Bonus Devlog: The economics of making your own video game
Welcome to a bonus devlog!
This time we'll start with something a little different. The economics of making your own video game.
Let's assume that your goal is to make a living by making your own video game. How much success is necessary? How many copies of your game do you need to sell? We'll take a closer look at these questions.
First, let's pick a benchmark for how much income a person need in order to live. In my country, the minimum monthly wage for an office worker is around 3200 €. This is for jobs such as secretaries, receptionists, personal assistants etc. We pick this amount just to get some sort of benchmark.
Next, we'd probably like our game to sell enough for the game studio to make another game. Let's say for example it will take around 1 year to make another game, and every month you need around 3200 €. Then the first game needs to make around 38.500 €.
How does the game make that money? Well, there are several ways a game can make money. There are different game stores that offer different business models. For PC games, the biggest store is probably Steam. Game developers can sell their games on the Steam platform and reportedly Steam will take a 30 % cut of the revenue. So, in order to make 38.500 €, we need to sell for around 55.000 €.
Next, let's talk pricing. Picking the right price for your video game is a challenge on its own. You probably need to take a look at other games in the same genre. How are these games priced? How do they compare with your own game? It can be hard to compete with high budget games on graphics and amount of content. Games made by big studios tend to be bigger and better looking than indie games. So it probably makes sense to price your game lower than the big games.
If you have a game in a niche genre, you can sometimes set a higher price because there is less competition in the genre. On the other hand, a niche game could perhaps benefit from a lower price since players will be more willing to try out an unusual game.
So pricing is difficult.
All that said, it seems a price of around 10 - 20 € is pretty normal for indie games. A game like ours is probably on the smaller end of the scale, so let's assume a price of 10 €. On Steam (and probably also other stores) many games a sold during sales where the price is reduced. It's common to see 30 to 50 % discounts. So some players will pay a full 10 €, others a reduced price. Let's assume that on average a player has paid 7 € for our game.
To recap, we have made the following assumptions:
- There is 1 person in your company.
- We have no additional company costs (office space etc.).
- The game needs to keep the company running for around 1 year (the time to make another game).
- The store takes a 30 % cut.
- Players pay an average of 7 € to buy your game.
With these assumptions, we conclude that we need to sell around 8.000 copies of the game to reach our goal of keeping the company running.
Lastly, a word about publishers. We didn't include a publisher in the above estimate because we probably won't have one for this game. The main advantage of this game is that it is an extremely small production, probably too small for most publishers to be interested.
However, that does not mean that publishers in general are not worth it. Publishers can often help the game developers with things like testing, marketing, public relations, making trailers and many other things. This can allow the game developers to focus on developing their game. So if you're making your own game, consider if enlisting a publisher might be worth it.
I hope you liked this little bonus devlog about some of the thoughts you might have as a game developer. We'll be back with our regular scheduled devlog on July 24th. Talk to you then!
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