Now we’re talking business
I’m sitting here just a few days before our upcoming game release, thinking about what next conference session to hold. One of those ‘doing a talk helps to save costs for the ticket’-talks.
As I’m running the studio it will be for sure covering the business side of games. You know, the one you do when your game had the luck to be one of those 1 % that became a ‘hitgame’ . Or the one you do when nobody ever heard about your game, telling ‘ I fucked up, enjoy the story so you know you’re not alone’.
In my case it will be about Rogue Stormers which will go from Steam Early Access to final release on April 21st. So while writing this I’m still sure that it will be a hit. To be fair, I seldom meet developers who don’t believe their to-be-released-game will be a hit. And that’s okay. But back to reality, you know, the business side of things.
Maybe my talk should be about costs. Not too sexy, who likes costs? But honestly, my mind currently is all about the costs and if we will recoup them. The game, meanwhile, is awesome. I don’t worry about that anymore. I still do worry about sales.
My view is the one of an independent studio with a current headcount of 35 people, located in the South of Germany, just at the French border. With the current FX-rate I would say our average costs per developer should be comparable to fully operative studios elsewhere in Europe and US. Excluding London. Is it still with Europe anyway? Everything is much more expensive in London, besides musical-tickets. And excluding all those US hotspots like San Francisco where even musical-tickets are expensive.
Let me share the more boring part of my inner me and breakdown a bit of Rogue Stormers dev-costs. The game will end up at around EUR 1,3 Mio. That’s for the PC version. Most of that comes from 200 man-months (mm) of development.
Attention Spoiler, if you want to keep the dream that developing games is only about infinite art, coding what no one else has coded before and exploding creativity, stop reading: What is a man-month? That’s the cost of one person per month. The rate should include salary, taxes, social security fees, cost of the working place like hardware, software licenses, according part of office costs like rent, studio cleaning, toilet paper and free donuts on Fasching. When using this man-month-rate for work-for-hire it should also include your margin and a buffer. Usually the buffer is too small and eats the margin. However, for a post mortem of a selfpublishing title you take the rate without margin and buffer.
Before planning the game I, in my function as finance guy, set the limit to 100 mm. Finally the plan ended up with 140 mm. Okay, that won’t work anymore after releasing this blogpost.
The now to be released version of Rogue Stormers started 2013. Just a few months before the first Kickstarter we made for it. Back then called ‘Project Ravensdale’. The material we prepared for the campaign included a visual prototype and costed us additional 10 mm. This was not part of the original budget so we were now at 150 mm.
The Kickstarter failed but the development still went on at a very slow pace. Just when someone was idle and could spend some hours he jumped on the project.
In April 2014 we made a second Kickstarter aiming to fill the gap to reach Steam Early Access. Although this was a much smaller one we still had to spend all-in-all around 5 mm. I leave this out and add it to marketing spends. The Kickstarter was successful and that July we released on Early Access a very early version of the game under the new brand of DieselStörmers.
End of 2014 we decided to add a roguelike-light approach, going away from the original dungeon crawler concept while we still have this Contra/Metalslug inspired run'n'gun mayhem. As we are talking business, you remember, that unbeloved little brother of creativity, I won’t touch too much why we did this. If you are interested in that part, read our Steam forums. There are many posts where I have to explain to angry gamers the problems we faced with the original plan and why we had to take a new approach. Did I mention I don’t want to do Early Access never ever again? Just one example for the reasons behind the decision: We faced heavy balancing problems with the original approach were players generated all kinds of crazy weapons that were really fun but broke the gameplay. Now we still have those crazy weapons but not by customization but by upgrading and looting.
The change was no easy decision, not only design-wise but also cost-wise:
This added around 40 mm to the overall budget. We believed that the new concept would get more love from gamers and more units will be sold. With a price-point of EUR/USD 20 retail-price we should have around 25.000 additional units.
Okay, the actual inhouse discussion wasn’t going too deep into this aspect as I’m the only finance-driven one in a studio full of creative crazy game developers . But frankly, if you do these kind of decisions that’s an important point you should take into consideration.
The overall budget was now 190 mm.
A few months later we received the info that jeans company Diesel’s claim against our IP-registration was accepted by the authorities. That had no impact on the development costs, but for sure it hurt our marketing efforts as we had to drop the name we tried to make well known for months. No Diesel no more.
In December 2015 we were targeting the release date March 24th. 4 weeks before that date it became obvious that we won’t be able to release a version then, that would have matched our own expectations. We postponed the release to April 21st. That not only has an impact on the budget which increased by another 10 mm, but also on the company’s cash-flow. The finance guy in me was crying, the marketing guy even louder as we already had everything targeted at the March date. Funny enough, our press-release regarding the delayed launch was published more often than the one announcing the original date.
That’s how we ended up with 200 mm. Funding a budget of 1,3 Mio is not easy. The long time it took us to get to the final release shows how hard it was to get there. It burned all of Giana Sisters sales and all margins from work-for-hire-projects.
At least we are almost done with the Steam version now.
There are another 10 mm in the total sum that the ports will require. Of course that’s a no-brainer. Only with the console versions the whole calculation makes any sense.
How will we recoup the investment?
As a rule of thumb you get 10 Euro from a game sold for 20 USD. We need 120.000 units sold full-price for break even, that’s 40.000 per platform (talking about PC, PS4, XboxOne).
Actually it has to be more units as the average price will be less:
I would be very happy selling 15k units for full price. That leaves 20k units discounted by 20 % and 10k for 30 %. It will take a while to get there. Especially as I have this angry voice in my mind crying at me all the time: Don’t discount your games so much! Stop it! Have you forgotten all the blood, sweat, tears and money gone into it?!
Don’t check those figures mathematically. These include lots of gut feeling based on too much years of number crunching ending up in one golden rule: Your costs are always higher and your margin is always lower. The fun starts when your worst case scenario is still good enough to not lose money.
I’m wandering from the subject. We were talking about units.
The game needs 50k to 60k units to break even for each platform. According to Steamspy (www.steamspy.com) the median for Steamgames is 30k. Giana Sisters: Twisted Dreams sold 200k units not including bundles. Steam has changed since 2012, so we handle this number with care.
I haven’t seen any such analyses for PS4 and XboxOne. Based on our own experience with Giana Sisters it should be possible to sell 50k with a new title. Unfortunately we don’t have a sim-release, PC will be a bit ahead of console. What’s the impact? 20 %? Hard to even guess.
All-in-all, looking at this, the numbers are a doable challenge. One that will keep me sleepless for some weeks to come.
The good thing is, once you reached the break-even you can start porting to smaller platforms, developing some DLC, tackling retail, signing some special distribution deals etc.
Where did I start? I was searching for a topic for a conference session. Hmm, just to be safe, I think I will wait with my talk until Rogue Stormers actually launched. And then I will do the session about the hit-game Rogue Stormers. For sure. Not the other one about ……, you know.