How to make money on making computer games

How to make money on making computer games

Despite the attractive multi-million dollar turnaround of the computer gaming market, entering it is just as difficult. This will require not only a solid start-up capital, more than one year of work, but also the “creative brains” of computer geniuses, which is much more important for success.

The gaming industry has been one of the fastest growing for several years now. The explanation for this is quite simple – computers and game consoles are getting cheaper, but a person’s desire to have fun does not disappear. Moreover, not a single economic crisis is able to prevent this. It has long been noticed: the worse the state of the economy, the more money people spend on inexpensive entertainment, trying to somehow brighten up a sad everyday life.

The time of single romantics in this industry has long passed: the development of computer games has become a very serious business, where entire teams of specialists work on each new project. Now it can no longer be argued that in Russia developers can not earn anything from the production of computer games, and basically work “to the West.” A good project when selling in Russia today brings at least $ 200-300 thousand per game. And often from sales in the CIS you can actually get as much money as from the rest of the world. For example, in Russia more than 500 thousand units were sold of legal copies of our “Truckers”, which brought $ 750 thousand at a wholesale price of $ 1.5.

The cost of printing a single laser disc is 30 cents. And together with the box and high-quality printing we get about 50 cents. From the sale of one disc, you can earn $ 1. The wholesale price of large gift boxes with games is about $ 24 apiece. Despite the fact that they are sold an order of magnitude smaller, the profit here is several times higher.
According to market participants, the normal rate of return in this industry is at least 100%. In Russia, this level is still somewhat lower – all because of the same piracy and limited markets. But the difference is offset by successful sales of “hits” in the West, providing the same 100%.

As for the distribution of profits between the developer and the publisher, with a correctly drawn up contract the earnings of the publisher and the developer are comparable. But in Russia, it is often the developer who earns even more, because the publisher takes on one hundred percent financing of the development. The developer does not risk anything, getting a certain percentage of sales after the product began to pay off. The average royalty rate in Russia is 20-50%, in the West it is less than about 20%, but if the developer came to the publisher with the finished product, taking over the financing of the project, then in exceptional cases royalties can reach 80%.

The cost of developing one game depends on its complexity. On average, a high-quality project costs about $ 500 thousand. In the West, the project price can reach up to $ 4-5 million.
In the United States, up to 80% of development costs are paid by expensive specialists, and in our country these costs amount to 60%. The rest falls on utility bills, rent, taxes, etc., overhead costs. The salary of a programmer is also significantly lower – from $ 500 to $ 1,000. Hence the high development cost: on average, a team of 15-20 specialists works on one large-scale project, plus additional people are involved at various stages.

The problem of personnel in the computer gaming industry is one of the most acute problems. According to the developers, only the brains are able to provide the quality of the game, it is impossible to work here without a creative approach. And there are no more than a hundred such specialists in Russia, with a total employment of 1,500 people in the industry. The matter is complicated by the fact that such specialists are not trained at universities, and
developers have to grow ordinary programmers and 3D artists for several years by themselves.

Another difficulty of this business is the volatile fashion to which computer toys are also subject. It takes from one to two years to develop one project, and during this time demand can change. Therefore, sometimes, it is easier for developers to close a project than to continue to spend money on it.

Outsourcing is another type of quite successful business of Russian developers, in which our experts develop individual parts of the game or completely complete the entire project under an agreement with a Western game producer. The benefits of such cooperation are obvious for both parties – a Western developer saves money, and Russian developers get a job.

For those who want to enter the gaming computer business, only two areas remain free now: distribution or sale of ready-made games and development.
As for the publishing house, it’s so easy not to get into this direction, even with a huge starting capital. The Russian market is divided between four or five well-known publishers, and none of the developers decide to entrust their product to an unknown beginner.

The most profitable is to simultaneously engage in development, publishing and distribution, that is, to control the entire technological process, making a profit at each stage, and not give it to a third-party company. But only very large companies can afford it, which have enough resources for everything.

The path to the developers is much simpler and cheaper. Initial expenses will be about $ 10 thousand. The technology is simple: several friends join together, buy a computer, specialized programs (for example, usually all programming is in C ++, 3D Max or Maya, worth about $ 5,000, are suitable for the art part). and they work on creating a demo version, then they go to the publisher with it, and if the publisher is interested in the project, then he usually takes all the financing on himself. The main condition for success is that the new project is worthwhile.

Every year from 3 thousand to 5 thousand computer games are created in the world, of which only a few hundred become commercially successful and appear on store shelves. The entire box office, as in the movie business, makes the top 10. It is clear why all developers and publishers are striving to make a hit, but not everyone succeeds.

The main thing when developing a game is to first correctly plan the entire process, and then organize it as well. There is a certain technological sequence of operations. First of all, the manager (producer) makes a marketing analysis of the market, determining which products will be in demand in a year and a half – after the game is released. After coming up with a new idea for the game, the creation of the so-called “concept document” begins, which includes a detailed description of the future product, an analysis of the market situation, that is, a kind of business plan. The next step is called “pre-production”, and it ends with the creation of a “design document”. Leaders of development areas take part in it – the chief designer, concept artists, the smallest game tasks and levels, the amount of animation, heroes, etc. down to the tree in the background. Pre-production lasts 3-4 months, during which a detailed work plan is created for the entire development period. It is the quality of pre-production that largely determines the success of the game in the future. Then begins directly “production.” The whole team is already involved in it: programmers, designers, artists, animators. This is the longest stage, at the end of which an alpha version of the game is created, usually with a lot of errors that are fixed within a couple of months, during which a beta version appears. It fixes the latest errors (sometimes together with publishers), and only then does the finished product appear. Then begins directly “production.” The whole team is already involved in it: programmers, designers, artists, animators. This is the longest stage, at the end of which an alpha version of the game is created, usually with a lot of errors that are fixed within a couple of months, during which a beta version appears. It fixes the latest errors (sometimes together with publishers), and only then does the finished product appear. Then begins directly “production.” The whole team is already involved in it: programmers, designers, artists, animators. This is the longest stage, at the end of which an alpha version of the game is created, usually with a lot of errors that are fixed within a couple of months, during which a beta version appears. It fixes the latest errors (sometimes together with publishers), and only then does the finished product appear.

There are also not a lot of serious developers in the country of the order of 10-12, compared with the same States, where there are several thousand of them. The most famous are Akella, Nival, Softlab-Nsk, Nikita, KD Lab and 1C.

It is impossible to accurately determine the size of the market for computer games, since no marketing research has been conducted. Despite the different estimates, all participants name about one order of numbers – tens of millions of dollars annually.
According to Dmitry Arkhipov from Akella, the turnover of the domestic legal market reaches $ 100 million annually.

Over the past three to four years, the volume of the Russian gaming computer market has been steadily increasing – according to various estimates, by about 20-25% per year. Now, sales of the most popular hit can reach 500 thousand copies through legal channels and up to 1 million through illegal (pirated) channels.

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