February 08, 2012

Cost of doing business

How can I afford this is a common question. The simple truth is I don't and can't. I find whatever volunteers I can and outsource to interns as much as I can. I'll frequently setup shop in a dorm and say I'm looking for testers "who wants to be the first to play an unreleased game" and they come running. Here's a simple run down of what it would cost me to run my business for one year. Say I hire 40 workers at 10$ an hour for one year of work not including benefits, insurance, vacation, etc, it would cost me roughly 850k after I account for slight variations in pay, as high as 1.3Mil if I pay well for those that really deserve or earn it. This doesn't include utilities for a building I'd rent, lease, or own which I also haven't accounted for yet. Then there's all the computers (hardware only) which I'd save money on by assembling myself and using cheap cases and monitors, periphs and accessories, and using as much open source as I can, such as linux based systems, gimp, etc. Then there's whatever I'd owe for licensing an engine and the publishers will take their cut unless I self publish and I obviously don't have the resources to have my own engine so there's no avoiding that. The electric to run all the electronics and keep the place cooled from all the heat they produce would likely be in the thousands if not tens of thousands every month depending on how high grade hardware I use.

This is why I generally pay by project if I can't get it done for free. Paying by project I can say 50$ for 5 concepts of a character with 3 angles each and someone will fill it even if it's not the greatest quality I can at least get something I can work with. Or I can offer up a job for a 3d model based on a concept work for a cost and get that filled in a similar fashion, might not be great but I could refine it myself if need be.

How do these businesses stay in business then you ask? Pick a standard game off the shelf and look at the price and think how many people bought it. Lets say something smaller like the darkness published by south peak games. In this case it's still a 60$ game brand new. If only 20,000 copies are sold they've broke even if not turned a profit. Granted it's a pretty good game but it's no MW3, GOW3, BF3, Halo, or other godlike franchise, but even so if I recall correctly it sold over a million units. Which means the game itself made probably upwards of $60mil not including used game sales and similar. But I'll go further down the line and pick something that didn't necessarily sell well. The cheesecake factor is a powerful thing, aka fan service, you can literally sell a game on nothing as long as it looks good. Enter Onechanbara bikini samurai squad, this game received less than favorable reviews, and didn't sell that well at a reduced cost of about 40$ even still I can almost guarantee you they sold more than 40,000 copies netting 1.6mil in the process. So while the larger companies likely have much larger bills and a larger pay roll they also tend to make games quicker so they don't have to pay for a year they have to worry about 3 to 6 months at a time cutting their operational cost per game to a much lower cost range. If I were to work on a similar system of only needing workers for 3 months to do one game 200k to turn around and make even 1mil off of 15 to 20 thousand copies I'd be in good shape even if I only got half of that after the vultures take their cut. The vultures in this case being engine and publishing costs among any other costs. So obviously now that we look at the bottom tier it's only fair we look at top tier for a number of reasons. The current record holder is MW3 for largest grossing sales ever. COD has broken that record more or less every year since modern warfare 1. Day one sales upwards of $400Mil, over $700Mil in first week, and upwards of One Billion Dollars in just over two weeks. This means that it had already broken every entertainment record EVER and the month is only half over. Considering there's probably thousands of workers on that game taking two years and lets be generous and say everyone working on it earned 50$ an hour with three thousand workers. Then the game cost 600 million dollars to make if not more and they in turn made probably twice that. If I told you that for every dollar you gave me I would in turn give you 2 dollars wouldn't you invest with me? I bet you would. Especially if I could prove it with a track record that says that not only have I done it before several times but I'm likely to make even more this next time. Keep in mind I'm being extremely generous in this case. It's likely most of the people earned half that or less and didn't work the full two years and that's if there even was 3,000 people which there might have only been 1k.  This is also before DLC and Elite memberships and probably not including the extras paid for Hardened and Veteran copies of the game and the dlc will extend over the next 9 months which will bring in lots of cash and probably push sales of elite to the consumers looking to save cash and get more bang for the buck. Put together I'd go so far as to say they may make two billion by the time the next COD hits this holiday season if they haven't already. If you want the minimalist view, they spent absolutely no less than $8mil it's extremely unlikely they spent a penny less than that, which means if they did the lowest possible cost to make it then they turned around and made 125 times their investment which is a good day for anyone. This is the single greatest reason video games will NEVER GO AWAY. In a capitalist economy they're simply the single most profitable source of entertainment and sales with advancing tech, constant cost reductions and short shelf life requiring replacement every 4 to 10 years with quick development cycles and huge profit margins they may be the single best product ever created and their versatility guarantees we'll never grow tired of them. Add that all to the supposed research that claims the chemicals released in the brain while playing games are very similar to those released during sex only much stronger and you've got yourself a serious addiction potential. Then more or less everything else that supports improvements in eye sight, visual color range, multi tasking, hand eye coordination, keeping track of multiple objects, reaction times, and almost every other thing they've thought of and you've got a great marketing package that can be applied to a lot of products and more specifically to the exercise related games that are literally good for you and can easily be proven. When all is said and done video games stand on top of their vanquished foes as the king of the entertainment mountain one of the great pillars of the capitalist economy.

If there are any venture capitalists reading this please speak up so I can give you a real pitch for my specific game and business plan so I can really get up and running.

With that having been said money isn't the real cost of doing business, it's a question of your personal relationships, sleep, and sanity. I'd probably have enough to run my business by now if I'd had a dollar for every relationship broken by working long hours, every time someone told me they were tired from working double and triple shifts, or people that simply stopped making sense because they'd lost their mind due to the deprivation and isolation associated with the kind of work that used to be put in by developers which thankfully doesn't happen much anymore. I can assure you that you can't possibly understand until you've worked a 110 hour work week. Sleeping at your computer a few hours at a time never going home or showering and hardly eating other than when you're starving. Now a days we tend to get real good sleep, though it's still common to see beds at work, and we don't work crazy hours though they're still generally free form within reason. We've also made other reforms like grouping people together and taking down a lot of the high cubicles in favor of open work areas so now you're around 4 to 5 people in close proximity and can see to the other side of the office. This leads to eating well, getting showers more often, and maintaining personal relationships better. Though of course what we eat still tends to be junk food but we're seeing more and more professional chefs around to cook meals for us and take orders which is very nice.


  1. You got me fired up against capitalism again...XD

    1. great topic for my philosophy blog now that I think about it...

  2. Whoa, this is a lot to take in. Kind of dense. o_o