Iron Tower Studio - Taking Care of Business

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Iron Tower Studio wrote an article on the business side of making their games which makes for interesting reading.

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Taking Care of Business - 2018

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.

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