# How many copies does one have to sell

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to be profitable? In a 1999 article http://www.gamedev.net/reference/articles/article866.asp on this site its claimed that to make money: -between 15,000 and 40,000 games must be sold on the PC - 150,000 units for the console market The storage formats have increased by a huge factor the last 10 years E.g. The super Nintendo cartridge could hold 32 Megabits, compare this to a modern game storage format such as a DVD which can store 4.7 Gigabytes, we can see that storage capabilities have increased with a factor 1200. The next generation consoles are going to use the blu-ray format which can store 25 gigabyte. Suppose we can compress art such as graphics, animation and audio a factor 10 to 1 and assuming the game engine itself takes up 1 gigabyte, on a 3rd generation console we can potentially ship 240 gigabytes of art! that is a lot Can anyone tell me (or provide a rough estimate) how many copies must be sold to make a profit on a game? I'm interested in: - how many copies are profitable for 2nd generation consoles - how many copies are profitable for PC market - how many copies are profitable for 3rd generation consoles

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All depends on your methods of development, publishing, and distribution. You need to know what kind of startup money the venture will cost, and how much profit per unit you will make.

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I know it depends on a lot of factors but isnt there some rule of thumb? or a gross estimate?

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Rule of Thumb:

Cost to develop and market / (Sale price per unit - Physical cost per unit) = Number of units required to break even

Your attempt to equate physical storage capacity with cost, while not entirely false (you have realized that more art requires more money), has led you to a false assumption that games have some general sales quantity required to make them profitable.

Your biggest mistake, as mentioned, is believing that available storage space is a measure of cost. Just because storage space exists, doesn't mean developers are forced to use it up. A really easy example would be Lumines for the PSP. It is distributed on the PSPs UMD disk, which can store up to 1.8GB of data. Yet the game itself uses a fraction of that space (try less than 180MB).

The cost of content per megabyte of data is also highly variable - is that 1 megabyte of voice acting, 1 megabyte of textures, 1 megabyte of FMV, 1 megabyte of code (no, game engines are not 1GB - code doesn't magically grow larger on next generation consoles or on large capacity storage mediums. A 1GB game engine wouldn't be remotely practical, even on a PC).

You then have the very design of the game. The title "Peter Jackson's King Kong" only uses 16 bytes more than just plain old "King Kong", yet it likely added a quarter of million dollars or more to the cost of the game.

The conclusion:
-Attempting to gauge cost (required to determine required sales volume) based on data size is ludicrous.
-Attempting to gauge cost based on general platform or worse, "generation" is a losing proposition.

Simply put, I could likely pop up a Gameboy Advance game that required more units sold to be profitable than a Playstation 2 or XBox game. To determine the cost you need to look at what went into making the game: Licences, artists, animators, motion capture, testing, audio and a host of other line items that make up the production.

While you'd have a hard time finding a publisher to back it at this point in time, you could make an XBox 360 game that was Tetris with lots of background music and low cost FMV (i.e. say HD video capture of natural scenes). It would take up an entire dual layer DVD (>9GB), yet would likely turn a profit at 20,000 copies. At the same time, you could make a titanic/Titanic Gameboy Advance game based off an expensive movie licence with voice recordings from the original A-list actors using sprites created through motion capture (it worked great for the original Prince of Persia) and with several hundred finely detailed levels throughly playtested (remember that 2D tile level data can be easily compressed). Such a game could easily require a million units sold to start becoming profitable.

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 Original post by eelke_folmerI know it depends on a lot of factors but isnt there some rule of thumb? or a gross estimate?

The only rule of thumb is that you have to sell enough to recoup your costs. What that number is depends on what your costs are. How much it cost to develop as well as what you spend on marketing, sales and manufacture. A big budget AAA PC title like Half Life 2 will cost millions to make and will need to sell a lot before it makes a profit. At the other end of the scale some indie PC games cost a few tens of thousands to make. Only you know what your costs are so only you can calculate when it will make a profit.

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If you make a game in your spare time for ~$0 and sell it by download from your website, you can keep 90% of the sale price as profit. If your game is$20 then that's $18 per sale. So 1000 sales =$18,000 which I guess is about the minimum liveable wage in the US?

To be a millionaire you must sell (only) 55,555 copies. Which is incredibly low compared to big AA titles, but a lot if you don't pay any marketing costs!

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 Original post by d000hgIf you make a game in your spare time for ~$0 Your game won't actually cost$0 of course, due to opportunity costs. Your time has a value because that time could be used to earn money at some other job. Even if you assume that all you could do would be to flip burgers at minimum wage then the cost of making the game is hours invested * minimum wage.

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 Original post by d000hgTo be a millionaire you must sell (only) 55,555 copies. Which is incredibly low compared to big AA titles, but a lot if you don't pay any marketing costs!
If you don't have any marketing costs, it's highly unlikely you're going to sell anything remotely close to 55,555 copies... probably more like 5 (I'm considering doing your own marketing a cost, since that's time you could spend improving your product). Conversion rates (# of sales/# of downloads) for downloadable games are usually measured in the low single digits. At a, say, 2% conversion rate, you'd need almost 3 million downloads.

That's not to say you can't make a day job out of it, or that you can't become a millionaire, but it's just not as simple as:
1. Make Game
2. ???
3. PROFIT!!!

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 Original post by MichalsonRule of Thumb:Cost to develop and market / (Sale price per unit - Physical cost per unit) = Number of units required to break even

allright I did some research on this; according to this book (Austin Grossman, Postmortems from Game Developer) the average cost for developing a game lies between 5 and 10 million dollar.

according to this article: http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/1/hi/technology/4442346.stm these costs are expected to rise to between 10 and 20 million dollar for the 3rd generation gaming consoles

So lets say I will develop a game for the xbox 360 which costs me 7.5 million on average. (don't know whether marketing costs are included in this figure (can't really imagine that). The xbox 360 Game price is $60 lets say$10 goes to distribution / packaging / costs of the dvd. So I need to sell 150.000 copies to break even. That sounds pretty fair and is the same number as claimed in the article. (I mailed the author to ask if he knew any updates on these figures)

I am just interested in this "average" figure. If we look at the big picture there are 90 million playstations 2 in worldwide so selling 150.000 is not that hard I imagine. Although there are 5000 titles for the ps2. I always thought that developing a game that actually made money was the same as winning a lotery but these figures show that the odds are not that bad indeed.

GTA san andreas sold more than 1 million copies in the first 9 days so thats a huge profit

On the other hand I would have expected the number of units that must be sold to increase over the next years because of this increase in graphics & costs for creating graphics. Maybe 50 dollar is not the right estimate and is $40 dollar more accurate. maybe marketing costs are even bigger then development costs? I'm not interested in these figures because I want to start a game company as I am interested in game engineering from a research point of view. I think costs are going to become a huge problem for game developers in the near future and few games will be able to make a profit (according to this http://www.dti.gov.uk/industries/computer_games/computergames_appendices.pdf article 3% of the games account for 55% of the sales. Academia should find new ways to decrease the costs of developing games. Quote:  Your attempt to equate physical storage capacity with cost, while not entirely false (you have realized that more art requires more money), has led you to a false assumption that games have some general sales quantity required to make them profitable. I'm only claiming that advances in technology (such as storage space, graphic cards) drive requirements for games (E.g. improved graphics etc) Quote:  Your biggest mistake, as mentioned, is believing that available storage space is a measure of cost. Just because storage space exists, doesn't mean developers are forced to use it up. That is true but if you just look over the past 10 years, developers have used up all space that was available to them (I still can remember buying phantasmagoria discovering it consisted of 7 (!) cd roms ;) I don't know for sure but I think most games nowadays are shipped on one or more dvd's. If the dvd storage format was more then enough why are 3rd generation consoles shipped with blu-ray drives? (Ok hd tv but I can imagine in a few years there will be games that ship more than 100GB on art) Quote:  The cost of content per megabyte of data is also highly variable - is that 1 megabyte of voice acting, 1 megabyte of textures, 1 megabyte of FMV, 1 megabyte of code (no, game engines are not 1GB - code doesn't magically grow larger on next generation consoles or on large capacity storage mediums. A 1GB game engine wouldn't be remotely practical, even on a PC). Hmmm I was just assuming it would be something like 1GB, it will all depend on the game ofcourse. Do you have any figures on how big game engines are? Quote:  You then have the very design of the game. The title "Peter Jackson's King Kong" only uses 16 bytes more than just plain old "King Kong", yet it likely added a quarter of million dollars or more to the cost of the game. true. Quote:  Simply put, I could likely pop up a Gameboy Advance game that required more units sold to be profitable than a Playstation 2 or XBox game. To determine the cost you need to look at what went into making the game: Licences, artists, animators, motion capture, testing, audio and a host of other line items that make up the production. ow I am not argueing about that. The costs of developing games depends on many factors but another fact is that these costs have increased over the years and are still increasing just because technological advancements allow for this. If the Xbox 360 was still shipped with a normal cd rom drive we would have these expensive games with fancy graphics. Quote:  While you'd have a hard time finding a publisher to back it at this point in time, you could make an XBox 360 game that was Tetris with lots of background music and low cost FMV (i.e. say HD video capture of natural scenes). It would take up an entire dual layer DVD (>9GB), yet would likely turn a profit at 20,000 copies. At the same time, you could make a titanic/Titanic Gameboy Advance game based off an expensive movie licence with voice recordings from the original A-list actors using sprites created through motion capture (it worked great for the original Prince of Persia) and with several hundred finely detailed levels throughly playtested (remember that 2D tile level data can be easily compressed). Such a game could easily require a million units sold to start becoming profitable. That is a good point. and i'm interested to see if developers/publishers actually consider this when making the decision to start implementing the game. Especially with high risk games (e.g. new types of gameplay; you could opt for the first option rather than a more expensive option). Thanks for the feedback anyway! #### Share this post ##### Link to post ##### Share on other sites Quote: Original post by Obscure Quote:  Original post by d000hgIf you make a game in your spare time for ~$0
Your game won't actually cost $0 of course, due to opportunity costs. Your time has a value because that time could be used to earn money at some other job. Even if you assume that all you could do would be to flip burgers at minimum wage then the cost of making the game is hours invested * minimum wage. Assume you work on a game full time (40 hours a week) for two years that's 4160 hours of production time. Multiply those hours by whatever wage you are giving up to spend on your own project and you get the total cost of production. Let's assume 4160 *$15 = $62,400 Now to find how much you break even: TotalCost / NetValueOfEachCopy = NumOfCopiesRequiredToBreakEven let's say you sell each copy and get to keep$15 from each and you're back to 4160 copies needed to break even. There are a lot of assumptions here, but I think it may help visualize (though no new info, just an example).

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 Original post by eelke_folmerallright I did some research on this; according to this book (Austin Grossman, Postmortems from Game Developer) the average cost for developing a game lies between 5 and 10 million dollar.
But that isn't the real average cost - that is the average cost of games that were featured in the Post Mortem section on Gamasutra. The vast majority of those titles are AAA big budget titles because those are the sorts of titles people want to read about. Even then their "average figure" is $7.5 million +/-$2.5 million - that is a pretty inaccurate figure. :)

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 according to this article: http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/1/hi/technology/4442346.stm these costs are expected to rise to between 10 and 20 million dollar for the 3rd generation gaming consoles
Few people in the industry actually believe these figures - they are actually spwaned from the black heart of the EA marketing deprtment and not from development. Every time a new console generation launches EA try to scare off the competition by announcing that the cost of development will double or triple. It never does and it won't this time - further more EA's products aren't average so you can't judge the industry based on what they say/do. As the top publisher they can afford to throw vast resources at a game. They have teams of 150 people working on titles because it is more important for them to ensure the game ships on time than it is to maximise profit.

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 So lets say I will develop a game for the xbox 360 which costs me 7.5 million on average. (don't know whether marketing costs are included in this figure (can't really imagine that). The xbox 360 Game price is $60 lets say$10 goes to distribution / packaging / costs of the dvd. So I need to sell 150.000 copies to break even.
I am afraid these figures are incorrect. The wholesale price of software (the gross amount a publisher receives) is much lower than $50. It is actually in the region of 50-60% of the retail price (so on a$60 title they get around $35.00 Then you have to deduct the platform license fee they pay to the console makers and the cost of goods (the cost of manufacture of the DVD, box, manual etc) - around$7-$8.50 per unit so they are down to around$26.00

They may then have additional deductions for shipping, retail marketing support, sales force incentives etc etc - potentially another $1.00 So the publisher is now left with something in the region of$25.00 but only when the product is brand new. Retailers rapidly start to discount games - often within weeks of launch, sometimes even at launch. This reduction is reflected in the publishers wholesale price so they may get even less than $25.00. Now you factor in marketing costs. A$7.5 million title will need to be a global hit to recoup its development costs. That means you need a global marketing campaign, which will easily cost another $7.5 million (it may well cost double that). So, your total investment is at least$15 million and you get $25.00 per unit sold. That means you need to sell 600,000 units just to break even. The retail price for current gen software is around$45.00. The retail price for the next gen may start at around $60 but market pressures have been pushing software prices downwards for years. There is no reason to expect the next gen to sustain a$60 price point for very long.

in 2004 12 games sold more than 1 million units - 52 console games sold more than 500,000 units Source: The ESA http://www.theesa.com/files/2005EssentialFacts.pdf

And I never said that you could sell 50K+ copies with no marketing. That was just the basic maths of the '$0'-budget game. Obviously there is a big step between creating even a great game, and selling a load of copies. On a bit of a tangent, how well would it work to join every game-playing forum you can find and recommending your game that way? You'd deliberately be targetting the exact market most likely to be interested. If you 'only' need a few thousand sales then is this a viable idea? #### Share this post ##### Link to post ##### Share on other sites I think you are only part right when you say you would be targeting your market audience - I'd say that there are a good many gamers (even hardcore) who do not visit online gaming forums. In fact, I'd wager the majority don't. Bear in mind also those people who purchase for others - I'm talking parents in particular. This is something that's going to be offset only partially by the increasing average age of gamers. To be honest, I think this is one of the groups that those multi-million dollar marketing campaigns are aimed at - a parent sees an advert on TV a few times, gets it into their head that the game must be popular / good / worth buying, and suddenly it's waiting under millions of Christmas trees around the globe. I'd imagine people who actually play games tend to make more informed choices regarding what they buy, and those are the people you're likely to be able to have an impact on. Again, the problem is the amount of time you must spend doing this instead of doing other things, but approached in the right way it might just be worth it... #### Share this post ##### Link to post ##### Share on other sites Original post by Obscure Quote:  Original post by eelke_folmerEven then their "average figure" is$7.5 million +/- $2.5 million - that is a pretty inaccurate figure. :) But at least its an indication... better than having no figures at all. Quote:  Few people in the industry actually believe these figures - they are actually spwaned from the black heart of the EA marketing deprtment and not from development. Every time a new console generation launches EA try to scare off the competition by announcing that the cost of development will double or triple. It never does and it won't this time - further more EA's products aren't average so you can't judge the industry based on what they say/do. As the top publisher they can afford to throw vast resources at a game. They have teams of 150 people working on titles because it is more important for them to ensure the game ships on time than it is to maximise profit. I talked to EA developers and indeed they can spend lots of money on developing games. However the "engineering" quality of their products for example sports games is extremely low (No software products lines or reuse of game engines) and lots of money is just being spent on QA which is top notch. If you just look at the past supermario 1 cost about$100k to make and any game nowadays just costs millions. So engineering costs do increase. (apart from increase in marketing costs etc)

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 So, your total investment is at least $15 million and you get$25.00 per unit sold. That means you need to sell 600,000 units just to break even. There are something like 2,500 titles shipped per year.

I think that figure is a bit steep as I read somewhere there are currently 5000 ps2 titles available.

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 Either a lot of people are losing a lot of money or the average cost of development is a lot lower than $7.5 million. Hmmm this is very interesting, i think it is very hard to get some hard figures about the costs of game development as there is a lack of trust in the game industry and game companies do not like to share this data. Although I think the figures in the report from the british goverment are probably the most accurate. Regardless of the costs (which is I still think will increase as more and more content and graphics is being shipped with games, maybe not by a factor 2 or 3 as some of these costs are also countered as more and more reusable game components are available.) I think its safe to conclude, that only very few games make a profit, however those that do make a huge profit. For big developers such as EA games this is not really a big problem as they often develop multiple titles and as long as one sells really well it can make up for the losses made on the other titles. However for smaller publishers and independent game companies these high costs coupled with a low risk of success are becoming a big problem. There is an increasing pressure on game developers to produce a hit title. In order to improve upon this situation, developers can benefit from: - Ways to increase their sales e.g. develop games that appeal to a larger audience or explore new markets; for example there is an ongoing movement towards developing online games which use a different business model than traditional games. One pays a monthly fee to play the game, but also the game is continually being developed and expanded (see for example World of Warcraft or Second life), this way you can rely on a smaller number of users but one is required to have the game in a continuous development. - Ways to lower their development costs; e.g. if, for example, we are able to reuse existing game components such as 3D engines or content generation tools we can lower the total costs of developing a game. If we can develop games cheaper we don’t have to sell that many copies to still make a profit. Even for a 3rd generation games suppose engineering costs make up 50% of total costs, the other costs such as licensing, marketing etc. they are pretty "fixed" and you cannot save on that, the engineering costs are the only thing were some cost savings can be made. In the 15 million example suppose you can save 15% (don't know whether this is a realistic figure) that is 1.1M that means +- 50.000 copies less to be sold before the game becomes profitable. I don't know how much and if money can be saved but I think there are definately some interesting research areas that can lead to cost savings. #### Share this post ##### Link to post ##### Share on other sites Quote:  Original post by d000hgIf you make a game in your spare time for ~$0 and sell it by download from your website, you can keep 90% of the sale price as profit. If your game is $20 then that's$18 per sale. So 1000 sales = $18,000 which I guess is about the minimum liveable wage in the US?To be a millionaire you must sell (only) 55,555 copies. Which is incredibly low compared to big AA titles, but a lot if you don't pay any marketing costs! yeah this strategy usually doesn't work. without marketing costs you can only reach a very small number of people unless your game is really kick ass and can sell itself. ;-) #### Share this post ##### Link to post ##### Share on other sites Quote: Original post by eelke_folmer Quote:  Original post by d000hgIf you make a game in your spare time for ~$0 and sell it by download from your website, you can keep 90% of the sale price as profit. If your game is $20 then that's$18 per sale. So 1000 sales = \$18,000 which I guess is about the minimum liveable wage in the US?To be a millionaire you must sell (only) 55,555 copies. Which is incredibly low compared to big AA titles, but a lot if you don't pay any marketing costs!

yeah this strategy usually doesn't work. without marketing costs you can only reach a very small number of people unless your game is really kick ass and can sell itself. ;-)

..but people will still need to know about it before they buy it
and in this day and age there are so many games out there that it's hard to be noticed..
so nobody should kid themselves into thinking you don't need any marketing because your game is so damn good...

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 ..but people will still need to know about it before they buy itand in this day and age there are so many games out there that it's hard to be noticed..so nobody should kid themselves into thinking you don't need any marketing because your game is so damn good...

So in a way those with the deepest pockets concerning marketing have the best chance of succes and even if your game is kick ass there is only a low chance of success with low marketing (although the role of game reviewers for magazines etc may also play a role). I think this is true for the console and pc market but for the online game market this is different. I don't know if you are familiar with the online soccer game hattrick but that is typical an example of a game that made it without ANY marketing. Just because the game is so good (it may look crappy at first) it gradually build a huge fanbase (currently more than 750.000 users). It just got so popular by mouth-to-mouth advertising.

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Think of innovative (cheap) advertising ideas then...

Get enthusiasts to spread the word to their friends "I want to play you online at this game".
Sell it on eBay as a 'normal game' and see if anyone is foolded(!)

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 Original post by eelke_folmerI don't know if you are familiar with the online soccer game hattrick but that is typical an example of a game that made it without ANY marketing. Just because the game is so good (it may look crappy at first) it gradually build a huge fanbase (currently more than 750.000 users). It just got so popular by mouth-to-mouth advertising.

Ah, but that IS marketing, it's just a method of promotion that is generally less costly than the big TV commercials or full-page spreads in magazines.

But you are right about those with the deepest pockets being able to dominate in terms of sales, because they can dominate in terms of marketing. Hence why more money is usually invested into promotion than into making games that try to include new features. As for magazines, I'm not sure if many gaming magazines devote much space to the 'less popular' (read: less publicised) games, which only serves to make the general situation worse. (Unless I'm wrong, and magazines are devoting more space to smaller titles these days... I know the online ones probably do, but because of their layouts that's probably quite different.)

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Quote:
 Original post by eelke_folmerI don't know if you are familiar with the online soccer game hattrick but that is typical an example of a game that made it without ANY marketing. Just because the game is so good (it may look crappy at first) it gradually build a huge fanbase (currently more than 750.000 users). It just got so popular by mouth-to-mouth advertising.

Gradually being the operative word. How long did it take them to get from zero to 750,000 users?

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That was going to be my other comment, Obscure. For some scenarios, word of mouth might actually be profitable (well, it could be if people weren't so dumb in going for whatever was advertised the most on TV, in mags and on shop shelves).

But for many scenarios, the time taken to build up a decent customer base is just too long. Online games need to pay various hosting-related costs, whilst more traditional game-dev companies need to pay wages, rent and all the rest...

Word of mouth is notoriously slow. Sure, some people only buy as a result of it, it often has a greater effect (positive or negative) on individuals than a flashy ad campaign, and it's cheap as chips... but damn, is it slow. Last game I bought (which was on word of mouth only) was X2 - The Threat last October. About two weeks before the sequel came out, and when the price was down to about £5 or £10.

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 Original post by eelke_folmerI think costs are going to become a huge problem for game developers in the near future and few games will be able to make a profit (according to this http://www.dti.gov.uk/industries/computer_games/computergames_appendices.pdf article 3% of the games account for 55% of the sales. Academia should find new ways to decrease the costs of developing games.

I thought about this. The typical human response when industry costs are going up and one man can't run his own show to be competitive in the market is to freak out and start to think that you can't be successful in the industry.

Think about game programming in terms of the automotive industry. in the late 1800's henry ford built his own car from scratch. Now Ford spends millions prototyping, designing, engineering, testing, marketing, and selling their cars. No the average engineer won't be able to build a Toyota Camry quality car from scratch and turn a profit from it. However, there is a new market developing for Custom bikes and cars where a group of a few guys can make a good living.

Same as the movie industry. The average big budget hollywood movie is in the millions-100's of millions now. No you won't be able to film the next Star Wars movie, but there is a large cult following for low-budget indie films and small-team movies (think michael moore movies, supersize me documentary, and others).

No you will not realistically be able to build the next world of warcraft or doom 3. But there are a growing number of people who enjoy playing indie, old school, simple, or just plain fun games that are in your reach. No you won't sell millions of copies, but if done right you can probably make a decent living. At the very least you can make a few extra bucks on a hobby that you love. http://experimentalgameplay.com/ is a good place to look at. They made fun, simple games and it was a huge success. There is still a market for games like this.

In a way it's like Wal-mart. Wal-mart comes into town and takes business away form Safeway type stores. But when the anti-walmart people lose their mom-and-pop shop, they purposely shop only at Safeway type stores. Big budget games are creating a large audience for indie games.