As you can read on my bio here, I'm the founder, partial owner, and "Somewhat-Creative Director" of The Domaginarium, an indie game development studio in El Salvador. We opened the studio in December 2010 and went through the process of shaping it and laying out the plan.
Disclaimer: Before I continue let me just say this is about sharing an experience, and not about writing a guide of "dos and don'ts" or giving you a plan on how to build your own studio in El Salvador or any other latinamerican country, in part because our plan/vision/experience is not the same as yours, and thus there's no reason why "our" plan should work on "your" company.
If you haven't read the first part of the blog, I think you should go read it before you continue reading this post. I've already given you some background and also an overview of our "plan," but I figured this time I'd share some perspective based on numbers and such.
As Kevin Smith says, "the less you make it for: best chances" and that was our plan (although we weren't inspired by KS on that, but rather common sense and tiny-biz 101). By monetizing everything, our total investment so far is $25,000 for 10 months of operations. This not only includes things like salaries but also "intangible" things like R&D, invested time, market research, and such (and when you consider all those "intangibles," that sum starts to sound quite small).
Here's where the fun part begins. We could play a little with those numbers and lower the investment (up to a certain degree), even some difficult choices in the process. Some of us decided not to have salaries during this initial steps (me included, and that's why I call myself the starving game developer, heh), and some things we managed to get them done for free or for very little money.
Using UDK was one of those important decisions since we ended up having one of the most powerful game engines at our disposal for only $99. If we'd decided to develop our own engine, the cost would've been a lot higher, mostly because I don't know if there's any programmer in El Salvador capable of taking on such task. We still had to do a little R&D to make the types of games we wanted to make, though, since we didn't want to make another first person shooter (more on that later), even if some team members were already familiar with UDK.
Part of that Unreal R&D is done by me, and since I'm not getting any salary right now, that part of the R&D is also left out of the actual investment. The same applies for many other "intangibles" so in the end we've actually spent less than half of the sum I mentioned earlier (I keep the exact amount to myself).
Again, we've been able to do this because we live in Latin America. People in other countries may be able to pull off something similar, but I don't think people in the US, where life is more expensive, could fund 10 months of their game development studio with just $25,000.
Such a low investment means we can break even with only modest sales, instead of needing 1 million copies sold for the company to survive. However, sales number are important for reasons other than the money (although making a lot of money is a good thing, obviously). Let's put is this way: on the first scenario we announce the first game made by a company nobody'd heard about sold 20,000 copies in two or three months; on the second scenario we announce that first game made by the guys nobody knew about sold 200,000 or 2,000,000 then the whole thing changes, and not just because you got more money.
At the same time we began thinking on what type of game to develop. The idea was to make something "different" but not so different people would go "what am I looking at?" So what came out of that was Parasite, which is the game we've been working on for a few months now (more on Parasite specifics including design choices and all on a future article). During the development of Parasite, many things changed and we had to adapt to those changes. One of the issues is that the game began to "evolve" into a more complex system that was taking a lot of time to develop (one of those issues being that, at first, the game was linear and ran for only 5 hours, but now we're looking at a non-linear game with combined gameplay of around 40 hours), so we had to rethink a few things and decided to do something completely insane: develop a second game at the same time, and that game is SteroidS, which just hit the release candidate yesterday.
During our games brainstorming Parasite was not the only game we had, obviously, but it was one of the "cooler concepts." We also had a few other larger games, and also a few arcade-style games. As I said before, part of our plan was to have our first game out before the end of the year, so we went back to those arcade-style games, picked one, polished the design, and started working on it, while still working on parasite (and since I'm the "Somewhat-creative director, I had to keep an eye on both projects).
SteroidS, also made in UDK, was in development by two people, and it has hit the Release Candidate after nearly two months of development, including the usual "what if we do this?" moments that can change your design at any time during the development. You can imagine everything we'd learned about UDK during these months was really helpful. We could've decided to make SteroidS a 2D game, or a flash game, or even use a different engine/framework but the obvious choice was to develop it using the available technology.
Anyone could say we're insane for doing this, and maybe it's true, but when you find your company is in the need of money, anything goes, and since SteroidS will be out soon we will have enough money to contine working for some more months (I hope), including salaries and beer for everybody at the studio!
Part 3 will come next week. Have a great week.