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Funding for smaller developers: Tips from the Game Career Guide

Funding for smaller developers: Tips from the Game Career Guide
August 28, 2015 | By Brandon Sheffield




This article appears in the 2015 annual Game Career Guide. You can read or download the whole thing HERE!

GETTING FUNDING IS ONE OF THE MOST DIFFICULT THINGS FOR ANY DEVELOPER, LARGE OR SMALL. 

Unless you're making games purely as a hobby, you'll need money to live, for software tools, and for licenses–and so will the people you work with.

While there's definitely no sure-fire way of getting money, I propose a relatively new model
that gets publishers and platform holders to pay for you to make the games you want, while you keep your IP – you just may not get to finish your dream project in one fell swoop. It'll take time,
and incremental steps, as you work gradually toward a final product.

BUT FIRST, SOME BACKSTORY

The game industry is always changing. Once consoles were king in the U.S. and Japan, and
PC ruled Europe. Now mobile is crown prince of Asia, and Steam makes up a lion's share of most independent game developers' revenues in the West. One of the bigger recent changes, as far as I'm concerned, is the rise of the independent developer. The “bedroom programmer” was common in the Amiga days, but small studios were deemed unsustainable for quite some time as console games got bigger, and teams needed to grow to match.

This meant the large teams, making games like your Call of Dutys or Assassin's Creeds, kept
getting bigger. The mid-sized developers, most of whom were working on licensed or budget titles, wound up finding they had no business. After the Wii ceased to dominate, there was no more room for a mid-tier game.

But at the same time, indies rose up, as digital platforms increased in popularity. Suddenly it was possible to be a team of around 5, and make a game like Braid, Castle Crashers, or Minecraft, and do very well for yourself. That was around the early days of the Xbox 360 and PlayStation 3, in the mid-late 2000s.

Now, indies seem to be everywhere, and we hear as many stories of abject failure as we do of smashing success. But there's a good side effect of all this—right now indies are a bit of a buzzword. That's gross, I acknowledge that! But it can be used to your advantage. For one thing, platform holders, especially new ones, see the appeal of indie games, and want to capitalize on that. Think about the PlayStation 4 announcement at E3 a couple years back. They were considered to have “won” E3 in that particular year, in large part because they seemed so human and reasonable. Part of that was because they brought a lot of indies, for whom consumers have some sympathy, up on stage.

Platform holders also know that indies are relatively affordable, in terms of budgets, so they may be more interested in getting into funding, with the potential of a larger payout later. While you're not as likely to get big money out of Sony or Microsoft as you might have three years ago, newer, smaller platforms show up all the time, hoping to get their slice of the pie.

And then, on the other hand, you have the larger indies (like The Behemoth, indiefund, or Mojang), who now sometimes fund other indies, using the spoils of their earlier success. Likewise, smaller publishers like Devolver Digital have risen to publish and promote smaller indie games, to great success. It's these types of folks to whom you have to appeal, if you want to get funding in this day and age as a smaller developer.

[Read or download the full 2015 Game Career Guide HERE!]

A CASE STUDY

I'll explain the model by way of example, using a game that we at Necrosoft Games managed to get funded twice (so far). Our first game,Gunhouse, was funded from its inception by Sony,for its fledgling (now defunct) PlayStation Mobile platform. We had prototyped Gunhouse as a game jam game, and Sony needed games quickly for its new platform, so it was a good fit.

We didn't exactly finish Gunhouse quickly, but that's another story—what matters is Sony funded the project, and we kept the IP, and were able to self-publish. While we didn't make revenue from the project, we now had a complete game that we could do whatever we wanted with. So, after the exclusivity period of two months ended, we brought the game to Windows Phone, through a grant program that Microsoft had at the time, called AppCampus. Personally I think we should get some sort of achievement for getting both Sony and Microsoft to fund the same game, but there's nobody to award it. Too bad. Maybe we should make ourselves one.

Anyway, we pitched Gunhouse to Microsoft as, essentially, Gunhouse 1.5. It would be called the same thing, but it would have a lot of improvements. We improved the store, and the weapon selection feature. We added enemies, stages, and feedback, such as screenshake. We improved the way the game plays in a bunch of ways, but not enough to call it a sequel.

Essentially, it was like Microsoft paid for a version up patch. In the process, we also brought the project from Sony's PSM Studio SDK to Unity, meaning the game was now much more portable. We still got to keep the IP and self-publish.

Why would Microsoft do this? Well, at the time, Windows Phone also needed more games, and PlayStation Mobile wasn't a huge market, so they weren't concerned that the market for the game had already been exhausted.

Now, we're trying to get the “final” version of the game funded, by a third party, in which case we'll release the game on iOS, Android, and PC. But while we wait for that final round of funding, we've ported the existing version of the game to Amazon's phone and tablets. It's another small market that doesn't cannibalize potential future sales, because it's a relatively isolated platform, but one where the platform-holder can promise deck placement or marketing if you pitch them properly. Since the game is now in Unity, it only takes a couple days to port and integrate new platform features.

All of this is essentially the model I'm suggesting to you now. I'll sum it up – you should target smaller (funding) platforms first, and release the core of your game there. Not every feature you'd love to get in there, but the very core of the gameplay and featureset. From there, target additional small platforms to fund larger versions of the game, building on that core, assuring them that the market for your game is larger than the one you just released it to. Then once you have a version you're satisfied with, push that to the wider platforms – iOS, PC, Web, PlayStation 4, whatever is appropriate for your game.

In our case, we are also porting the existing version, which we still want to improve, to some other platforms as we anticipate more funding for additional versions of the game. If you can get some marketing push behind your game, this can be worth it. But it should be noted – even if we don't ever get more money for the game, we can still pull the trigger and release the version we have on iOS, Android, and PC, because we own it. The game is good, we just want to do more with it. If that opportunity doesn't arise, we still have a full game we can release to an audience that hasn't seen it yet.

[Read or download the full 2015 Game Career Guide HERE!]

FUNDING IN YOUR SIGHTS

Now who should you target? Any new platform is a good potential source of funding. Not all of them fund, but many of them do. Some friends of mine Kickstarted a game called XXX, which didn't make its funding goal, but caught the eye of Intel and their RealSense camera, which gave them $100k to continue development. I targeted PlayStation Mobile and Windows Phone, but others I know targeted the Nvidia Shield around the same time. If you had a game that showed off their 3D Tegra chip, they would potentially fund you.

Today, of course, the companies that are funding are different, but they're out there. Just do some research—what are the new platforms from companies with money, but who haven't necessarily been in the field before? That's where you look first. And look for platforms with large potential audiences, if you can't get funding. Spry Fox released a game on the original Kindle, before anyone else. But they knew lots of people had the device, so there was a high potential for return there.

So where do you find these people? You can look online, and send people cold emails, but if you have the opportunity, go somewhere like GDC or E3 and try to meet these folks in person. A face-to-face meeting really helps establish that you mean business.

After looking at platforms, you should look into publishers—from smaller ones like Devolver Digital and new companies like Raw Fury, to more established publishers such as Square Enix and 505 Games. These folks can also be contacted by email, but you should do your best to impress them. Publishers look for something with market viability within their area of expertise first and foremost, whereas platform holders may take a wider variety of games just to have a spread of content. So if you have some nice art, an interesting story, or can show an interesting vine of your prototype, and get some attention with it, you've got a better shot at catching someone's eye without having to do as much cold-calling.

Lastly, there are the indies that have gotten big. Our current game, Gunsport (no relation to Gunhouse—confusing naming convention, I know), is being funded by Iron Galaxy, which had success as a porting house for quite a while, till they broke into indie success with Divekick. Now they're making Killer Instinct Season 2, and are doing quite well. Divekick's success got them interested in doing some funding and publishing themselves, and now they've got three multiplayer indie games in their stable.

Developers are a bit tougher to get hold of, and they may in fact have to contact you. The Behemoth has a fund, but you can't petition them. The choice is all on their side. But if you can get them to notice your game, who knows! Indiefund is similar—they have scouts who look for interesting games to fund, so your best bet is to make a splash on the internet and hope to catch their eye. Going to Indiecade and talking to people is a pretty decent way to make this happen.

[Read or download the full 2015 Game Career Guide HERE!]

TALKING TO FUNDERS

If you're ready to give this a try, there's a bunch of stuff you should know first. For one thing, you should have something playable that demonstrates what is interesting about your game before you approach anyone. If you've just got hopes and dreams, with no gameplay, or visual or audio target, you'll be viewed as a much greater risk, and are less likely to get funded.

Now, when you're talking to folks about funding and the future of your game, I advise you to keep these things in mind:

  1. Never give up your IP. It's all you've got, and if you let someone else own your game, you may as well do work for hire. It makes more money, and can sometimes be less stressful. But if you want to make something for yourself, you need to keep it. Plus, if you don't keep your IP, you can't sell an improved version of the game without extreme difficulty.
  2. Ask for timed exclusivity, not permanent, from platform holders. Most platforms will want to keep your game forever. Unless that platform is somehow completely ubiquitous (no platform is), or they're giving you an absolutely massive amount of money, this is not worth it. So you should make sure your game only needs to be exclusive to their platform for a set amount of time, after which you can bring your game wherever you want. And then, once you've got timed exclusivity locked down, ask for it to be shorter. In the case of Gunhouse, Sony had a standard 4 months of exclusivity for PSM. We asked for it to be two months, and they said “okay.” That's it! Never hurts to ask.
  3. Ask for more money than you think you need, but not much more than others are getting. Game development is hard to predict, and your time estimates will probably turn out to be optimistic, and thus wrong. You'll need a bit more money. But if you can, try to find out how much games are getting in terms of funding from the same platform or publisher. Try to find this out from other developers, of course—the publisher won't tell you. But they may give you a range, and if they do, aim for the top. They'll make a counter offer, and then you can make a third that may please both of you.
  4. Ask for higher revenue share, in stages. Indiefund has a publicly established model for this, so there's a precedent. Indiefund gives you a certain amount of money, which they expect to recoup upon initial sales of the game. Once the game recoups, then the revenue share split is 70/30, in your favor. If the game then doubles indiefund's investment, 100% of the revenue reverts to you. Now, most publishers won't give you 100% after you make double their investment, but they may well give you something like 90%. See what you can get in terms of revenueshare stages. This makes you play the long game, even if the publisher does a fire-and-forget release.
  5. Seek out good/wide distribution partners. For some companies, like the aforementioned Spry Fox, distribution is more important than funding (whereas for me, at the current state of my company, funding is more important). As Spry Fox's Daniel Cook says, “A small trickle of steady revenue is more valuable [to us] long term than a burst of short-term revenue."
  6. Try to get success early, one way or another, so that the platform holder cares about you once they move to an extraction model. At the beginning of a platform's lifecycle, the platform holder will be in an investment phase. That is to say, they know they need users, and for users they need game, so they will pay to have games on their platform so that they can get those users. But if that platform becomes successful, and they reach a sustainable number of users, now they don't want to give funding anymore, because they know that developers will want to release their games where the users are, regardless of funding.

This is another reason why you want to target new platforms early—but you should also try to get in good with them in the early stages, if you believe in the future of the platform, so they will still care about you when they make it big. If Ouya had made it big, for example, they'd still care about Towerfall, because Towerfall gave people a reason to talk about the Ouya at a critical time.

For our part, since Microsoft paid for Gunhouse's Windows Phone version, we felt we'd gotten enough out of it, and so released it for free, in the hopes that it'd make an impression on Microsoft for the future. I don't generally advise releasing your game for free, but, in that case we felt it would help. (It did help, but we screwed up our launch and had to re-launch later without promotion… but again that's another story.)

[Read or download the full 2015 Game Career Guide HERE!]

SUSTAINABILITY

Not everyone can follow this model. It requires you to be very cheap, and complete games on budgets that hover around $50-$75,000 dollars, or often less. We made the Windows Phone version of Gunhouse for less than 20k, and had some left over.

Essentially, you've got to save money wherever you can. Cook at home. Live as cheaply as you can. I personally have $400 per month for all food and entertainment, and I live in the Bay Area of California, one of the most expensive places in the US. Don't have an office if you really don't need it. Don't meet at coffee shops, unless they're extremely cheap. Offer more revenue share versus up front money. People should be paid, but if you can promise more on the back end, you can work for cheaper. Eventually, all this scrimping and saving can pay off, because if you get a hit, your recoup will be so low that you'll just start making money on day one.

We at Necrosoft Games are a globally distributed team. This has logistical problems, but financially works out very well. Most of us are in eastern Europe, which has a much lower cost of living. To work with us, you have to be able to live as cheap as us. We have a core group of people who are paid a monthly salary, and everyone else is a contractor – however, all contractors also get revenueshare or bonuses if they complete their full contract.

You also need to make sure you think about marketing, especially if you're working with a platform holder rather than a publisher. Nobody knows your game as well as you do, so taking vines and gifs, writing stories about your team, sharing information, all of this helps raise your company's profile. Pitch your game and your story to press, and try to get your game and your company name out there. Speaking engagements can sometimes lead to publishing deals, or new partners, as well, so leave all your options open.

It's difficult to think about marketing when you're focusing on making your game, but in this day and age it's necessary to stay ahead of the crowd.

[Read or download the full 2015 Game Career Guide HERE!]

AFTER YOU’VE MADE THE GAME

Once you've released the thing, there's still more you can and should do! This is when you try to get new platforms or publishers to pay for ports and upgrades. If the platform you've chosen has a weird SDK or tools, you'll want someone to pay you enough to where you can rewrite the game in Unity or C++, so that you can then bring it anywhere. And then once you can bring it anywhere (the “final” version of your game), do so, remembering to angle for marketing deals or deck placement by contacting the platform holders first. You never know where your game will hit.

Get into bundles once your game has kind of had a sunset in terms of sales. Bundles will give you much less money than you'd get from selling it normally, but once you're not selling much normally anymore, this can squeeze a bit more blood from the stone. This is another reason why you want to own your IP – if you don't, you'll have to talk to a publisher before you go into a bundle, or onto a new platform, and if they don't want to, well, that's that!

And again, make sure you give revenue share or sales bonuses to your contractors. Of course you could burn out a bunch of college kids or friends, but that's not sustainable, and hurts the industry at large.

[Read or download the full 2015 Game Career Guide HERE!]

MORE EXAMPLES

Here are a few more examples of this model, or variants thereof. ElitApps in Bratislava Slovakia released a game called Hero Panda Bomber. It's basically a Bomberman clone in 3D. They did it as a proof of concept to see if they could make something nice in 3D for the Nvidia Shield. And it worked. While even they admit the concept is far from stellar, being essentially a clone, Nvidia needed games, saw theirs, and offered marketing.

Once the game was marketed heavily on Nvidia's store, other android consoles with controllers started asking them to bring their game over, again in exchange for marketing.

While this wasn't a huge revenue blast, it was a nice trickle, and got the company some recognition in the industry, all because they targeted new platforms, and didn't port all at once.

In the second example, a company in the Czech Republic took my advice and walked around the show floor of GDC Next in Los Angeles, and pitched all the technology providers there. They wound up getting $25k to make a small game that they were then going to use to supplement the development of their larger projects.

Lastly, there's someone who did the opposite. I spoke to a developer in Austria who was offered 50k Euro to make his game. The game was level-based, and was sort of a platformer. He said he didn't take the money because he couldn't make the full game for that much. But I pressed him—couldn't you make the core of your game for that much, though? And he said sure, but wouldn't that be cheating the platform holder?

You could make an argument for it, but I say no. They want a game—any game. You should of course do your absolute best to make the best game possible. But if you give them a polished one hour experience instead of a three hour one, nobody is going to complain.

Had he taken the money and made the core of his game with it, he would have been able to then get another round of funding to bring it to completion. As it was, the game remained unfunded, with money just coming out of his own pocket.

THE POWER AND DANGER OF RISK

Publishers are afraid of risk, but they want new ideas. This push and pull has existed in the game industry for its entire lifetime. But if you're cheap, you can take a risk that a publisher can bank on. Their only risk is a small amount of money, the risk is on you to recoup. I highly suggest trying risky, interesting titles with this model, because it may be your best chance to explore them.

In my continued discussion with Daniel Cook about this subject, he shared with me his ideas for potential success rates of certain kinds of companies, saying that they should be aware of their chances of succeeding. These are rough guidelines, and should not be taken literally, but are interesting to think about.

Necrosoft Games is somewhere between the non-prolific indies, and the prolific indies. So let's say our chances of success are maybe 10-15% per game. But this model I propose is not about increasing your chance of success, directly. It's about lowering your chance of failure. If you're making games with someone else's money, and you budget to where you definitely can survive long enough to make that game, plus a bit longer, you've got no chance of failure. You can't go bankrupt unless you're spending your own money.

PUT THE FUN IN FUNDING

To sum up, I say: do take risks, but don't do it with your own money. Do keep your IP, no matter what. And if you're interested in trying this model, do it now. The window is closing on publishers funding, but new sources of money come every couple months. New platforms launch. New publishers arise. Larger indies start funds. The money is out there, if you're hungry enough to take it. Just make sure you make a real good game along the way. Because if you're in this industry just for the money, you'll be better off making advertising software!

Brandon Sheffield is director of Necrosoft Games, senior contributing editor to Gamasutra, and advisor to multiple conferences and competitions. Currently working on Gunsport (among others) at www.gunsport.tv.



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