business plan for game development playing video games and creating them are quite different. Playing games–especially the ones you like–is usually a fun experience, and finishing one can take from eight to over 100 hours, depending on the game. Meanwhile, game creation is grueling work that can take months, years, or even a decade–and that’s just for one game.
Getting into playing games is easy enough. Just purchase a console/computer/handheld device, load a game, and start having fun.
Entering games development is an entirely different matter: if you’re skilled enough, you can work for a major game developer or publisher, but that path usually involves working over 80 hours per week and you don’t really have a say in the creation process.
On the flipside, you can start your own game development company, which is considerably tougher. You have to put in long hours as well; failure is likely; and you might not earn enough to support yourself. However, it’s more likely that this route would be more rewarding on a personal level.
If you’re not deterred, here’s a general step-by-step guide on what you need to know about starting your own game development company.
Business Plan For Game Development
STARTING YOUR GAME BUSINESS: BUSINESS PLAN AND LEGAL STEPS TO TAKE
Build your skills
First, you need to develop the necessary skills in game development. We’re not just talking about computer-based abilities like programming, software engineering, and animation; you’ll also need level design skills, a wide knowledge of video games and their hardware, and a deep reserve of imagination.
You can acquire most game development skills at uni, but you can also self-study the necessary applications and game engines, some of which would cost you money (e.g. a new licence for 3ds Max 2015 currently costs $5,175) unless you get their free student version or use open-source software.
As an alternative, you can create your own game modifications (e.g. weapon reskins, custom maps) to gain knowledge and experience.
What’s important is that you beef up your knowledge because you’ll need it not only in actual games creation, but also in other aspects like who to hire, what tools to use, and other development-related management decisions you’ll encounter down the road.
Pick the right game
Starting a game development firm and developing a game go hand in hand. After all, a company can’t exist if it doesn’t have a product or service to offer. But since your company is spanking new, you’ll have to wisely choose what type of game to make.
Why? Because making games takes time and money so unless you have ample supplies of both, you need to develop something small and simple. Avoid being too ambitious–creating something large-scale with limited means tend to fail. Instead, aim for something that you can actually finish given the resources you have.
Develop a practical business plan
Out of the countless games released for various platforms every year, only a handful are relatively successful. Some big-budget games sell millions of copies but are considered commercial failures because the publisher spent more than it earned.
On the other hand, there are smaller independent studios that release a digital-only game which sells 500,000 units. It’s viewed as successful because the studio spent a fraction compared to how much it hauled in.
The point? The likelihood of creating a bestselling game is pretty slim. Thus, when you develop your firm’s business plan, see to it that it takes this likelihood into account and devise for several revenue streams. For instance, in addition to revenue from game sales, consider taking up porting and animation projects (provided that you have the skills and resources), or even crowdfunding.
Whether you’re a one-man outfit or small development team, your company needs funds to continue functioning. Being solo may be challenging in terms of output, but at least you can bootstrap your development by working a day job.
Having other developers in your start-up, however, would probably be a financial headache if you’re still not earning because you’d have to pay their salaries, unless they’re doing it for free (which is unlikely).
Either way, you need to get funding for your development studio so that you can finish your game. Here are a few options you can explore:
Kickstarter. Indiegogo. Patreon. Take your pick.
Help from friends and family
You can always ask your loved ones for financial aid.
If you have a good credit score, apply for a business loan. Just make sure you have a detailed business plan, complete financial documentation, and excellent character references.
Using your savings would help but don’t rely on this solely; you may run out in the middle of a crucial stretch. Even then, allot only a part of your savings and leave the rest for emergencies.
They’re convenient, but the interest rates are high and the credit limit is relatively small. Thus, you should use credit cards for small, necessary purchases, not big-ticket expenses.
A day job
To keep your studio afloat, have a day job and allocate a portion of your earnings to finance your game’s development.
The Indie Fund
This organisation was formed by several indie studios to fund other promising developers. To apply for funding, contact The Indie Fund through the info on its apply page.
If you have a working demo or finished copy of your game, drop by the annual Game Connect: Asia Pacific (which is customarily held in Australia) to attract publishers’ interest.
While a viable option, venture capitalists are a tough crowd. To convince one, you should have a long-term business plan for your studio.
While the Australian government has helped fund local development, it seems like the initiatives have gotten axed ast 2014 so this isn’t a viable option right now.
Form your team
Team salaries are where a substantial part of your funding would go. Because of this, it’s crucial that you hire good talent, particularly for the leadership positions in your studio. Why? For starters, your choice would affect how well the development proceeds. For instance, good talent will finish tasks on time and provide realistic estimates.
Perhaps more importantly, you need to put the funds to good use; the money is either part of your savings, loaned, or from a crowdsourced service, which means there is pressure and high expectations for you to deliver.
You’ll need a capable director, producer, lead programmer, and art director–except of course you’ll fill in any of these positions yourself.
Tip: to open up your selection of applicants and potentially reduce your costs, think about forming a virtual team where other staff members live in another corner of the globe.
Set up the business
Since you’re forming a game development company, you have to set it up by accomplishing all the necessary forms, paying the fees, and doing all the legwork. Even if you’re a one-person studio, It’s essential that everything is legitimate for a number of reasons, including the following:
Should you decide to use the proprietary limited (Pty Ltd) company structure, you are afforded a number of benefits like more protection from liability for company debts; shareholders can be employed by your studio; you get more favourable tax rates; and other companies would view you as more credible.
You get an ABN
So how do you go about setting up your development studio? It involves the following tasks:
Decide your studio’s business structure (e.g. sole trader, partnership, trust, company).
Register for an ABN.
Register your business name and trademark.
Register the necessary taxes (e.g. GST, PAYG, payroll tax, fringe benefits tax, fuel tax credits).
Complete all necessary licenses and registrations. To find out what your company needs to accomplish.
6. Procure an office for your development studio by buying or leasing property.
Arrange all the necessary insurance for your company (e.g. workers compensation insurance, third-party personal injury insurance, and public liability insurance).
Acquire the domain name for your company’s website. Take note that you’ll need an ABN or an Australian Company Number if you want to get a .com.au or .net.au extension for your domain.