Archive for October, 2010

Day 19, survived week 4!

Focused on marketing stuff today.  It’s a blast, I love the subject.  Today was more focused on how to present your product to your customers…most people will just list off the features.  But the customer doesn’t really care about the features, he cares about “how does this feature benefit me?”  So you can say “This game has 500 levels”, but what’s the direct benefit of that?  “This game has 500 levels, guaranteed to keep you racking your brain for weeks.” sounds a little more appealing because now I know your 500 level game is going to give me a fun experience for X amount of time and I can visualize that.  It sounds dumb, but a lot of people make purchases based on their emotions instead of logic.  If I offer you a game that’s $10, but tell you that if you sign up for an account you can get it for $1, you’ll probably do it to save that $9.  But if I offer you a game that’s $500, and if you sign up for an account you can get it for $491, you’ll probably say fuck signing up it’s too much work.  Logically you’re saving $9 either way, but it’s a matter of relativity.  I find that stuff interesting just in general, haha  Always been a people-watcher, human psychology is fascinating.

We planned out our actual first year Cash Flows and this seems like a no-lose scenario.  No matter what numbers you throw in, the income makes a basic J shape.  If you can survive the initial dip (spending money before you’ve made any) and ride it out, then the projects pile up and so do the passive income streams until even if the games are all selling like shit, you have so many out that your money still goes up, and then it goes up exponentially.  The first year will be the trickiest, but if I can survive that, I’m set.  I factored in profit sharing, raising salaries, treating everyone to beer and steak occasionally, etc.  Got a lot of ideas on how I want to run things, but we’ll see what the instructors think about my Cash Flow before I get too psyched haha

- Yarr

Day 18, death & taxes

Today we got to learn about the taxes and write-offs and bonuses and all that jazz. A lot of it went over my head but it’s the stuff I need to learn so I downed a couple redbulls and did my best not to fall asleep haha

I got my iPhone working and even though I’ve loved my Blackberry Pearl for years it feels so weaksauce after using the iPhone haha it can DO the stuff an iPhone does but it’s just not as pretty.  It’s also actually a weird adjustment to type without physical feedback from the buttons.  I can type ridiculously fast on a Pearl, without looking, but with a touch-screen I can’t imagine not looking at it every time I type.  So now people will know when I’m talking to them and txting my friend “save me from this boring chick” at the bar haha

I’m diggin the crap out of the iPhone.  I grew up a PC guy so adjusting to a Macbook is rough (how the hell do I Maximize a window??) but I’m mostly just going to use it to get a build on the devices without needing to bug the programmer if I want to change some art and such.  Seeing the App Store in action was pretty cool…lots of little things I picked up from playing a few games.  Like virtual d-pads blow, so I’ll try not to design games that require those.  I played a game where the d-pads are on the bottom corners and the main play area is flat on the bottom of the screen…wtf??  Your thumbs cover the action half the time.  That was a silly design decision.  It looks like you only get a short blurb of text describing your game and then people have to hit More to see more, so put all the good stuff in that first couple sentences.  The App Store is designed for twitch impulse buying, it’s pretty smart on Apple’s part.  The Developer page is just a tiny little link in the top corner and it doesn’t look very customizable.  iPad games are priced higher than iPhone games in general, but I don’t know if they sell the same.

It’s definately cool to be able to see how this stuff all interconnects.  Mac is all about the user-friendliness and an iBook on my iPhone appears on my iPad, etc.

The Macbook gained points for having iMovie.  Holy shit is that a cool program.  I could’ve blindfolded myself, clicked randomly for a minute, and BAM, professional looking edited movie.  It’s ridiculously easy, and I dig it.  I’m probably going to use that for Behind the Scenes stuff, interviews, etc. down the road.  Should be a big time-saver.  I’m psyched to get an iPhone 4 where you can record HD video AND edit it in iMovie directly ON the phone.  Awesome stuff.  Unfortuantely it’s a bitch to get an iPhone 4 from Rogers right now.  Everyone else seems to have them, so wtf Rogers??  haha

- Yarr

Day 17, business licenses

Really short day today.  Went over business license stuff and by-laws, and our guest speaker was done like 2 hours early, so we got out before noon haha  I spent the day catching up on sleep.  Huge assignment I have to do tomorrow!

- Yarr

Day 16, the biggest Apple fanboy ever haha

On the weekend I hit the Apple store and bought a bunch of stuff for dev’ing/testing.  iPhone 3GS, iPad, and a Macbook (figure with a Macbook I can make art changes and such without having to bug the programmer as much).  Unfortunately the 3GS doesn’t work without a sim card.  Like, I can’t even get to the Home screen, all I can do is read the error message about needing to insert a sim card and make emergency phone calls haha  Thanks for not mentioning that, Guy Who Works At The Apple Store, jeeze.  I don’t really want to use it as a phone, just the Wi-fi so I can play games from the App Store and test my own games when I sign up with the dev program.  But if I can’t even get to the Home screen then it’s pretty useless as-is.  I’ll probably just take it back and then go to Rogers and grab one with the cheapest plan they have (I’m assuming the $250 + a 3 year plan is cheaper than going in with this $600 one and seeing if they’ll attach a plan to it) or try a Pay as you Go Sim or something.  When I get an iPhone 4 I’ll get an actual phone plan with it and ditch my “currently on its last legs” Blackberry Pearl haha

The guy put all the stuff into a giant Apple bag and I walked out with it slung over my shoulder like Santa Claus looking like the biggest Apple fanboy in the universe haha  I haven’t actually used Mac’s since college.  When we were growing up, a buddy of mine had a Macintosh with a 5″ black and white screen…that thing was AWESOME.  King’s Quest III, Dark Castle, Scarab of Ra, Shadowgate…so many good memories.  The weirdest part to me at the time was that the graphics were brutal (my PC at the time had big pixely but colorful EGA art), but the sound was PERFECT.  Like fully clear voices and stuff…I always wondered what was up with that.

Today a bookkeeper came in to explain bookkeeping to us.  I learned that I’m going to just hire a bookkeeper, because holy FUCK.

- Yarr

Day 15, digging into the savings, eek!

Today was more financial stuff.  Cash in/out sheets and income statements.  This is where we’re going to be figuring out actual numbers and learn if we’re going to need to cut costs somewhere or find more start-up money, etc.

We’re allowed to lose money, you can have negative income for a bunch of months, especially at the start where you’re putting money in without having much sales-wise…as long as your actual “for the business” money doesn’t drop below 0 because then, well, you have no money haha  I should be alright, I’ve been saving since I was younger for this so I have a chunk of money stored away in the bank.  Its not much but it’ll be enough that I don’t have to go to investors to fund this…not that using other people’s money is a bad thing, but I want to have full control over everything so I figure the best route is to use as much of my own money as possible.  It would be demoralizing to have initial profits going toward paying off a debt haha

- Yarr

ooooo, finally we started on the fun stuff!  I had a pretty good idea of what my demographic was (since I AM my demographic), so the research to find the feasability and market shares and everything was useful info but more work than fun.  Today we got to discuss marketing, and we’ll be focusing on that a lot.

Indie games that bomb bomb because no one knows about them.  Marketing is an after-thought for most people.  You can’t even imagine how many post-mortems I’ve read over the years that follow the same pattern: Developer has a great game idea, he spends 2 years making it, finally releases it and then sits back waiting for the millions to roll in.  Of course no one knows the game even exists except his 5 friends that have been leaving supporting feedback on his website, and then when the guy can’t pay his rent he posts a bunch of pissy articles about how there’s no money in indie games and the success stories are all luck and magic elves delivering gold to the lucky few.

That’s bullshit.  Your game didn’t sell because you didn’t tell people about it.  The excuses range from “I believe in my product, if my game is good people will find it!” to “I’m too humble, it feels like bragging to advertise!” to “sure, marketing’s great if you’re a big corporation but I don’t have any money!” to simply “I don’t know HOW to market!”

This is the age of the Internet.  You can market for free.  Facebook, twitter, game news sites, YouTube videos, these things don’t cost anything more than a little time and effort on your part.  If you have the money then save yourself some time and hire someone to market your game for you.  Sure, it costs a bit of money up front, which sucks when you’re not actually earning any income from your game yet, but if you drop $500 on marketing and make $501 in sales, then that’s a profit.  If you make $2000 extra in sales, then that $500 was a good investment.  If you’re one of the iPhone success stories that ends up making millions, then that $500 was the best $500 you’ve ever spent.

Our instructors have stressed repeatedly that it’s not bad to go into debt, it’s bad to go into stupid debt.  Going into debt for a new 52″ TV is stupid debt.  Going into debt to market a product you’re trying to sell, and doing the research to pick the right channels to market in…that’s smart debt.  Even if you don’t want to go into debt, Twitter, Facebook, E-Mail, message board discussions, etc. are all free forms of advertising.

I’m going to dig this marketing unit a lot.  I’ve got a lot of ideas I want to try, and I’m eager to give new technology and marketing techniques a go!

Far as projects goes I’m still coming up with them and it’s a blast…I love designing stuff and mocking it up and ironing out the kinks.  I had some time to doodle at lunch so the above drawing is related to the last drawing, haha

Also a fellow artist has discovered my secret office-space!  He’s two couches away from me here at the mall and the poor sucker is trying to balance a Wacom tablet AND laptop on his lap at the same time.  I should go over and point him to the Lenovo website haha

- Yarr

Day 13, finally a relaxing night!!

No assignment due right away so I decided to take tonight to just relax and doodle and catch up on some sleep!  It looks like we’re going to be focusing on finances pretty hardcore for a week or so.  No surprise there, since that’s probably the most epic section of importance.  We talked about the Break Even point in business, where you balance the books and finally the money coming in from your business is paying it’s own bills and everyone’s salaries and it’s basically sustaining itself…it’s broken even.  A milestone worth celebrating!

Of course breaking even isn’t good enough, got to set your sights higher and rock a profit!

I’m still designing projects that I can do super quickly.  I’d love to do a Christmas game of some kind just in time for the holiday season and all, but I don’t think I’m going to be running that smoothly by then.  We’re “launching” our businesses Dec 1st, but that might not actually involve working on any games yet, more launching websites and such for them.

I’m thinking designing and writing GDDs will take a chunk of time and I should be factoring that in to my dev time.  3 weeks might be more reasonable than 2 weeks…a week for writing up the design and planning it out with the programmer and a couple days of buffer time, then 2 weeks for the main game development.  We’ll see how it goes though, the first projects will be pretty simple till I get the process down and see where I’m at for money.  Ideally by the end of the year I’ll be developing month-long projects.

Okay sleep time!  Also the pic at the top is related to a game idea haha

- Yarr

Day 12, sub-zero finances

Today was more financial stuff.  Cash in/out sheets and income statements.  This is where we’re going to be figuring out actual numbers and learn if we’re going to need to cut costs somewhere or find more start-up money, etc.

We’re allowed to lose money, you can have negative income for a bunch of months, especially at the start where you’re putting money in without having much sales-wise…as long as your actual “for the business” money doesn’t drop below 0 because then, well, you have no money haha  I should be alright, I’ve been saving since I was younger for this so I have a chunk of money stored away in the bank.  Its not much but it’ll be enough that I don’t have to go to investors to fund this…not that using other people’s money is a bad thing, but I want to have full control over everything so I figure the best route is to use as much of my own money as possible.

That means I’ll be paying a programmer out of my own savings for the first while…better not fuck it up haha

- Yarr

whew, 3 classes today!  I was stuck at the school from 8am till 8pm.  First class was about our financial projections, second class was about psychology and reality, third was about budgeting.  This whole week is about financial stuff but I think my last post with all those spreadsheets is a good start with just making sure this whole thing is even feasable.  Second class was full of zen-like questions about what gives money, products, services, etc. value, and how your perspective shapes your view of those things.  I’m big into general psychology/philosophy so I’ve already mulled over those questions in years past.

It was cool that they covered it though…this course is really covering all the bases.  There’s even a class about making a smooth transition to a home entrepreneur and separating your work and home life where they talk about how to get your kids to help with the chores because you’re busy working in your space of the house you’ve designated a work area, etc. etc.  It’s not particularly relevant to me right now, but it’s impressive that it’s even brought up…I’m not sure a University business course would cover that.  I think I’m pretty set internally to handle this whole adventure.  I’m confident that I have good instincts, the creativity to make some cool shit, and enough industry experience/knowledge to make smart decisions and adapt to changing technology/markets…on top of that I have massive support from all my friends and family.  I’m not feeling stressed at all beyond the sheer amount of work, it’s not complicated stuff it’s just a lot of it in a short time-frame…but then, that’s what I signed up for, haha

- Yarr

So I managed to get a couple hours of sleep to help me survive the day.  Unfortunately, today was all spreadsheets and numbers as we started going through basic financial projection stuff.  It sounds super nerdy but I actually LIKE making spreadsheets.  It’s kind of like really simple programming when you get the more intricate “this cell is the result of that cell times that one, minus that one, divided by the sum of those ones, and it has a setting on it where if it’s lower than X amount of money the cell will turn bright red” stuff going.  It’s fun to play with the numbers, haha

We’re getting a default template spreadsheet to use, but I think I’ll end up making my own because of the nature of small game dev…I want to be accounting for price changes, the sales curve (lots of downloads the first day or two while the game is on the New Releases list, then dropping down to minimal past there), development costs, etc.  I already know how to use spreadsheet programs so I whipped up a quick test sheet in class to crunch some basic numbers: 

This is the basic chart for 11 games (whoops just noticed I have two Game10s but fuck it this has taken forever as it is, I’m not changin’ it!), the first 6 taking 2 weeks to make (I’ll be making very simple small games, no epic 40-hour RPGs here haha), the next one taking 1 month, the next 4 taking 2 months.  This chart assumes the games will all cost 99 cents ($1 on the chart for easier numbers) and only sell 1000 copies a month, but will sell that each month.  1000 copies a month shouldn’t be difficult, judging by stats I’ve seen around the net.  I’m also factoring in Apples 30% take and the initial start-up $10,000 investment for buying equipment.  And I’m paying the programmer $1,000/week with $1,000 extra for misc stuff (song licenses, advertising, etc.).  I actually think the “misc stuff” will be more expensive, but when I do the real estimates up I’ll figure that all out.

The bad news is I spend pretty much the entire year in the red.  And yet…a glimmer of hope!  Because of the “slow and steady wins the race” concept, by December I’ve pulled out of the red and I’m actually making a profit.  Not a big one, obviously, but that’s all I need to know this could work.  The thing about charting it out on a spreadsheet is that if I hadn’t done this, and just went along hoping things worked out, I’m sure by August I’d be all demoralized and be like “fuck this, there’s no hope, this was a failed experiment, I rolled the dice and bombed and now I have so much debt I’m screwed…I’d better find a real job fast and try to pull myself out of this hole I’ve dug!”  But because I’ve charted it out, I know to expect to spend the majority of the year in the red but that if I stick it out and follow the plan, I can come out alright.

I’m learning that business seems to be about pure logic.  If you follow steps A, B, and C, they result in D.  If they don’t result in D, then you have to tweak A, B, or C.  And as long as you stick to the plan and don’t let your emotions make you deviate from it, then you will get D.  But if you get too involved or scared or panic when things aren’t going smooth, you end up changing your plan on the fly and can no longer expect to get D.  It’s interesting to see how simple this theoretically is.

Now let’s play with the numbers for fun, haha:

The last chart was the absolute minimum I could sell to just barely break even by December.  Now say my games all do consistently decent, with 5,000 sales a month across the board.  Well fuck.  Now I’m out of the red by February, I’m making more than I made working as an employee in the industry by the end of May, and I’m hitting “rich as shit” by December.  Bonuses and steak dinners for my programmer and I haha  But neither of these charts really reflects the way game sales tend to work on the iPhone, so let’s try some more likely numbers:

Now this one assumes each of the games follows the “usual” iPhone sales chart…a big chunk of sales at first from being listed on the New Release store, getting in reviews, etc., followed by a severe drop once that stuff wears off and the game is no longer on the charts.  This is a lot more painful, and I drop in and out of the red, and yet, I still end up surviving by December.

Again though, this isn’t very accurate.  Not every game hits the same sales curve.  Some games do amazing, some do decent, some do terrible.  That unpredictability is one of the reasons I’m attempting to keep my start-up and development costs as low as possible (VS spending 2 years on a game and needing to make like $100k on it just to break even).  So let’s see what happens with a little variation in the success rates:

 Game1 doesn’t really do much.  I don’t know the system well, the game is pretty simple, I haven’t got an efficient marketing strategy so the game doesn’t even get noticed aside from being on the New Apps list.  It fades into obscurity pretty fast.  Game2 I correct some mistakes I made with Game1 and it does pretty decent.  Nothing spectacular, but enough to make up for Game1′s lackluster performance.  But then Game3 and 4 do pretty terrible.  There’s a little more consistent success in the later games because I’m spending a month or two on the games so they’re looking polished up and awesome compared to the 2 week games, I’ve got my shit together, I know the platform better, have my advertising/marketing process down, etc.

This time I’m out of the red by May, just barely.  By December I’m not doing anything amazing but I’m surviving.  Most people would probably just look at the December figure and say “$14k for a year of work??  That’s ridiculous.  This is a failure, quit now.”

The catch is that digitally distributed games are a passive income stream.  Once you put a game out, you can theoretically ignore it and it’ll slowly bring in bits of money, like the peons in Warcraft mining for gold.  Even one peon mining means if you wait long enough, you’ll be able to afford a Barracks.  So let’s assume the sales in the last month continue at a minimum…any game making more than 700 sales/month drops to 700, and any game making less than that stays at it’s low-ass number.  So let’s look ahead 2 more years:

Also I completely stop developing new games, or promoting my current games.  I basically go sit around in my underwear eating cereal and watching YouTube videos for 2 years.  I come back and check the numbers and what’s this?  I’m almost $95,000 up??  Because my only expenses each month are my rent and food now, as long as I make even one dollar more than the total of my rent/food, I’m making a profit.  If my rent/food total $800, and I have 10 games out, I only need them to each sell 80 copies a month.  Some games may sell 200 copies while others may sell 0, but it’s not a horribly impossible number.

But even then, I’m still using pretty optimistic numbers.  Let’s say things go even worse, and in January after the first year, every project drops to only 30 copies sold a month.  That’s like 1 a day basically.  Ridiculously low amount.  What happens 2 more years of YouTubing in?

Bam, $20,000.  For doing nothing.  I’m making about $230/month without lifting a finger.  That’s not enough to pay my rent/food, but I could get a part-time or full-time job and just have a nice $230/month extra supplement on the side with no maintenance at all.

But I have a lot of free time, and so let’s say I decide to do a little bit of marketing every few months for the hell of it.  Advertise a bit on Twitter, re-bundle games together, offer a free Lite version, try to get a few extra reviews, pay for a banner ad somewhere, etc.  Nothing excessive, a weekend of work here and there.  So keeping the same brutal sales figures up above, let’s throw a few spiked sales in there throughout the 2 years:

Now these aren’t even big spikes.  There’s no 500,000 numbers in there.  most are tiny 1,000 sale spikes.  And they’re not very frequent given the time-span of 2 years.  Now I’m looking at $42,000 by the end of the 3rd year, for doing almost nothing at all.  I forgot to throw in a few marketing/Lite-developing/etc. expenses in those months with the spikes but even over-estimating those expenses I’m still going to be sitting around $30,000 – $35,000.

So what’s the lesson I’m taking from all this number crunching?  Digital distribution is essentially like playing a videogame where your health-bar regenerates over time.  Even if you take some pretty critical hits, as long as you can find a place to chill and kill some time, you’ll recover and be back in business.  I don’t want to say it’s impossible to fuck this up, but I think the way I’m going about it (small projects, focus on marketing, etc.) it’d be pretty damn hard to fail in an epic way haha  Worst-case either I just don’t make as much money as I could, or I end up back at $0 and I go find a real job.  Unless I take some ridiculous gambles or stray from my plan, there’s no way I can end up financially crippled by this venture.  That’s pretty damn comforting haha

There will be fluctuations of course…a new iPhone will come out and need higher res games on it.  Another phone may become decent competition.  The PS4 may have an App Store.  But the point of this whole thing is that this isn’t nearly as “cross your fingers and hope you get lucky” as a lot of articles make it sound…you just need a combination of patience, a focus on marketing and re-marketing, and an efficient development strategy that keeps your expenses low.

whew…this took forever!  I actually had to re-write the thing a few times and I fucked up some charts originally with bad formulas in them that made it look like I was going to be a jillionaire in year one haha

- Yarr

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