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SamLuo

RPG Funding

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What is the kind of cost that a small scale company would face funding a large scale game like RPG or MMO? A lot of small groups doing this that look to bring in artists or auxiliary programmers offer profit share, but say if the company was paying everyone a wage or commission, what would be the average cost? What are other steps that small companies take to secure funding for large scale games?

Of course I realize the high cost is the reason a lot of companies don't do this. But I'm just curious (:
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[quote name='indiewhite' timestamp='1330926196' post='4919375']What is the kind of cost that a small scale company would face funding a large scale game like RPG or MMO?[/quote]Small-scale companies usually don't attempts large-scale projects, because it requires them to [i]become[/i] a large-scale company [img]http://public.gamedev.net//public/style_emoticons/default/wink.png[/img]
i.e. either you've got to hire a large amount of staff, or you've got to contract a large amount of staff, either way you're now a large company --- if you don't have to do either of these things, then it's not really a large-scale project.
[quote]A lot of small groups doing this that look to bring in artists or auxiliary programmers offer profit share, but say if the company was paying everyone a wage or commission, what would be the average cost?[/quote]The average salary for a US game dev is ~$80,000 p/a. So a team of 24 staff would require ~$2M per year just to cover payroll.[quote]What are other steps that small companies take to secure funding for large scale games?[/quote]Make a pitch to venture capitalists or publishers.
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[quote]The average salary for a US game dev is ~$80,000 p/a. So a team of 24 staff would require ~$2M per year just to cover payroll[/quote]
Cool beans, thanks! What is the average staff size for say a medium to large scale team?

I guess I'm mostly interested in the management side of this since its something that has always eluded me in my observations of games. Cause for a while now, I've been looking for a stable, solid team to join (hobby not "professional") and those seem to be teams on the larger side, but I have no idea what to look for in what makes up a good group and good management.
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[quote name='indiewhite' timestamp='1330957617' post='4919454']1. What is the average staff size for say a medium to large scale team?
2. I have no idea what to look for in what makes up a good group and good management.
[/quote]

1. A small game development company is one that employs fewer than 30. A large game development company is one that employs over 100. (In my opinion.) Medium would be in between. What difference does it make (why do you ask this)?
2. One way is the track record. Look at the games they've made, see how many games they've made, see what metacritic scores they've garnered. Another way is to go drinking with people from that company, see if they grouse a lot or really enjoy their jobs. Not sure what you're trying to figure out here...? And what these questions have to do with funding your own company?
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I'm unable to find the source again, but I recently read an article about an indie team of 4 running on a budget of about 15k per month -- They had office space (so budget for rent, utilities, snacks, etc) and legal/business council, both accounting for around $1200 of the monthly budget each -- a small start-up team . These were folks with a salary, but not an "industry standard" salary -- occupying the space between "doin' in for the love/breaking in" and "broken in but not breaking out". Each programmer was making the equivilent of around $13/hr, give or take.

Not exactly the info you were looking for, but a good point of data for the costs involved in running even a small team like a real business.
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[quote name='Ravyne' timestamp='1330974653' post='4919533']
I'm unable to find the source again, but I recently read an article about an indie team of 4 running on a budget of about 15k per month -- They had office space (so budget for rent, utilities, snacks, etc) and legal/business council, both accounting for around $1200 of the monthly budget each -- a small start-up team .[/quote]

Was this it [url="http://www.joystiq.com/2012/02/29/how-one-indie-studio-burns-15k-per-month-or-this-graph-looks/"]http://www.joystiq.com/2012/02/29/how-one-indie-studio-burns-15k-per-month-or-this-graph-looks/[/url]
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[quote][color=#282828][font=helvetica, arial, verdana, tahoma, sans-serif][size=3][left]1. A small game development company is one that employs fewer than 30. A large game development company is one that employs over 100. (In my opinion.) Medium would be in between. What difference does it make (why do you ask this)?[/left][/size][/font][/color]
[color=#282828][font=helvetica, arial, verdana, tahoma, sans-serif][size=3][left]2. One way is the track record. Look at the games they've made, see how many games they've made, see what metacritic scores they've garnered. Another way is to go drinking with people from that company, see if they grouse a lot or really enjoy their jobs. Not sure what you're trying to figure out here...? And what these questions have to do with funding your own company? [/left][/size][/font][/color][/quote]
1. I'm asking because several hobby companies that have asked me to join have said they are large companies (being only 50 or so people) so their ambitions are not unrealistic. I'm always wary when considering joining hobby companies that want to remake skyrim so I was just wondering what would actually qualify as a "large" team.
2. I'm just entirely clueless. I've always wondered how the big companies got started, and I figured the best way to figure out is to examine the companies that work, and ask get opinions from people who have actually worked the industry. It's mostly to satisfy my own thirst for knowledge.

[quote]I'm unable to find the source again, but I recently read an article about an indie team of 4 running on a budget of about 15k per month [/quote]
Interesting. I'll have to read more. :D

Thanks for the info guys. I guess I'm mostly curious since I'd like to run a team (certainly not anytime soon but one day), but I have no idea the logistics or the business side of things. Cause right now being a student it seems like funding a team for a medium to large scale game is a huuuuge undertaking and I wouldn't even know where to begin.
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[quote name='astagg' timestamp='1331032271' post='4919730']
Was this it [url="http://www.joystiq.com/2012/02/29/how-one-indie-studio-burns-15k-per-month-or-this-graph-looks/"]http://www.joystiq.c...is-graph-looks/[/url]
[/quote]

Yep, that's the one. good lookin' out.
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[quote name='indiewhite' timestamp='1331053840' post='4919827']
1. I'm asking because several hobby companies that have asked me to join have said they are large companies (being only 50 or so people) so their ambitions are not unrealistic. I'm always wary when considering joining hobby companies that want to remake skyrim so I was just wondering what would actually qualify as a "large" team.
[/quote]

I would be extremely wary of any "hobby" team with more than about two handfuls of people (fewer than a dozen, for sure). In fact, I'd argue that the "optimal" size for an indie team is anywhere between 2 and 6. This does, of course, essentially preclude the possibility of epic undertakings, but that's not a bad thing.

If you look at any of the successful indies -- say Team Meat, The Behemoth, or any of the iOS break-out teams -- they're always small teams. Big teams are just way too disorganized, opinionated, and unruly. The biggest factor in getting an indie game done, when little or no money is on the line as motivation, is that everyone is on-board with the vision -- fewer people means fewer people to convince, fewer people to keep in line, fewer people to monitor. You have 15+ people making an FPS and half of them will want to make Call of Duty, and the other half will want to make Halo. Focus is destroyed.

There are exceptions to the rule, but most of those you'll find have a significant percentage of people with industry experience -- and a telling fact about those types of groups is that they'll almost always be working on a Mod, or working with an engine license (Unity, Unreal, etc).

For just about any appropriately-sized indie project I can imagine, you really only *need* a single good programmer, a single good artist, and someone to contract sound out to. You can scale up a little, but managing any more than 3 people in a particular discipline is where you start needing management.
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[quote name='indiewhite' timestamp='1331053840' post='4919827']1. I'm asking because several hobby companies that have asked me to join have said they are large companies (being only 50 or so people) so their ambitions are not unrealistic.[/quote]That sounds really suspect. Are they even "companies" at all, in the legal sense of the word? Use of the word "hobby" makes it sound like they're not really companies...

[i]Either:[/i]
* they're a real company [i](a legally registered entity in some jurisdiction[/i]), who either employs staff for wages/salaries or has signed contracts with 'employees' agreeing on compensation to be dispensed under specified conditions ([i]e.g. X shares in the company when Y tasks on product Z are completed[/i]).
[i]or[/i]
* they're a group of hobbyists working for free.

In the first case, the act of "joining" them will involve either the signing of paperwork, or doing work for them under their direction and receiving a paycheque for it. This means they own your work and have the right to publish it.
In the second case, the act of "joining" them is an unofficial gesture, and any work you do for them is still owned by you, and you can dispute their right to use it at any time.

IMO, a hobbyist group that pretends that they're a real company is one of the most dangerous groups to join, because they've built their foundations on top of this falsehood. Any plans for them to later form a company, or to somehow arrange financial agreements between the "staff" are severely compromised by their beginnings, with ownership of the work legally divided between all 50 "staff".
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[quote] and a telling fact about those types of groups is that they'll almost always be working on a Mod, or working with an engine license (Unity, Unreal, etc).[/quote]
This is a positive or negative thing?

[quote]That sounds really suspect. Are they even "companies" at all, in the legal sense of the word? Use of the word "hobby" makes it sound like they're not really companies...[/quote]
I use the term company loosely as well. I've seen groups with contracts ready for help that include a salary or a profit share, and I've seen groups who haven't even though of contracts. Of course I'd prefer groups that conduct themselves professionally, regardless of whether they are registered with the local jurisdiction.

If an individual (not a registered company and no contract) pays another person for work, say a character model, would that be the same as the first example you gave? The payer would then retain the rights regardless of a change of heart from the second person?
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Its not the mod or engine license that's a good or bad thing in itself -- the telling sign is that larger groups with industry-experienced members almost uniformly recognize that doing a mod or working with an existing engine is really the only viable approach once you start ratcheting up the ambition and head-count of a project. It comes with experience that "an engine" is really not just the runtime -- but is also the documentation, tools, workflows and pipelines that support it. Even looking at the AAA game industry, iD used to be king of engine licensing, but essentially no one licensed idTech4 (Doom 3) because Unreal's tooling and support was miles ahead, although the runtime components were more-or-less comparable. Choosing a mod or engine license is a "mature" choice that you simply can't do everything in-house without a big budget and years to burn. Large, ill-experienced teams often grow so large in order to support the notion that they can do it all themselves -- that or they have no "hiring" standard at all -- or both.

Simon explains it better: [s]As far as I'm aware, paid work always belongs to the payer unless there's a contract to the contrary -- at least if the work is part of a greater whole, or is meant to be productized in some way -- but I'm no lawyer, myself.[/s]
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[quote name='indiewhite' timestamp='1331081094' post='4919940']
If an individual (not a registered company and no contract) pays another person for work, say a character model, would that be the same as the first example you gave? The payer would then retain the rights regardless of a change of heart from the second person?
[/quote]

That depends on the license the individual pays for. For something to be a work for hire there has to be a contract in place, without that the seller retains the copyright and the buyer gets what he pays for. (Normally one buys a license to use, modify, copy and distribute the work and derivates of the work), If there is neither a contract nor a license then the buyer gets one copy (Just as if he had bought a music CD at the store) and the normal copyright restrictions apply.
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[quote name='SimonForsman' timestamp='1331085829' post='4919952']That depends on the license the individual pays for. For something to be a work for hire there has to be a contract in place, without that the seller retains the copyright and the buyer gets what he pays for. (Normally one buys a license to use, modify, copy and distribute the work and derivates of the work), If there is neither a contract nor a license then the buyer gets one copy (Just as if he had bought a music CD at the store) and the normal copyright restrictions apply.[/quote]This highly depends on the jurisdiction. In some places, simply by giving someone direction to perform work, they are legally an employee and you become obligated to pay for the work that you directed them to do, and the work that is produced becomes entirely your property, all without a contract or written agreement!
In some jurisdictions, this goes further any any "related work" that the 'employee' does ([i]even when not at the workplace or during work hours[/i]) also becomes the property of the employer ([i]e.g. making a mobile game as a hobby while working at a studio -- the studio owns your hobby project[/i]).

There's a big difference between the letter of the law and what goes on in the real world though -- it's possible for an unorganised group of hobbyists to form into a real legally bound company with unanimous agreement, and it's also possible for a completely by-the-book employment situation to end up in lawsuits.
For example, my current employer routinely violates federal employment laws with potential fines as high as $30K per instance, but the employees accept this practice. Even though they're not operating by-the-book and have the potential to devolve into lawsuits at any time, they still exist as a successful company.

As always, business questions need to be answered by a lawyer (and IANAL).
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[quote name='Hodgman' timestamp='1331088268' post='4919958']
As always, business questions need to be answered by a lawyer (and IANAL).
[/quote]

And while it shouldn't need to be said but sometimes has to be said. Any lawyer consulted should have the requisite skill set/knowledge appropriate to what you are seeking answered i.e. don't ask a lawyer specialising in criminal law about commercial law.
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[quote name='Ravyne' timestamp='1331061319' post='4919866']
I would be extremely wary of any "hobby" team with more than about two handfuls of people (fewer than a dozen, for sure). In fact, I'd argue that the "optimal" size for an indie team is anywhere between 2 and 6. This does, of course, essentially preclude the possibility of epic undertakings, but that's not a bad thing.
[/quote]
I just wanted to second this particular opinion -- in my experience, the ideal team-size for hobbyist, or even smaller indie teams is normally only a handful of people who cover all required skills for the project. Unless you're a large commercial outfit with a proper management structure and properly paid staff the overhead and reduced coherency of a larger team just doesn't have the benefit a lot of inexperienced team-leaders think of when they recruit all these people.

I would be [i]extremely[/i] wary of joining any hobbyist team which already has 10 or more members unless they can show you that they're making impressive progress on their current progress -- the exception to this potentially being open-sourced projects which have had many contributors but will usually still only have a small "core" team of regular maintainers and project leaders.


A larger team simply isn't needed or useful when working on a hobbyist project, and you'll consistently see smaller teams pumping out smaller and more realistic -- but still polished and impressive -- games while the larger (and usually less experienced) teams trundle along working at a larger project which often ends up abandoned.


Also look at track record when considering joining a team: has the team released games before?; have members of the team released solo projects or worked on other successful teams?; do they appear to be making real progress on the current project?
Importantly -- do they seem to have something specific for you to do, or are they just trying to recruit you with the vague notion that you will be helpful? If the people you're considering working with are skilled and experienced they should have a specific task or list of tasks in mind for you to complete -- and will usually be at the point where you can ([i]need to[/i], in fact!) get started on it right away -- otherwise they wouldn't be recruiting you.

Beware teams that claim to have been working on a project for x amount of time (often "over 6 months" or "over 1 year") but who don't have anything to show for the work -- they'll usually claim they were working on design and/or pre-production, but again this simply isn't how smaller successful teams tend to work.


Lastly, as already mentioned, small teams do not (successfully) take on large projects -- beware claims to the contrary. There are always exceptions to any rule -- Danny Green who develops commercial games "alone" (in quotes, as I believe he out-sources art) for example -- but if a team [i]is[/i] an exception to the rule they will already have something impressive to show.



Hope that's helpful! [img]http://public.gamedev.net//public/style_emoticons/default/smile.png[/img]
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[quote name='indiewhite' timestamp='1331053840' post='4919827'] [quote][color=#282828][font=helvetica, arial, verdana, tahoma, sans-serif][size=3][left]1. A small game development company is one that employs fewer than 30. A large game development company is one that employs over 100. (In my opinion.) Medium would be in between. What difference does it make (why do you ask this)?[/left][/size][/font][/color] [color=#282828][font=helvetica, arial, verdana, tahoma, sans-serif][size=3][left]2. One way is the track record. Look at the games they've made, see how many games they've made, see what metacritic scores they've garnered. Another way is to go drinking with people from that company, see if they grouse a lot or really enjoy their jobs. Not sure what you're trying to figure out here...? And what these questions have to do with funding your own company? [/left][/size][/font][/color][/quote] 1. I'm asking because several hobby companies that have asked me to join have said they are large companies (being only 50 or so people) so their ambitions are not unrealistic. I'm always wary when considering joining hobby companies that want to remake skyrim so I was just wondering what would actually qualify as a "large" team.
2. I'm just entirely clueless. I've always wondered how the big companies got started, and I figured the best way to figure out is to examine the companies that work, and ask get opinions from people who have actually worked the industry. It's mostly to satisfy my own thirst for knowledge. [/quote]

1. The term "hobby company" makes my baloney radar go "ping!" It's either a hobby or it's a company (IMO). 50 would be large for an hobby team, to be sure. I would want to see their collaboration agreement before I got involved. I'd want to know what all the members think they're trying to accomplish together, and I'd want to know if that's what I, too, want to accomplish. But if you're just in it to have something to add to your portfolio, then I'm sure you'd be learning a lot.

2. Big companies rarely started as hobbies. Your question may be leading you astray, if you're trying to learn about "companies" rather than hobby endeavors.

Maybe this all comes down to thinking some more about what it is you really want to know, and asking more-targeted questions.

[quote]I'd like to run a team (certainly not anytime soon but one day), but I have no idea the logistics or the business side of things. Cause right now being a student it seems like funding a team for a medium to large scale game is a huuuuge undertaking and I wouldn't even know where to begin. [/quote]

Instead of thinking about funding a game, you should be thinking about funding a business. Only publishers are interested in funding a game -- if you want to start a business, you have to think business instead of game.
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[quote name='indiewhite' timestamp='1331053840' post='4919827']
I guess I'm mostly curious since I'd like to run a team (certainly not anytime soon but one day), but I have no idea the logistics or the business side of things. Cause right now being a student it seems like funding a team for a medium to large scale game is a huuuuge undertaking and I wouldn't even know where to begin.
[/quote]
Running a hobbyist team or running a business are two (potentially [i]very[/i]) different tasks -- you should think carefully about what it is that you actually want to achieve.

If you want to work on games with a few other people as a hobby that's fine, and quite achievable if you can find the right people. Try to keep to a minimum number of people, and tackle smaller more achievable projects rather than something like a grand-scale role-playing game with current-gen graphics. For a hobby you can probably get away without proper contracts, but should absolutely still consider putting some form of agreement down in writing and making sure that everyone is clear on what is expected. Don't think you can start as a hobby and turn it into a profitable business later -- if you're planning to go in that direction you should sort things out properly from the start and avoid potential costly mistakes later on.


If you want to start a business making and selling games you'll need to approach it as a business -- the same books and classes that would help you start and run any other business will apply, and you should absolutely learn about things such as making a business plan, proper budgeting, which contracts apply and when you should use them (speak to a lawyer for this!), etc.


Hope that's helpful! [img]http://public.gamedev.net//public/style_emoticons/default/smile.png[/img]
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[quote name='indiewhite' timestamp='1331081094' post='4919940']
I use the term company loosely [/quote]

If you want to go into business, you have to use the term the same way businesspeople use it. Seriously.
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