I first published this article on my blog site.

Today I gave my introductory lecture about the game industry to a new group of incoming Game Production students at The Los Angeles Film School. After talking for a couple of hours about the latest industry trends, types of jobs available, and professionalism, I asked them for questions. There was only one thing they all wanted to know: how much money they were going to make. After all, games bring in bajillions of dollars of revenue, don't they?

So, I ran the numbers by them.

According to the International Game Developers Association's 2014 Developer Satisfaction Survey (yeah, I need to update my slides with the latest IGDA survey), 48% of those polled said that they were independent.  This means that they either are freelance contractors or working as an indie developer.

Indie developers are those who are developing a game either individually or as a group without the financial backing of a publisher.  Unless an investor funding their work or they are living off of profits from previous work, indie developers work without pay until they finish their game, release it, and the money starts rolling in.  But here's the problem.  A developer's first game is usually not successful.  Nor their second.  Nor their third.  An indie developer may have to produce many games before one becomes truly successful.  Angry Birds, for example, was the 52nd game developed by its creator, Rovio.

Independent contractors, on the other hand, do usually get paid for their work regardless of the game's eventual financial success or failure.  A contractor may bid a fixed amount for making a specific delivery, such as a design document, a game level, a set of animations, or a website.  The contractor may also work out an hourly, weekly or monthly rate with the developer.  How much the developer is willing to pay is based on the demand for the contractor's skills and experience, and the developer's financial budget.  A quality assurance tester would not be paid much more than minimum wage, and a struggling artist or writer may not be able to negotiate more than $20 to $30 an hour.  However, an in-demand, high-level programmer might command as much as $100 to $150 an hour.

Did you notice that I used the word "usually" in the above paragraph?  An under-financed developer may try to negotiate a deal with a contractor in which payment is contingent on the game's success.  Other developers may fail to pay the contractor after the work is delivered. I did some contract work for a developer two years ago who didn't pay my final $12,000 invoice because they went out of business, and that's money I'll never be able to collect.

There is more security by working for an established game studio or publisher as a salaried employee.  The Developer Satisfaction Survey reports these as average wages in the U.S. game industry for those with three years or less experience:

Now, these numbers are sometimes sweetened by bonus and stock options programs.  If a company is doing well financially, it may set aside some of its revenues as profits to be divided among employees based upon their individual contributions to the company.  Publicly held companies, such as Activision and Electronic Arts, offer employees at a certain level stock options, the opportunity to purchase company stock at a discount, which they can immediately sell without putting up any money or hold onto.  Such benefits can supplement a developer's income by tens of thousands of dollars.

Still, working at a game company is not all rainbows and unicorns.  Crunch time, which means overtime work developers must do to deliver a game on schedule, is the bane of game development.  It is not unusual for game developers to work sixty, eighty, even a hundred or more hours per week for months so that they will deliver their finished game on a promised date.  Now, the Developer Satisfaction Survey does report that 45% of developers did receive extra compensation for working crunch time; however, that compensation isn't necessarily in the form of monetary compensation.  In all the years I've worked crunch time, I have never received overtime payment.  Instead, my employer might give me a week or two of vacation time when the project was over.  This might be an appreciated benefit if you're single, but if you have a spouse who is working or kids who are in school, extra vacation time in February or October isn't that great of a benefit.

Of course, it's better than receiving a permanent vacation -- being laid off.  Too often developers are laid off immediately after finishing work on a game because the game didn't sell well, or it did sell well but it wasn't enough to get the entire company out of financial hole it was in, or there just wasn't another project for the developer to work on. According to the Survey, developers have worked for an average of four employers over the past five years.  While they might have worked for one employer for a year at a salary of $60K, they then are laid off and spend three months looking for a new job, effectively making that $60K salary worth only $48K due to the downtime between jobs.

The only way people make a lot of money in the game industry is if they have ownership in the company they are working for, and that company gets sold or goes public.  Minecraft creator Notch owned 75% of his publishing company Mojang when he sold it to Micrsoft for $2.5 billion, and now he's the richest developer alive.  However, he is an extremely rare exception.  I recently visited the home of one of the most famous game developers in the industry and found that he lived in a middle-class home not much different from my own.  We may have ups, but we also have downs that even everything out.  I made a nice chunk of money when the first company in which I had ownership was sold, but then I lost it all on my second company.  C'est la vie!

So, if you are thinking about going into the game industry, don't do it to get rich.  There are a lot easier ways to make a living, but to be honest, I can't imagine doing anything else.  Get into game development because you have a passion to make games.  Do it for love, not money.