I've determined that my personal savings may not be enough to finish my current project, so I'm working on a business plan in preparation for getting some funding. There's plenty of info available about the generalities of writing a biz plan, but I'm having a little trouble pinning down hard data about the indie game market. Anyone know where to look? What I need is data to show that there is viable market out there, one that has room for another developer of quality, alternative games.

Also, does anyone have any specific tips for writing a successful business plan for an indie developer? I've been able to find broad, general information on writing business plans, but nothing specifically about any particular field, let alone the specialized field of games development.

Any help would be greatly appreciated!

As far as I know there is no such data on the indie games market or the shareware industry. Most indies would be private businesses with no obligation to report sales figures publicly.

Probably what you'd have to do is use figures from the gaming industry as a whole. I seriously doubt you'd be able to come up with any data that would be enough to convince a banker of the viability of starting an indie business though.

This is something I am interested in too. I am going to meet some people next week who are trying to give the Games industry a boost in New Zealand. At the moment they have focused upon retail development and I would like them to realise that Indie/shareware is an option, especially if they decide to start handing out development grants.

The Roll-Call thread and the various links that people have posted have made me realise there are far more Indie developers than I had previously thought, I still don't know how many of these are successful though.

Would people be interested in a thread similar to Roll-Call where people post the name of their product(s) and just a straight yes/no/To-close-to-call answer to the question 'Was this product financially viable' There may be a little definition needed for financially viable but you get the idea. There would be no obligation to post.

Is this something people would like or do people want to keep their sucess/failure under wraps?

What you could do is just post a poll.

From what I've seen on here and other boards absolutely NO ONE wants to discuss actual numbers. I don't know what the motivation for the secrecy is but it's probably a combination of fear of competition and fear of internet backlash (if you're too successful). Both are perfectly legitimate reasons, BTW.

The question has been asked many times but you'll find very little information. Usually it boils down to "we've done really well" or "we haven't done as expected but (insert excuse)".

Ultimately, it comes down to the fact that people get into this business not directly for the money. It would be highly unlikely (and probably ill advised) to go looking for outside financing for a shareware project. The only real cost is TIME and that's something we all have plenty of.

Originally posted by KNau
Ultimately, it comes down to the fact that people get into this business not directly for the money. It would be highly unlikely (and probably ill advised) to go looking for outside financing for a shareware project. The only real cost is TIME and that's something we all have plenty of.

I don't know. It just seems like there has to be some middle ground between Electronic Arts and Labor of Love Games. If I am able to sell 20,000 units each year of something with a gross profit of $5/unit, that sounds like a viable one-person business to me. Furthermore, the existence of indies like Stardock (which has been around for 10 years+, I think) indicates that some people have actually found that middle ground. But, I suspect I won't be able to find the information I'm looking for because there's really no incentive for anyone to make it available. So for now, I guess I'll have to stay more to the Labor of Love side of the equation (though I'm willing to change my tune if someone can point me to some hard data :) ).

I don't think anyone here is saying that there is no middle ground, or that it isn't viable for one person. The thing is, however, I think it takes time to really get into the swing of things. If this is your first go at it, there is so much you need to learn about marketing, setting up and running a web site, providing support, etc. Its also a lot easier to sell if you can have 3 or 4 games on your site. At that point, if you put a lot of effort into getting someone to visit your site, even if they aren't interested in what you brought them in for, they might find something else of interest. But it takes a while to get to that point, of knowing how to market, knowing how to design and run a web site that is customer friendly and marketing wise, being able to provide quality support for users, and getting those 3 or 4 games developed and polished.

As a few examples:

Steve has said before that up until he released dweep, he was only making about $300 a month off his 4 other games, and he had those games out for a while. I think he probably had plenty of "not making a whole lot of money" months before he learned all the ins and outs and how to really make money at it. Its a skill you build up over time.

Also, you mentioned Stardock. If you didn't happen to make our last IGDA chapter meeting, Brad gave a wonderful presentation for the group. One of the things he talked about was how it took him a while to actually get any momentum going for Stardock. He had a hard time pulling in much profit from his first game (Galactic Civilizations, I think it was). However, he ended up in a unique position, being the only real game available for OS/2. He struck up a deal with IBM and got a game included with something (I don't recall if it was the OS itself, or some accessory CD or whatever). He eventually shipped like 1 million units at 50 cents each or something. Certainly not chump change, but it took him quite a while to get there, and honestly, probably the only reason he made it there even as fast as he did was because of his unique position in the OS/2 market.

So, I think you can see that what I'm trying to say is that this is the type of business you build up over time. Back to what the original topic of this thread was, getting investors to invest in indie developers, I think that in the general case the return on investment for them is going to be quite low for several years. Reasonable profitability is probably too far out to draw their interest in most cases. To them, their money would probably be better invested elsewhere.

Originally posted by KNau
Ultimately, it comes down to the fact that people get into this business not directly for the money. It would be highly unlikely (and probably ill advised) to go looking for outside financing for a shareware project. The only real cost is TIME and that's something we all have plenty of.

I question that. I'm certainly in this for the money, and many others whom I know are as well. I know the games business is risky, but when all is said and done it's not that much riskier than having any other kind of business, and the personal rewards -- getting to do something you love -- are important too. And you know, I've worked for big game companies (3DO, EA) and the risks of having your project cancelled, and possibly losing your employment, are hardly insignificant. In other words, there's no real safe harbor in this industry.

That said, I think you're probably right about not looking for outside financing for a shareware game, at the very least not until you have a couple games actually selling, and a strong forward-looking strategy for growing the business.

If you do look for financing, don't go to a bank unless you want to take a second mortgage on your home. Banks are not in the business of investing, they are in the business of lending money with secured assets.

Getting investment from disinterested investors is not likely either. You're probably not looking for enough (the minimum for a typical arms-length investor is about $100K or so, though some will go down to $20K-50K if they're part of a larger pool), your risk is extremely high, and most importantly you probably don't have a strong exit strategy.

"What's your exit strategy?" is one of the very first questions you're likely to be asked by any potential investor, and it's a question too many new biz people don't have a ready answer for. This question is in a way code for "how do I get my money plus some good-sized return back out?" An investor with $10,000 say can easily get an annual 3% increase with little to no risk if he locks up his money in a CD or something similar (a few years ago, this percentage was much higher!). With a moderate amount of risk, he or she can make an annualized 5-7% in stocks over a few year period. And with a little more risk, he or she can make 30-50% or more in real estate. And in each of these cases, the way the money can be pulled out of the investment is clear.

In the case of a small business, you have to show an investor how your company will be able to provide a high return (this varies, but doubling their money in 2-3 years is good) AND how they will be able to get this money back again. Essentially there are three ways you can do this: you can buy them out (this becomes the equivalent of debt financing at a very high interest rate); you can sell the company to someone else (by far the most common); or you can do an IPO -- fashionable in the late 1990s, not so much now (and virtually unthinkable for a small game company). The upshot is unless you plan to sell your company sometime in the next five years, and for enough that someone putting $10,000 into it today might get back some multiple of that, your chances of getting outside investment are pretty much nil.

Now there is sort of an exception to this, what's called the 'friends and family round' of invesmtent. Basically you present your plan to friends, relatives, etc., and ask them for money -- a minimum of $5K or so each. All the above rules apply -- you need to be able to show them how they'll get their money out, etc. -- and there may be other SEC regulations you need to think about too (you may or may not run afoul of what's called the 'qualified investor' rule, which basically is in place to stop unscrupulous speculators from stealing Granny's last pennies). There's another rule too that I've used in my three startups, which we call the 'Thanksgiving table rule.' Before I accept an investment check from a family member or friend, I make sure they realize the risks involved, and that, even if this whole thing goes bust, that we'll still be able to sit across from each other at Thanksgiving with no hard feelings. That's not a license to blow their money, but just a reality check that they're going to be okay with you no matter what happens with the business -- that they understand that despite your passion for it, there are many factors beyond your control. I've had people back off from investing when I put the situation in those terms, and you know what? I'd rather have the relationship intact than have their dollars.

Finally, going back to something I mentioned above, you can finance via debt -- credit card debt, credit line on a house, etc. This is a well-known and time-honored way of getting a business going. Just be absolutely certain that you don't get in over your head. Debt only multiplies with time; like fire, it's a wonderful servant and a terrible master.

Well this turned out much longer than I had planned! FWIW, my experience comes from starting a consultancy in 1993 that I rolled into a company in 1994 (with angel investment) that we sold in 1996; another company that we started in 1997, got angel and VC investment for, and sold in 1999. I'm now doing it again (sigh), but at this point am financing it myself. I do plan to get investor dollars at some point, but I'm marshalling my forces carefully. It's never an easy process -- no matter what you heard about the roaring '90s -- but I'm giving this a good shot.

Best of luck to you, no matter what you decide!

Ron is right. There is great potential in going indie, but it also isn't a get rich quick business. A good analogy is that of turning a flywheel. At first it takes a lot of effort to get it moving, but eventually it builds up momentum. Keeping a business going is much easier than getting it going in the first place.

When I was making only $300/month from shareware, I hadn't really been focusing on shareware. I just trickled out a few side projects from 1995-98 that I released as shareware just to see how they did. For instance, BrainWave took me only 2 weeks to complete. But meanwhile I was spending the bulk of my time working on retail projects. Finally I saw the light of day and realized that retail work was getting me nowhere but that there was serious untapped potential in shareware. So I didn't begin focusing on shareware marketing as a business until I released Dweep in 1999. Before Dweep this web site was getting only 15 visitors per day and doing not even a half-GB of traffic per month. Now it sees thousands of visitors and many GBs of traffic per day.

One problem some indies have is that they don't recognize the flywheel analogy, so they start turning the wheel in one direction and then shift directions. To become successful as an indie requires picking a direction and consistently turning the flywheel in that same direction. Each time you shift directions, you lose momentum.

Nobody ever posts numbers as has been said and its kinda frustrating... As I have no shame and little business sense, I sometimes post mine.

StarLines INC (game is here (http://www.positech.co.uk/starlines) has sold about 1,200 copies at a selling price of $19.95. Can't tell you my split I'm afraid. Thats not shareware, its through an online publisher, and its over a few years ( 2 or 3 years I think).
I have done a few much less successfull games. I hope this encourages others to print numbers, but as has been said, most people don't do it for the money, I worked out years ago that its not a profitable thing to do for me.

cliffski thanks for posting that number.

I read somewhere (avault I think) that you could expect anywhere from 1000 upto 5000 registrations for a game. At an average price of $15 per registration, thats in the range of $15k - $75k. Assuming you make $15k only, thats about what you would make working at Burger King :) One has to decide what is more interesting : flipping burgers or creating something.

My 2p.

From my perspective getting into Indie gaming purely to make money is a folly. That's not to say that there isn’t' money to be made. It's just that the risks are much higher then in other areas of software development. I would cite these high risks as the primary reason the majority if Indies actually have full time jobs in other (less risky) areas of software development.

If you look at the number of Indie games that are breakthrough successes and making their developers a sustainable income vs. the ones that aren't or even worse vs. the ones that are never finished. The % of commercially successful titles is a very small percentage. To me that equates to high risk and hence a poor way to make money.

There are ways to mitigate that risk, and if you can do them then more power to you. Unfortunately many people are in my camp and do not have the resources or the know how to do market research and know weather the game they are developing will be successful or not. If your motivation is purely money and your operating in an environment where you aren’t sure that your investment will ever show any returns it would definitely have and impact on the motivations to finish that game.

I think a lot of the above is common sense. Sure, all of us are probably trying to make money as Indies, but that's not the only thing. We also love making games, enough that we keep trying to make them even though we don't know if we'll ever see a cent from them.

The indie games business (and the gaming industry as a whole) is still very young and immature. Those who make the shift to running their companies like a business will thrive. Those who don't won't.

Other major industries have gone through the same growing pains. Before the banking industry went through de-regulation a few decades ago, bankers had an established culture of being the privileged elite. Private jets, posh executive suites, country club memberships, and other wasteful expenditures were the norm. After deregulation, competition for customers grew fierce. Some banks like Bank of America resisted the change and fought vehemently to preserve their culture. Others like Well Fargo sold the jets, slashes executive perks (even going so far as to eliminate free coffee for executives), and started acting like a real business instead of a country club. During the time where BofA lost billions, Wells Fargo thrived and grew.

Indies who run their companies like a business will do just fine and can make oodles of money at it. Those who treat their companies like a hobby won't be able to compete well in the long run. The first group makes games customers want; the second group makes games they want. The first group does what needs to be done; the second group does what feels most enjoyable.

While it's fine to decide to be an indie hobbyist, don't expect to make a good living with a hobbyist mentality.

Steve, sorry to get slightly off track, but I don't recall seeing this anywhere: After releasing Dweep, roughly how long did it take before you saw a regular registration rate of more than a handful per week?

Basically how long did it take you to get the flywheel spinning :)

Dweep saw a relatively steady increase over time when it was first released: $500 the first month of sales (June '99), then $1000 the next month, then $1400, and gradually reaching $2500/month after 5-6 months. Two expansion packs, a gold version with a level editor, and three awards (two Shareware Industry Awards and a ZDNet award) continued to build sales from there.

Originally posted by Dexterity
The first group makes games customers want; the second group makes games they want. The first group does what needs to be done; the second group does what feels most enjoyable.


Good point, one of the things I find the hardest about making a game that you want to be financially successful is that it's very hard to know what customers want. At least I find it hard to see the world through the eyes of people who will be playing my game. I think this is something critical to being successful but also very difficult to do. You can use market data to identify key population segments and get some indication of what sells to them, but to truly delight them you really have to get "inside their heads".

I haven't been able to find a means or method of doing this. I think I often substitute what I like for what my customers like because I’m not really sure of what they like. Part of the problem is that I may not have a crystal clear identification of my market. I generally indicate the casual gamer as my market, but what part? I’m not really sure. I find myself hoping that I will cater to SOME part without really knowing which part.

Steve (or anyone else who's managed this), do you have any suggestions for how to see your game through the eyes of those who you want to play it? I don’t really want to know the specifics of what puzzle gamers are thinking, but rather techniques for clearly identifying a market and then making a game that delights the members of that market. (what ever that market ends up being)

This article basically sums up my thoughts on doing market research as an indie. It isn't too complicated, but most indies still don't do it:
http://www.dexterity.com/articles/basic-market-research.htm

Originally posted by Dexterity
Ron is right. There is great potential in going indie, but it also isn't a get rich quick business. A good analogy is that of turning a flywheel. At first it takes a lot of effort to get it moving, but eventually it builds up momentum. Keeping a business going is much easier than getting it going in the first place.


I think that anyone who is in this industry to make a lot of money is going to have a hard time of it. The people who are successful over a long period of time have all started very slowly and built their business up slowly. Any people who achieve the rare overnight success often disappear just as quickly.

I didn't become a game developer to make a lot of money, it started as hobby and then became a way to make a living. Making money was an unexpected surprise.

The flywheel analogy is a good one. The most important things you need to be successful in shareware are patience and persistence. You have to be in it for the long term and not expect immediate success. It requires more patience and determination than most people have.

It takes a long time to get that flywheel going and you have to work at it all the time. It can seem like you are getting nowhere for long periods of time, even years. Pretty Good Solitaire has made in the seven figures in seven years, but it made less than a thousand dollars its first year. There certainly was no sign that it would be a big success in that first year. But at the time I thought even those few hundred dollars a big success and my goal was just to do better next year. And another year at the flywheel and it did have a better year. Every year it has done better (the only exception was a two month period where it did worse than the previous year in those two months - this happened because I got distracted developing a retail product that never got released and I stopped tending to the flywheel for a little while. When you do that, it will slowly start winding down). But if you do something every day to keep things going, it can grow and grow.

We just released a new game last month and just started the flywheel on it. At this point it seems like it takes forever to get the thing going, and although it started out far, far better than PGS did, it still seems like it takes forever to get the flywheel going. It would be easy if one didn't have patience and persistence to conclude that you can't make money at shareware and give up. But I'm not as interested in what it is making today as in what it will make 5 years from now. If you take the attitude of just trying to increase the current level and do something today geared towards improving the revenue in the future, it's amazing how the compounding effect of those increases adds up over time.

I would think it would be very difficult to get outside financing for a shareware project. The only way to do it is to finance it yourself. Fortunately if you are the programmer it costs very little money, it's mostly time.

The one thing that concerns me about Dexterity's model is how Steve is going to be able to tend to the flywheels of so many products released in such a short time. It takes a lot of time to care for each product, with only two major products it takes most of my time. With lots of products you may sacrifice opportunity to accelerate the flywheel. Perhaps you get that back by having more flywheels, I don't know. It will be interesting to see.

Originally posted by goodsol
The one thing that concerns me about Dexterity's model is how Steve is going to be able to tend to the flywheels of so many products released in such a short time. It takes a lot of time to care for each product, with only two major products it takes most of my time. With lots of products you may sacrifice opportunity to accelerate the flywheel. Perhaps you get that back by having more flywheels, I don't know. It will be interesting to see. [/B]

The answer is a great deal of time spent on optimizing various processes (game eval and selection, QA, launching games, customer support, ongoing marketing, shipping, etc) plus the fact that I have help to execute these processes. There's no way I'd have time to do it all myself.

I focus on accelerating the flywheel of the company as a whole, and new games benefit from this momentum. With the three different types of deals we offer (Silver, Gold, and Platinum), many developers are only looking for a slice of that momentum while continuing to build their own flywheels. So not every game gets an equal amount of promotion.

Preceding the rapid succession of launches this year were many months of planning and technology-building... plans which continue to evolve. This work would be overkill for launching a single new game, but we benefit from economies of scale. If five person-hours of planning can shave one person-hour off the launch process, this translates to a big long-term benefit.

Because of our different business models, our flywheel will look different than yours, and our momentum is building in a different direction. From your perspective it may seem difficult for us to adequately sell each product. From my perspective it looks like it would be difficult for you to adequately sell each customer.

There are really only 3 primary ways to grow a business without changing the nature of the business: 1) increase the number of customers, 2) increase the frequency of purchases, 3) increase the amount of purchases. This year we've been focusing hard on #2 and #3, such that when we shift back to focusing more intently on #1 (as we're doing now), the backend sales system is already working its magic. For instance, in the past month alone, we've increased the size of our average sale by about $5.

There's really no right or wrong way to turn the flywheel. Consistency can be more important than direction.