How Much Money Can Indie Games Make?, Part I

This article was posted in my Make It Big In Games blog a few days ago. Some comments have shown that non-professional developers think it is discouraging. Please don't take it so. I do think that people that are professional programmers, artists, producers, or have worked at professional game development in the past initially have a better chance at success. They may not have experience making small Indie games, but they do know their craft, so they don't have to take time becomming better programmers, for instance, so they will, on average, make less mistakes and get their project finished. Anyway, on the article:

How much money is in Indie Games?

This is definitely a popular question. Here are two typical emails that I have modified and paraphrased a little to protect the innocent (please note that I did not change the grammar or spelling):

From the obvious newbie:

Quote:Recently ,my friends and I are interested in Indie game development, we want to make our own game .We have many questions about Indie games.Could you please give us some suggestions?
What shall we do at the begining? How many copies could sell on the average.
Thanks a lot.

From the professional game developer:

Quote:I don't want to waste your time, so I'm going to keep this simple and to the point.

A programmer friend and I have been in professional game developers for 8 years now, and are beginning to research how to go indie.

What we have been trying to figure out is what the 'general numbers' are for average independent titles. Basic questions like: What are good sales? What can you expect to gross per copy? How long is the typical title in development? What is the 'breaking point' for download size? What genres are most popular? These are just a few of many, and I know there are issues we haven't even dreamed of at this point.

We've speculated on what amount of venture capital we would need to develop a basic title, but it's just that - speculation. We are both have families and homes, so we're being very careful about out assumptions and research.

While these emails obviously have different levels of professionalism and presentation, they both ask basically the same question, i.e. what game should I make and how much money will it make? These are both big subjects, and since this post is about how much money Indie Games make, the other question(s) will be addressed in later articles.

So, quit stalling and get around to it. HOW MUCH MONEY CAN MY INDIE GAME MAKE?

OK, You're not going to like it...

42




Huh?

42 is "The Ultimate answer to Life, the Universe and Everything" according to Douglas Adams in Hitchhiker's Guide to the Galaxy, so it must be a good enough answer to such a vague question.

Another glib answer is, how good is your game?

Now we are honing in on the answer, and the problem with giving "average" answers. If you want the average, then the answer has to be...

ZERO.

Yep, zero, zip, nada, as in Zero Dollars, Euros, Yen, or whatever your national currency happens to be.

Not to discourage wanna-be game developers, but the average for the first question posted in this article will definitely be zero. In fact, it will be less than zero, because I can almost assure you the game will never be completed. Selling something means you are a professional and you need to make products good enough to sell. In order to get good enough, you will need to practice, make a bunch of throw away games, get to know your team mates, make some more games, give them away for free, watch people play them, learn what you did wrong, roll it into your next game, then another, and finally you may have enough experience that people will want to pay you for your creations.

Now that you have reached the point described in the above paragraph, you are more in the same boat as the second email question posted in this article, and we can start talking about success strategies, and how much money an Indie game can make.

For this exercise, we'll use the Casual Games market because it is accessible by Indies, and it currently a hot enough market that money can actually be made here. Keep in mind that urban legend has it that the casual games market is dominated by 41 year old females, so it might not be your cup of tea. However, other Indie games markets are not as established, so it is harder to find sales data.

Let's start at the top, since that is the easiest place to find data. Go to Game Sales Charts to find out actual sales data from Real Arcade, one of the largest on-line game sales portals. (another good thing about Real is that they are a public company, so they frequently give actual sales numbers for the entire portal, so you can make assumptions about the total size of the casual game market. Phil Steinmeyer has recently taken a good shot at doing just this, check it out).

I'll let you do the math, but now you can find out the annual sales of Real by looking in their 10Q, figure the average weekly sales of Real's portal, then make your own assumptions about how much of that revenue the number one game would get. Now apply those percentages to the number of weeks a game appears in any of the top tracked spots. This will give you a good approximation of how much your top selling game on the Real portal makes.

Now you can go back to Phil Steinmeyer's site and apply the market share numbers for each of the portals, and decide how much more your game could make by being in wide distribution. Remember, that independently developed games will usually end up on all of the popular portals.

Like I said, I'll let you do the math, but, in general, we expect the top selling games in the casual space to make anywhere from $1.5MM- $7MM in a year. WOW!! That is huge cash! But, there are some catches.

I'll have an entire article on royalties, net payments, etc., but for now just assume your company will get 30% of that money. OK, that is still a WOW! Or, maybe a not bad, I can live with that.

I said the top selling games. Look at the Real sales charts and see how many games would actually hit the top. There are a HUGE number of games chasing those top spots. Big Fish Games alone published 365 games last year. Also, take into account the fact that many of the portals are starting to create their own content for all of the top promotion, marketing, and sales on their sites, and it gets even harder.

That said, if you do create a hot property, there will be bidding for your game. In fact, right now, the market it hot enough, if you make a couple of great games in a row, you will probably be getting offers to buy your company.

A bright side to consider is that additional markets are becoming very real for the top developers. I have already covered the XBox360 Live Arcade download market, and the cell phone marketplace is really becoming hot as well.

To summarize, if you are a great game developer there are huge opportunities in the Indie space right now.

Next time, I'll cover more of the middle part of the market, i.e. what you can expect if you are not at the top of the charts.

-Jeff Tunnell, Game Maker ... Make It Big In Games



Photo by Lady-Bug