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Taking Care of Business, 2018

by Vince Weller on 02/25/18 10:13:00 pm   Featured Blogs

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The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

Even though we worked on our first game for more than 10 years (mainly due to inexperience and working part-time), I count 2016 as Year One. Before that we were a Fellowship (of the RPG) and now we’re a Business with multiple revenue streams.  In a Fellowship, hoping for the best is a sound business strategy: you’re working on your first game and hope it will do well. Then the game is out, it does great (meaning it doesn’t fail outright, which is as great as it gets these days, especially if you’re an indie with a shoestring budget), your Fellowship gets upgraded into a Business, gets its own IRS number, and you face an existential question that has plagued mankind ever since we crawled out of caves:
 

Now what?


The goal is to make more RPGs, of course, but:
 

  • We’ll work full-time from now on, meaning we’ll have to rely on the first game’s revenues to pay for the second game’s development. We’ll make the second game twice as fast, but twice as fast still means 4-5 years, which sounds about right considering that full-scale RPGs take 3-4 years for proper studios with proper budgets, which means that:
  • We’ll have to boost our revenues with a short-term project (expansion or spin-off), which means that we’ll have to make a small-scale game that sells. Easier said than done these days.
  • Our second full-scale RPG should be different enough to dodge the dreadful ‘more of the same’ stigma while keeping the design core intact, be better than the first one (meaning the design flaws must be fixed and the design core expanded), AND sell more than the first one. Now that we figured out what we want, all we need is a genie to grant us these 3 wishes.


To chart through these treacherous waters, we need to know what works and what doesn’t (aka a frame of reference when it comes to business decisions). Unfortunately, such info isn’t really available, so indie developers have no choice but to sail without maps or compass, doomed to learn from their own mistakes in an industry where your first mistake might be your last. Thus we turn to SteamSpy’s data and achievements, reading them the way people used to read the tea leaves and entrails (and just as accurately).
 
Essentially, this article is part 1 of our business diary to be posted over the years. Hopefully, someone might find it interesting. Ideally, other developers will share their own stories and contribute to the indie knowledge base.
 

The Age of Decadence (our first full-scale RPG)


We released it in Oct 2015 and I’m happy to report it’s still selling and still being mentioned favorably here and there (which is why it’s still selling, I assume). We’ve sold 126,295 copies to-date at an average rate of $13.51 per copy. The price reflects not just the discounts during the sale events but the regional pricing as well, which is an equally strong factor.
 
Year by year it goes something like this:
 

  • 2013-2014 (Early Access & Direct Pre-Orders): 13,124 copies – $320,157 – $24.39 avg.
  • 2015: 20,771 – $472,869 – $22.76
  • 2016 48,798 – $620,914 – $12.72  (50% discount is introduced in March)
  • 2017 43,808 – $293,714 – $6.70 (75% off on sale events throughout the year)


The moral of this story is twofold:
 
First, the number of copies sold never tells you the full picture. In 2017 we sold twice as many copies as in 2015 and almost the same as in 2016 but got less than half of 2016’s revenue.
 
Second, 95% of what you sell is sold during the sale events so your sale price (lowered further by the regional pricing) becomes your effective price during that year.  It’s also worth noting the increase of copies sold as we increased the discounts.  73% of copies were sold at 50-75% off.
 
In January 2018 we reduced the price from $29.99 to $19.99 to boost non-sale sales and mainly to see what happens (i.e. gather more data).
 

Dead State (the first joint project)


In late 2009 we partnered up with Brian Mitsoda to work on Dead State, a zombie survival RPG. We had the engine (Torque engine upgraded for some serious RPG work), the tools, and experience, so it made sense to offer it to developers lacking the tech base and explore this 'business model'. Brian would handle the design, writing, and scripting, we'd handle programming, art, and animations. Our thinking was that by the time AoD hits the final stage, when the focus is mainly on quests and scripting, our programmer, artist, and animator would be able to switch to Dead State without affecting AoD. Of course, it didn't work out quite like that, but we did deliver and learned quite a lot in the process.

As indie developers we were excited to hastily implement things the moment we could (only to be forced to redo them a few months later), but Brian followed a more structural and organized way of game development. Since that's not something any of us was ever exposed to, it was a very useful practical lesson. Unfortunately, working on two projects at once put quite a strain on the team, so it's not something we'd ever do again. While theoretically we can hire and train another team and let them handle joint projects as it's certainly a profitable venture, it's a very different business model that would eventually turn us into project managers rather than game developers.

Since we can't disclose the financial aspects of this project, they aren't included in the revenues posted in this article.
 

Post-AoD-Release Plans


When the post-release dust settled, we had a well-received (87% Steam approval at the time) niche RPG that sold about 40,000 copies. Neither a success nor a failure, so let’s call it a promising start! The question was what to do next.
 
Question #1: Do we make a sequel or a brand new game for our long-term project?
 
As you probably noticed a number of indie and not so indie sequels have done very poorly lately, selling a lot less than the original, according to SteamSpy:
 

  • Legend of Grimrock: 1,037,095 vs 421,351
  • Blackguards: 598,208 vs 248,752 (and that’s heavily discounted)
  • The Banner Saga: 804,625 vs 328,163 (it would be interesting to see how well the third game does)
  • Shadowrun: 1,161,596 vs 829,676 vs 587,436


Keep in mind that copies sold ! = revenue as ‘bundles’ can easily inflate the number of copies sold without boosting neither the revenues nor the number of active players.  If we look at the players rather than owners, we’ll see a very different picture (% represents players vs owners)
 

  • Legend of Grimrock: 616,936 (64%) vs 226,741 (57%)
  • Blackguards: 261,263 (45%) vs 85,257 (32%)
  • The Banner Saga: 601,244 (78%) vs 116,640 (39%)
  • Shadowrun: 817,525 (74%) vs 434,653 (54%) vs 220,465 (38%)


It seems that success of the first game often fools developers into thinking that they can do even better or at least as good with a second 'bigger and better' game, but as you can see it's not always the case. The obvious conclusion is that unless you have a AAA blockbuster with massive sex appeal, don’t go for a sequel because it will be seen as more of the same and sell less.
 
For the record, I think that Legend of Grimrock and the Shadowrun sequels were fantastic games that surpassed the originals and addressed the criticism, but it hardly mattered in the end because people assumed they offered more of the same.  
 
Now, let's be optimistic and assume that the breakdown goes something like that (based on our reviews and impressions):
 

  • core supporters - 25% - love it, want more.
  • core haters - 10% - hate it, will never buy another ITS game again.
  • kinda liked it - 50% - liked it but ... This "but" ranges from minor to major issues.
  • meh - 15% - played for a couple of hours and moved on, no strong emotions, no urge to play more.


So if we make AoD 2, we get the core supporters and some % of the ‘kinda liked it’ camp. We'll also get some new players, probably no more than 15-20%. So our best case scenario is selling 3/4 of what AoD sold, worst case - less than half. Considering that AoD sold rather modestly, either scenario would put us out of business.
 
Thus moving to a brand new setting with different systems is the safest bet even though it looks like the riskiest. We settled on The New World, a sci-fi RPG inspired by Heinlein's Orphans of the Sky. Our goal is to offer a very different experience while keeping the design core that attracted people in the first place.
 
So we shifted to sci-fi from fantasy, party-based from single-character, focus on ranged from  melee, increase by use from skill points, focus on exploration from working your way up in a faction, feats from skills' passives, while retaining and enhancing our design core: TB combat, skill-based system, stats & skills affecting non-combat interactions, multiple quest solutions, non-combat paths, non-linearity & replayability.
 
Naturally, when you change the recipe, there’s always a chance that you’ll lose some customers, but we don’t want to box ourselves in either and spend the next 20 years remaking the same game. The rewards (having the freedom to experiment and try new things) outweigh the potential risks here.
 
Question #2: Do we make an expansion or a tactical spin-off for our short-term project?
 
So now that the long-term project was settled, we had to pick a short-term project: expansion or a spin-off. Either option would boost sales but I feel that an expansion’s sales potential has a hard limit regardless of its quality (about 15-30%, if I have to guess – the core supporters and people who want more).
 

  • Deus Ex: Human Revolution: 23% of players got the easiest Missing Link achievement
  • Pillars of Eternity: only 8.6% got Soulbinder achievement, only 5.2% opened the Battery. Granted the achievements are a very unreliable tool but still…
  • XCOM2: 15.7% completed The New Alliance mission in the new and much improved expansion
  • Witcher 3: 18.9% got the Witcher’s Gone South achievement, although in this case it represents a million players.


Another problem with expansions is that they usually add content in the middle after players have already reached the end, so the ask to the players is not ‘come try new content’ but ‘replay a bunch of old content, and then find new content’, which brings us right back to the risks and dangers of offering more of the same.
 
Of course, the undisputed advantage is that an expansion is relatively easy to make as you’re using the existing engine, systems, and art assets, but the same logic applies to a stand-alone spin-off, which is why we decided to bet on the latter and go with a stand-alone tactical game set in the same world.
 

Dungeon Rats (the tactical spin-off)


Let’s start with the goals, in the order of importance.
 

  • Our main goal was to support our full scale RPGs with tactical spin-offs. Full-scale RPGs take many years (3-4 years for proper studios with proper budgets; we hope to do it in 4-5 years), so we desperately need a revenue booster.
  • The New World will be a party-based RPG where your Charisma determines how many followers you can have and the experience is split between the party members so a smaller party would always be further ahead.  We had no experience in this area (we didn’t even know if we’d be able to balance it), so we decided to try these features in Dungeon Rats first and get the hands-on experience  and feedback from thousands of players.
  • Since AoD was in development for over 10 years, it was important to show people that we can stick with a proper schedule and deliver a game on time. A faith-building exercise.


We hit goals #2 and 3, but it’s too early to say about goal #1. I hoped that Dungeon Rats would sell 100,000 copies in the first year on the strength of the combat system and the low price ($8.99, under $5 during sale events), but in the first 14 months it sold only 33,027 copies at $5.55 avg. Of course, without proper statistics it’s hard to say whether DR did as well as it could under the circumstances or failed miserably.

Overall though, AoD always sells more and and there wasn't a single day when DR sold even half as much. The obvious conclusion is that a strong seller (relatively speaking) has to be a “full-scale” game, whether choice-driven or strictly tactical. Anything else would have a very limited appeal by default.
 
Still, the idea to make tactical spin-offs to boost revenues had merits and while the first year sales are below our expectations, I hope that the game will keep selling over the next 3 years and make a more convincing case when it’s time to make a decision.
 
What worked well there (although not for everyone) is the scarcity of resources (food and alchemical reagents). Originally, we did it simply because there are no healers and stores in a prison mine, but it did evolve into an interesting feature. While we won’t be able to add complex quests with multiple solutions to our tactical spin-offs (it would double the development time but not the revenues), we’ll be able to improve the survival aspects and develop them further.
 
So IF Dungeon Rats will keep selling while maintaining a decent rating, the next tactical game (The New World’s spin-off) will take place during the Mutiny and feature a fully customizable squad (you’ll be able to create an entire party yourself), mission-based structure, base building and defense.
 
If you think it’s the right direction (and if you liked Dungeon Rats to begin with), take a moment and write a review. So far AoD got 1,553 reviews with 81% rating while DR is sitting with 210 reviews and 79% rating. If you have suggestions on how to improve the tactical design, we’d love to hear from you as well.
 
Anyway, if we make adjustments for two games, then our annual revenues look like this:
 

  • 2013-2014: $320,157
  • 2015: $472,869
  • 2016: $703,199
  • 2017: $389,114

 

Markets & Revenues


AoD’s top 10 markets:                   DR’s top 10 markets:                      
 

  • The United States – 34%         The United States – 35%
  • Russian Federation – 17%        Russian Federation – 16%
  • United Kingdom – 7%               United Kingdom – 7%
  • Canada – 6%                           Canada – 6%
  • Germany – 6%                         Germany – 5%
  • Australia – 4%                         Australia – 3%
  • France – 2%                            France – 3%
  • Spain – 2%                              Spain – 2%
  • Sweden – 2%                          China – 2%
  • Norway – 2%                          Poland – 2%
  • Other – 20%                           Other – 19%


The only conclusion here is that some countries like hardcore RPGs a lot more than others. Sadly, it has a very limited application as there isn’t much we can do about it, one way or another. It's worth noting that even though Russia is our second biggest market in terms of copies sold, the revenue share is only 5.2% due to regional pricing.
 

The New World (the second full-scale RPG)


We started working on the game in 2017 after wrapping up post-release support for Dungeon Rats. We did a lot of groundwork in 2016 calling it pre-production: mainly working with the new engine (Unreal 4) and developing the setting, systems (on paper), and key concepts.
 
2017 was a busy year: we did a lot of programming and animation work, produced a lot of art assets, defined locations (quests, places of interest, key characters), factions (leaders, relationships, goals), expanded the Pit’s quests, finalized the systems, and did a lot of work on the first two locations, so we started 2018 in a pretty good shape.
 
Our main goal for this year is to release a combat demo.  It’s a major milestone as it’s practically a game in itself. We do that, it means we have the engine (fully customized for what we need), all systems except stealth, all art assets and animation, interface, and TONS of small things that take a lot of time. It’s a massive amount of work and it took us 5.5 years to reach this point with AoD. If we do it in 2 years this time around, it will mean that we’re right on schedule for 2020 release and give us 2 years to work on quests and locations.
 

Kickstarter & Support


Whether we would use Kickstarter is frequently asked question, so I might as well address it here since it falls under ‘business decision’ category. We’ve decided not to use Kickstarter for 3 simple reasons:
 

  • It’s not about funding development, it’s about raising some money and hoping for the best. If you honestly state how much you need to make a game, you will be laughed at and fail. In 2007 Feargus Urquhart was asked if he wants to make Baldur’s Gate 3. He said, "If you'll put a real budget behind it: it can't be $10 million, it needs to be $20 million, $25 million." To be fair, he was talking about a Dragon Age-like game but still... Yet Obsidian asked for $1.1 mil on Kickstarter for a game marketed as a spiritual successor to Baldur’s Gate. Fortunately, they raised about $4 mil but the game cost twice as much to make ($7.5 mil). Now imagine for a moment if Obsidian only got the asking price…
  • The setup itself forces you to upsell via stretch goals and “rewards”.  The rewards will almost always cost more than you hoped and the stretch goals can easily double the projected development time. You don’t have to upsell, of course, but then you won’t do well. Promising anything in the heat of the moment is easy: a mega dungeon, another major city, even an expansion; delivering on the money you raise - not so much.
  • Unless you have a full demo showing all aspects of the game, you’re selling promises and good intentions . There is a HUGE difference between what the developers envision and the final product. Ideas always sound great on paper, imaginary games are always awesome, and it seems that everyone is convinced that a year or two at most is more than enough to make a complex RPG.


Thus, step 1 is releasing a proper demo (not the combat demo I mentioned earlier but a full demo coming somewhere in 2019). At this point we’ll be 6 months away from launching the game on Steam’s Early Access, which is a more straightforward way to boost revenues for the final stretch: no promises, no stretch goals, hundreds of players’ reviews, open discussions, fair price.
 
If you want to support us now, the best way to do is to participate in various design discussions. Our design approach was once described as:
 

  • Designer develops strong vision internally.
  • Designer then seeks criticism and suggestions around that vision.
  • Designer and critics argue relative merits.
  • Designer improves his vision accordingly.


So if you have something to say, now is the time.
 

But wait, there is more!


Feargus Urquhart requires no introduction but I'm going to introduce him anyway. He's been managing Obsidian Entertainment for the last 15 years and he's the reason the company is still around, which is a no small feat. Under his stewardship, Obsidian prevailed where so many other studios either have failed or were absorbed by various gelatinous cubes preying on the weak, so I have nothing but the highest respect for the man and his uncanny ability to manage business.

Anyway, he did like the article and was kind enough to answer a few questions relevant to to the topic at hand:

1. What's your take on sequels and expansions? Obviously, Pillars of Eternity 2 and three planned DLCs suggest you're a strong believer. At the same time, its new 'nautical-leaning setting' and ship combat offer something very different to entice players to come back and try something new. Is this the best way to go then?

I’m a big believer in sequels, but I’m both a maker and player of RPGs. I think RPGs are great to sequelize due to their focus on story, characters, and growth. When I finish a RPG, I usually want to play with that character again, or play in that world again. Now, not everyone is like me, but I think there are quite a few of us. For all games, but particularly, for RPGs, we create these complex engines and design methods, and we can give players an even grander experience when we can use as much of that as possible from game to game. Of course, we can’t just make the same game again, and sequels need to be more than a big expansion pack. But, so much of our time goes into what players play (quests, areas, companions, dialogs), and when we create all of those again for a sequel with a different, or continuing, story - that’s a new game.

The challenge sequels are fighting with non-sequels is for attention. It is easier to get someone’s attention with things that feel new, so a sequel does need something new and interesting. This could be a big feature like the world map and ship combat in Pillars 2, but it could also be an incredible story; the core of which grabs your attention, and anyone else’s when they hear about it. I don’t know where the line is, but I think we all get a feeling for it. One of the things we did on Icewind Dale 2 at Black Isle Studios was to re-do the HUD. It looks and feels entirely different than all the other Infinity Engine games, and allowed us to also add in some tweaks, but it was not an entire re-write. One could argue that what we did was “skin” the UI, which isn’t really a benefit to players. I think it gave the game a fresh look, gave players more of the world to see, and created an easier way to interact with the characters and game controls at the same time. Either way IWD2 felt new and different because of it.

2. Pillars of Eternity sold more than Wasteland 2 and new Torment combined. At the same time Tyranny sold about a quarter of what PoE did, despite being a unique and innovative RPG. What made one game a hit and the other "a largely underappreciated gem", as Paradox put it?

I don’t know. :) After 27 years in the industry, you would think that I would have a better answer. It probably seems odd for me to say that, however what we do is creative and can have a lot to do with timing – sometimes that means ideas catch on, and sometimes they don’t. It is very possible that the idea of Tyranny was interesting to people, and made them stop and take a look, but at a deeper level it just wasn’t interesting or compelling. While Planescape: Torment (the original) is now a very successful game, it was not as successful and Baldur’s Gate, or Icewind Dale, early on. That doesn’t meant it wasn’t successful, I think there are some urban myths about how Torment wasn’t a financial success early on. It was.

3. What business advice would you give to indie developers?

Funnily enough I was part of a panel talking about game funding yesterday, and I was the person there to talk from the perspective of independent developers. Not that your question, I’m guessing, is entirely about funding. To answer, I’m probably going to throw out a bunch of random advice. :)
 

  • Get known for making a type of game. Some developers, including us, try to be a one sized fits all developer. They can make any kind of genre of game. By doing that they don’t grow an audience, and publishers (if they want to go that route) just put them in a pile with every other developer. They become a commodity, and not a specialty tool. After our first couple years, we focused entirely on being an RPG maker, and didn’t try to sell ourselves as something else. That means we turned down products that might have made us some money, or even helped us keep people rather than laying them off – but it would have been the wrong decision to take a game that diluted who we were.
     
  • Find, then protect, your fans. Everyone needs people who love their games, want to play them, and want to talk about them. They are also the people who we learn from when it comes to whether our new ideas are fun, or not. Having a great relationship with your fans means engaging with them, being honest with them, and truly considering their feedback. We luckily have fans who have been with us for over twenty years – if we didn’t do the above most of the time, they probably wouldn’t still be with us.
     
  • Play your game more than most of your players. We even have a hard time with this sometimes, but the more we play our games, and play them early, the better decisions we make about what to add, what to take out, what to tweak, and what to re-design.
     
  • Understand your costs. I was asked what our man-month rate was in the panel, and I could answer it. By knowing that number, I can always be going calculations in my head as to what it takes to make a game, if we’ll have enough money in two months, or is a feature worth it. 9 man-months for a throw away NPC that’s not interesting to players is probably not worth $117K. Not saying our NPCs take 9 months, but just an example.
     
  • When talking to anyone about your game, be able to convey the concept in a few words – no more than a sentence. This helps core your game down for yourself to what it really is at a high level, and it helps you grab someone’s attention so that they will stay to listen to your more detailed information.
     
  • Video and GIFs are better than screenshots, which are better than text. :) However, 30 screenshots of the same level, showing the same stuff, with everyone in the shot standing around – probably not better than text.
     
  • Figure out which hats you can wear, and which ones you can’t. Running a developer means having to be involved in HR, Legal, Accounting, Business Development, and Operations. When we are small, someone has to probably wear almost every one of those hats. But, as humans, there are things we are individually not good at. Be honest about identifying those, and then finding people, or even contractors, that can do those things.
     
  • Don’t dwell or hold grudges. I see developers at all ends of the spectrum start making bad decisions (me included) and get burned out. This, of course, can be due to long hours and too much crunch time. But, it can also be due the bad decisions or mistakes they have made, or that they have been subject to. If I dwelled on every bad decision I’ve made, I would probably be in the corner whimpering right now. I screwed up, I’m going to screw up again. The thing to focus on is how to do what I do better and let the milk that has been spilled be forgotten. However, it is not to have the attitude “I’m going to show them, and not let them screw me again”. That leads to decisions made for the wrong reasons.
     
  • Love games, and love making them. If you don’t have both, don’t do this – it’s hard. When you love what you do it is infectious. When you love games, you want to talk about them. When you love making games, you are always thinking about how to make them better. If you can’t love what you do, and what you’ve done, why will anyone else?
     
* * *

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