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The financial challenges of running a studio


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Diving into the indie game universe is the dream for so many developers, but how do you then stay afloat?

Five indie game studio Founders at different stages of their journey share their experiences on how they run successful businesses while staying independent and retaining creativity.

It sounds like a fantasy, doesn't it? Quitting your 9-to-5, dropping your letter of resignation onto your boss's desk, and following your dream to set up shop yourself. 

But while realising your childhood ambition of running your own game development studio may sound tempting in theory, how does the fantasy compare to the truth? 

We spoke to five developers at different stages of the journey to find out what they learned about taking the indie plunge, from setting up payroll to securing investments.

Chocolate Kieran
 

For Brendan Wilson, who set up Astroneer developer System Era Softworks six years ago, establishing a game studio with his friends had essentially been a life-long dream. "It was pretty much a fantasy from about age fourteen or fifteen to work at a small game studio founded with friends," says Wilson, who now employs around 35 people on both freelance and full-time contracts.

"I had fallen in love with the idea of not just experiencing virtual worlds, but building them. Once I was fortunate enough to enter the industry, I had this plan to find a job to build experience at some AAA place, and then after five years or so of honing skills and making connections, I would return home to start a studio with old colleagues. I feel super fortunate that things did basically turn out this way, except I never moved back."

Not everyone can afford to go straight from a salaried position into self-employment, of course. Sergiu Craitoiu, who co-founded Unbound: Worlds Apart creator Alien Pixel Studios five years ago, still had a full-time job when setting up their first studio. The team has since expanded to seven employees and funding only became an issue once personal savings ran dry.

"We still had full-time jobs when we set up our studio, and money wasn't an issue for us," Craitoiu admits. "But then when we decided to quit our jobs and work full-time, then money became a problem.”

"At first, we didn't even consider getting investment – we were sure that we could do it with our own savings. Later, we had to expand our team and the financial situation became very difficult to manage."

Joran
 

Yellowcake Games, best known for multiplayer title Dashing Dodgems, is in a similar position even today, with all three employees retaining employment elsewhere whilst trying to get their indie dream off the ground at the same time. Our studio is funded in three ways: all three of us have a job elsewhere that funds our hours, we have a small game out already that trickles in some money, and we gained a small grant, explains co-founder Joram Wolters.

"So very much of it is incredibly boring," Wolters adds, reflecting on the realities of running your own business. "There’s a lot of just setting things up, organising, planning, etc. And people overlook how incredibly important interpersonal skills are – it has really taken us these years to finally get to know each other well enough to take each other's quirks and personalities into account. Also, working part-time and working remotely are huge impairments to productivity."

Setting up a company can be surprisingly straightforward; Max Scott-Slade of Sea Hero Quest developer Glitchers explains dubs it “as easy as filling out a few forms.” Staying profitable, however, is the tricky bit. 

"Initially, costs can be virtually nothing if you can bootstrap things or have an existing client," says Scott-Slade, who has been running Glitchers for seven years, directly employing five people and using a further network of 20 freelance contractors.

But while he found securing funding simple enough, issues later down the line were notably more complex. 

"Maintaining funding was straightforward, but not something I would do so lightly as decoupling from it is expensive and time-consuming," he admits.

"In the end, we went our separate ways with an investor. It was a painful process, but I think we learned a lot about how and when to approach that kind of money in the future. For now, our focus is on total ownership of our products and relationships until we need to fuel the fire of existing success. That way we give up less and maintain control of our destination."

The duo behind Machines Have Lucid Dreams creator Ivngerm, however, are instead fighting to minimise expenditure instead of exploring alternate investment as they start their new venture.

"Rather than seeking funding, we have found a way of absolutely minimising expenditure," explains partners Blithe Germ and Ivan Kashdan. "So far we have been able to build the entire game without spending any money on specialist software or hardware that we didn’t already have access to. Moreover, we have not needed to pay anyone else to help us with the project, being able to fill on most roles using our collective experience.” 

So when it came to the game’s music, for instance, Germ spent six years in a band while growing up in Hong Kong, and sound design was one of the specialisms Kashdan studied at film school.

But whilst it's one thing to secure funding to develop, publish, and market video games, what about the other more humdrum costs of running a business? While some studios are working in partnership with others to cut costs in the development process, others outsource other parts of the business, too – aspects such as bookkeeping, HR, accounting, and legal counsel.

"Until we were about 15 people, I ran payroll myself,” says Wilson. “We had no HR, and our outside accountant was strictly for doing our taxes. I’d pay all invoices, and hack my way through the bookkeeping.”

"But at a certain point, you start spending most of your time on those administrative tasks, and it just makes no sense to lose contact with your core skills and knowledge that made the company succeed in the first place."

Glitchers has a similar arrangement and outsources accounting, legal, marketing, PR, and artwork, but says it has "great partnerships with all kinds of different companies and individuals who make us better than the sum of our parts".

While Ivngerm is working to minimise costs, the partners acknowledge they'll have to seek out specialist help when it comes to marketing and promotion in order to maximise exposure and get as many people as possible playing their debut title. 

That said, going solo – even when dampening down as much expenditure as possible – is rarely risk-free. Wolters warns of the woes of trying to stand out in a desperately oversaturated market, and hints that some publishing deals may look good at first flush but may turn out to be "pretty exploitative" in the cold light of day.

Ultimately, though, the overwhelming advice from all contributors is to keep true to yourself, listen carefully to others, but trust your instincts – or, as Wilson puts it: "My story is only my story and you can never repeat someone’s path to success.”

That said, it comes with a quiet note of warning, too.

"It sounds liberating to 'be your own boss', and yet for me, it’s been the opposite," he admits. "Yes, there is more control over my day-to-day activities, and yet I’ve never felt more of a professional obligation, especially once we started hiring employees. If I was working anywhere else, and I wasn’t happy about something, I could just quit and find a new job. 

"It’s a major commitment. You don’t get to just walk away lightly if something isn’t going well. You’re in it for better or worse, in good times and bad. And it can be quite lonely. I don’t think that gets talked about enough. When you’re an employee, you make a lot of friends out of your co-workers. When you run your own company, all of your co-workers are either your business partners or your employees, and they will never treat you the same way again like they did when you could just be friends as colleagues."

Scott-Slade advises aspiring studio heads to "try to care less and delegate more," adding: "It’s pretty hard, but being so emotionally involved in business can be very negative for your own mental health. Stepping away and approaching it more like a business and accepting that things aren’t always going to work out is part of learning to be a better owner.”

"It sounds harsh to ‘care less’ but I mean, detach yourself from success or failures of business and instead energise and learn productively from all things that happen – even the bad stuff."

The information set out here is general in nature and does not constitute an offer, an invitation or a recommendation to enter into any product or service and does not constitute investment advice or a personal recommendation. We recommend that you obtain independent tax and legal advice tailored to your individual circumstances before you make any decision to enter into an investment transaction.

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