The business side of running an Indie games studio
Warning: this post is just a list of tips and guidelines for starting one’s own company and the way we went about it, as usual your mileage might vary. And as I’m just writing this from the top of my head thus this post will go all over the place. For in-depth articles you’re welcome to glean the sources at the end of the post.
In the Netherlands starting a company is pretty easy: register yourself at the chambre of commerce (kamer van koophandel), choose the type of company you want to be (BV, VOF, eenmanszaak) and then troll the revenue services for a VAT number. Afther that you’re all set to go… Piece of advice, don’t do this before there’s an actual need to, like you’re about to sell the game or when investors start showing up or you’re actually making costs that need to be declared. Also do get an accountant as soon as cash starts moving, they are well worth the money if it saves you hundreds of hours trying to do it yourself 🙂
At some point we’d advise you to get a legal aid insurance, this doesn’t cost too much, and should you accidentally write skynet you’ll be able to defend yourself legally before the robots come to get you. This is especially important when you start signing contracts.
Get yourself some backup systems, we chose to use SVN because that was available at the time, at this point GIT might be a better idea because it’s new and shiny. But be sure to keep your backup system in a different physical location than your work computer! You don’t want to lose years of work due to a fire burning down both your computer and your backup.
Keep financial records dutifully in a spreadsheet, and update it ASAP, not at the end of the year (trust me, it gets ugly pretty fast). Be consistent in this for your (future) accountant.
Naturally, the biggest question is how to handle the Money and lack thereof. There are plenty of options:
Start from your mom’s basement: This works fine but you should really leave it after a year, if only for health reasons.
Start with investors: We have no experience with this as we took another route. Our research in the matter however suggests investors and game companies don’t mix very well as the high-hopes of investors don’t match the realities of making games. Basically, you end up selling a large part of your company before you’ve even made it worth something. And if that’s a controlling interest, you may end up not calling the shots. One tale of caution about investors: they can, and usually will, kill a game company. Horror stories galore on the interwebz.
Find business coaching and other university instances (there are plenty ones out there) that help people set up companies and let them help. They might give you a loan to start your company and enable you to leave your mum’s basement. This is currently a good option but you’ll have to be able to make up your own mind when their advice doesn’t match with the weird industry that is the indie industry. And they usually have very strict repayment demands on loans that can be problematic to meet if your company flops.
What we actually ended up doing was something different: Catnip Games started out as a part-time project – we kept normal wage-paying jobs for half the week and spent the other half working on projects. The normal jobs are dialled down when the company earns enough to compensate for lost income. This means you can’t fully focus on creating stuff, but it also means you don’t have to fear paying your rent next month. If the company flops then no harm done and we can move on without debts. If it works, we can ease into full-time self-employment almost immediately.
The best way to describe our development process we have found so far is to compare making games to writing a novel: it takes a long time to write, you can’t know if you have a best-seller until you start marketing it, and a complete flop or a huge success are always on the table, thus people “risking the bank” on investing in game development usually have to be made aware there is no guarantee whatsoever you’ll make any returns on your first game… but if they’re fine with losing money in the short run and make a buck in the future that’s up to them (and you).
Making a game is a R&D process, some solutions might be found in a day, but unforeseen issues might set you back weeks, experience is definitively something acquired on the job, even if you think you know everything. In building a game will you encounter weird unexpected issues and have to fix them, or find it’s unfixable without too much hassle and force you to start from scratch*.
This is usually the part where investors start giving “advice”. You can guess how much help that advice will be when coming from a financial analyst trying to comprehend why the physics engine has bugs in your new platformer/rts/shooter game.
Regarding subsidies: we currently haven’t found any that matched our criteria for a healthy indy dev studio, as subsidies are usually applicable to salaries and a starting indie game company can’t afford employees. Other subsidies are available but will take you up to two weeks in a month of filing papers instead of making games. If you think it’s worth it be my guest, we didn’t. Most subsidies requirements mean you are only eligible for them when you no longer need them in the first place.
If your business takes off you might have to face other problems like managing a team, managing business contacts, going to network events, game days, and other events where like-minded people hang out. But those are luxury problems.
Well hope you enjoyed a piece of mind, for more concise information there are always these sources of in depth information:
http://www.gamedev.net (especially the forums)
*from what I’ve heard losing a month or even a years worth of work does happen