussed extensively which could be summarized as this:
"Sure, we all want to make our games etc, but on the way to get there, we all need to establish a strong source of revenue to secure the backbone of our studios".
One of the studios offered about 75% of their workforce to make PC ports of console games. Eventually, this secured their financials, until they were acquired by Activision (This is the studio known as Beenox).
Another specialized in web contracts, fetching pretty much any decent Actionscript-based game dev project they could tackle from big names (Disney, etc).

My one and only advice is that you should use your initial capital to set up a sustainable source of income for your company, and spend anything you get out of it on your own creations. That way, your risk is minimized.

The alternative, which I personally prefer, is not go the full-fledged studio path but start with your own indie startup project. I don't think you'd need to have people relocate to your home office yet, and you could do with a much smaller team and smaller scoped project. While your initial project may not be successful (and I mean you will probably lose money overall) it gives you a foot in the door, a bunch of experience and more importantly, credibility. The next time you assemble a crew (for real this time rather than rely on freelancers) people will have something to see. Given the low salaries you can promise (and the profit share formula) and your demand of relocating, having a serious project under your belt can only help.

My 2 cent.

#9 mdwh   Members   -  Reputation: 888

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Posted 09 July 2012 - 06:50 AM

This kind of thinking shows me you aren't willing to make good business decisions and let personal feelings interfere. That is deadly and you should re-think why you wouldn't enter a market where a game can take 2 - 8 months to make and is becoming the biggest profit margin for game developers. IMO It's a lot easier to monetize iPhone and Android games compared to almost everything else (Maybe barring web games).

I wonder if even here, this is still true for most developers these days. It seems that Google Play is flooded with developers these days, and it's hard to get anyone to see your game without the same kind of marketing needed on other platforms. With the exception of some hold-outs like Nokia, making significant money (i.e., comparable to full time job) from mobiles for Indie developers seems it would be as hard as it is on non-phone platforms. (My games get more downloads now on Windows than Android, though Symbian still leads by far.)

Edited by mdwh, 09 July 2012 - 06:52 AM.

http://erebusrpg.sourceforge.net/ - Erebus, Open Source RPG for Windows/Linux/Android
http://homepage.ntlworld.com/mark.harman/conquests.html - Conquests, Open Source Civ-like Game for Windows/Linux

#10 kdog77   Members   -  Reputation: 229

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Posted 10 July 2012 - 01:05 PM

@ redfella, I think you deserve some honest feedback if you plan to start a development company and not just invest the 100k in a team that is up and running. To be blunt - your stated goals exceeds your current capacity. Let me explain:

Budget: $100K is not enough to develop a decent FPS on PC and survive in this market, let alone a decent MMO. 38 Studios spent in excess of $100M and still ended up getting shut down without releasing a game. Even low end iOS/Android "casual" titles have budgets over $100K these days. I think if you want to get experience developing for PC, then start with taking an existing game and development tools to create a mod (e.g. Half-Life). This is a tried and true method for relatively inexperienced developers to hone their skills at lower risk.

Salaries: A good rule of thumb for hiring professional developers is about $10/K per man/month. So hiring 3 good people with decent experience to develop your game would probably burn through your $100K in about 3 months. This doesn't include employment taxes and other withholdings that you would be obligated to remit to the IRS/NC state tax board as the employer. You may be able to contract parts of the game's development to cheaper vendors located outside the US, but merely offering profit participation is not sufficient incentive to acquire top talent. Have you considered taking on partners?

Experience: Even experienced and well-financed developers fail (e.g. Kaos studios). You stated that you have some ideas, but no background in game design. How do you expect to recruit and lead a team to develop the game? Again it may help if you have something concrete (such as a mod) to show potential partners.

Location: Unless you have home insurance that includes workman's comp and amazingly fast internet, it would probably be a better to allow the team to work remotely. In addition to the meager salary, you won't find many people willing to move to NC for a short term project to work in some random dude's house (sorry but this its true).

First Game: Please look at the background and experience of guys like Notch and Jonathan Blow before aiming to match them. Those were not their first attempts at developing a commercial game and they often took years to complete. Again, you need to match your expectations with your capacity and skills.

Investing in a private game developer may be another way to get in the door, but that is an entirely different subject. Good luck.
Kevin Reilly
Email: kevin.reilly.law@gmail.com
Twitter: kreilly77

#11 SimonForsman   Crossbones+   -  Reputation: 6166

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Posted 10 July 2012 - 01:36 PM


This kind of thinking shows me you aren't willing to make good business decisions and let personal feelings interfere. That is deadly and you should re-think why you wouldn't enter a market where a game can take 2 - 8 months to make and is becoming the biggest profit margin for game developers. IMO It's a lot easier to monetize iPhone and Android games compared to almost everything else (Maybe barring web games).

I wonder if even here, this is still true for most developers these days. It seems that Google Play is flooded with developers these days, and it's hard to get anyone to see your game without the same kind of marketing needed on other platforms. With the exception of some hold-outs like Nokia, making significant money (i.e., comparable to full time job) from mobiles for Indie developers seems it would be as hard as it is on non-phone platforms. (My games get more downloads now on Windows than Android, though Symbian still leads by far.)


Making money on games is always hard, The advantage of mobiles is in the format, you can push out one or even two good mobile games and get some decent marketing for them with a $100k budget. On the PC as an indie you pretty much need to hit a neglected niche to be able to compete on a small budget. (There are quite a few of those to choose from though but MMOs, FPS:es, Action RPGs, etc aren't genres you want to aim for unless you got a cool twist up your sleeve to be able to get by with far less polish than your competitors)

Edited by SimonForsman, 10 July 2012 - 01:37 PM.

I don't suffer from insanity, I'm enjoying every minute of it.
The voices in my head may not be real, but they have some good ideas!




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