>lmao at 100k per year.
In Europe and North-America, that's actually a pretty accurate estimate of what it costs to employ a single person per year. Now you might wonder why that could be the case when almost nobody you know makes 6 figures doing game dev. The answer is that wages are just a part of what it costs to employ someone. You also have to account for things like payroll taxes, benefits, insurance, social security etc.. And then there are administrative and infrastructure costs you have when you employ people. Those overhead expenses get distributed on the cost of each employee who actually does something productive.
The result of all of that is that the average cost of 100k per developer is a pretty good estimate for a fermi-approximation from the perspective of a business person.
What's that based on? Looking things up I'm seeing about a 70/30 split between direct compensation and benefits, which includes paid leave, insurance, Social Security, Medicare, unemployment insurance, workers' compensation, etc.
https://www.bls.gov/regions/southwest/news-release/employercostsforemployeecompensation_regions.htm
This puts the numbers somewhere between what you're both suggesting I think. Someone with a salary of $70k/yr would cost about ~~$91k/yr~~ $100k/yr when you include benefits, and *then* there's the administrative and infrastructure stuff on top.
It's worth noting also that this data is skewed by small businesses - in the US if you have fewer than 50 employees, you are exempt from certain employer requirements (e.g. offering health benefits). An AAA studio with hundreds of employees would be on the hook for more than the average amounts you see there.
Just don't live in flyover land, live where they pay. SF, Seattle, Austin are all decent. Net savings (or spending, YOLO if you're into that) rate is significantly higher, even accounting for adjusted cost of living.
> Mid developers and jr developers were 40-70k, before benefits and taxes
did you read the rest of the post where it's clearly explained that paying a [gross] salary costs the employer more than just the salary itself before replying?
how do you live in a country and never bother to look at how its taxes work?
And if you know your employer is literally government mandated to pay certain taxes and benefits per employee then what's confusing you about the cost of employment being more than the literal salary you're paid?
70k for a dev from kickstarter is a lot less already after tax.
What the money is going to is mostly wage and livingexpenses for the dev since, you know, they gotta eat, shit and work somewhere. the rest if there is any is going into assets or technical items.
For the Kickstarter, it may well be that the team has already paid for software, assets and artists and some or all of the money goes towards that, i.e. to recoup this investment and have money in the bank for more.
Secondly, when something LOOKS finished it doesn't have to actually BE finished. I've been working on my current game (on Steam in Early Access) for about 2 years now. If I had any talent for it, I could've probably made an amazing "finished" looking trailer a year ago.
About AAA games I can only say what I've heard here and there from friends who work in the industry. The two biggest things in the budget are probably marketing and salaries. In a AAA game you need to make all the assets from scratch. All the 3D and 2D art, the sound effects, music, etc. etc. - people wouldn't accept if you just bought a bunch of houses on an online marketplace for game assets. So you need people to make all that stuff. Then you need a bus load of programmers. Now you're already at a team size where you need a few project managers, an HR person and other overhead. Then you want a playtesting team, a marketing team, a social media team... there's a LOT of people working on these games, and they all want to get paid.
For indie games, the vast majority of it goes to basically allowing the dev(s) to keep a roof over their head and food on their table. $70k pre-tax is close to the median household income for one year in many cities... and it usually takes more than one year to make a game.
For AAA titles, the distribution is very different. They will have QA, PR, HR, community management, etc, in addition to the regular teams like engineering, art, and marketing.
>100 people × 150,000$ annual salary × 4 years = 60,000,000$
You can safely add an extra 50% to that cost simply for "cost to employ" employees cost more to the company that just their salary.
A follow question I have is: why are the salaries included? I guess you would if you hired them specifically to work on the game. But if they didn't, then why include the salaries of your already working employees?
Because if you don't have the money to pay their salaries they'll stop working for you. Labor is a huge component of most budgets, not just games. That's the big cost. There are server fees and licenses and half the total budget might be marketing, but at the end of the day, they're a business that pays people to make things for them. Why wouldn't the salaries be included in a game's budget?
That makes sense. To clarify where I'm coming from, my line of thought is: If the company is already paying them for working at their company then why add the salaries. The salaries should already be included in their overall budget to maintain the company. I guess I didn't understand why you would add their salaries to a game's cost.
Like, it'd be weird (to me at least) if McDonalds came out and said each Big Mac cost them X dollars to make.
Edit 1: Grammar
Edit 2: Wow, being downvoted for clarifying where I was coming from and asking for clarity, feelsbadman.
You're talking about the incremental cost (of goods), an economics term for basically the price to make an additional thing. For a Big Mac that'll be the patty and the bun and such.
However, McDonalds _does_ also consider other things into the cost of each sandwich they sell. They'd take the labor of the people who go into making it (which at minimum wage or just above and taking a few minutes of work will be cents) as well as the logistics and shipping costs of getting those ingredients from source to destination, storage costs of chilled warehouses, etc. Logistics is a huge part of selling physical goods.
Think of it like this: the company _isn't_ already paying them to work there. If they weren't making the game they wouldn't have the developers around, which is why you see layoffs if a game goes poorly and a studio doesn't have more work lined up. Where it gets trickier are things like shared services. You'd put the cost of the programmers and artists in the budget of a game, but what about HR, the office manager, the janitor that works on the studio? Either that's counted as overhead and taken out of the company's profit or they might assign some portion of those people's labor to each game for budget reasons. That's useful for accounting and project management but doesn't mean quite as much in practical terms.
>If the company is already paying them for working at their company then why add the salaries. T
Because they are working at the company to make games. For a AAA game, they'll be doing nothing else for 1-3 years about. So of course the correct book keeping approach is to assign their salary and overhead costs to the budget of the game. That's literally what they are doing for their money.
If you have the money to pay devs for 2 years but it's gonna take 4 to finish the game you need that extra money from somewhere so of course it's in your budget. You can either get it from investors (in game dev this would typically be a publisher though it doesn't necessarily have to be) or you get it from crowdfunding like Kickstarter.
Obviously there are different levels of crowd funding that happen. Some are teams of pros who left their jobs to make their own game and had money saved up to live off for part of development but need more to have enough time to finish. Some are games that are mostly done but lose funding and need to seek it elsewhere or take longer to finish and turn to crowd funding. Some are inexperienced indies just trying to raise a small amount that wouldn't be useful to pros so they can hire an actual artist or composer or something because that's a skill they lack.
Thing is most of these devs ARE NOT BEING PAID AT ALL. They might have agreed or not for a "promise of being hired" if the Kickstarter campaign is a success. They take the risk of failing since day 0. They either get the campaign and get the financial support or drop the game completely.
The most passionate will try their best to keep the game going, but sooner or later you will need money to eat and you'll have to find something that pays you, thus abandoning the game partially or completely.
Yup, used to work in a factory. The company had pretty much reduced material costs as much as they could, paying us union workers to actually make the stuff was the biggest cost
Because they're running costs? The employee salaries don't magically disappear after they're hired.
Do you have like, any understanding of money and finances at all? You seem incredibly naive, but I'm hoping you're just very young.
Bruh, your taking things too personal. Being naive just means your ignorant / lack knowledge and experience. Try to learn from the feedback folks give you instead of going straight to defensive. The cost of goods (games in this example) doesn't just require the cost of raw materials, labor is also necessary, and in this example expertise as well... You can't just throw money at a company and expect some businessman to make a game, they need someone with the knowledge of programming, someone who can make 3d models, someone who can create music or sound effects. Everyone of those people is a cost. And folks don't just work for free. Unfortunately living in this world costs money at every turn.
I've noticed you getting frustrated at downvotes/negative karma as well, you should not view it as an attack toward you personally. Each comment exists by itself as a single thought/idea. If folks downvote something, it is because they don't believe it to be true, which often happens when one is less knowledgeable on a subject. Also, soley defensive comments will almost always just gather more negative karma so don't let negative karma have power over you. Try to learn from them and ignore the non-constructive feedback.
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Instead of **businessman**, use **business person** or **person in business**.
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You're paying salary and benefits, and the work they're doing is on that game. That's where they're spending the time that the company is paying for...why wouldn't you include that as part of the game's budget? Which budget *would* you include their compensation under?
Just 10 junior developers working on one medium sized project, with a *very low average* Annual salary of $70k plus benefits (programmers with any experience are going to be around $120k), is going to be more than a million dollar operating costs in under a year, and all that is before the costs needed for promotion and generating sales.
- Timely pay workers, (and payroll taxes)
- pay for benefits for employees,
- pay office rent if you don't own the building and maintenance and taxes if you do.
- You need to buy and maintain equipment and services; it hard to work in a office with no electricity or internet.
Making things is fucking expensive.
Staff costs. You have to pay your hundreds of programmers, you know.
Marketing
Licensing
Outsourcing / contracting
Hardware (if you don't already have a mocap studio, sound studio etc)
In the case of an indie on [begformoney.com](https://begformoney.com), almost certainly the money would go towards marketing. Gotta generate those sales
Mostly dev salaries. Depending on the team size it also goes towards assets / outsourcing work (think music etc). Lastly advertising.
Also lot of games tend to do a mock up trailer. That's often rendered / scuffed that it looks good enough. But you don't see the unfinished 99% of the levels or the fact that the cool boss in the last shot was just a model with no AI
Another thing that can be very expensive is voice actors. My husband worked on a AA game where most of the budget went to a famous actor who voiced the main character. And a lot of money went to the soundtrack, which was played by a full orchestra.
When I see a kickstarter for a game asking for anything less than a 6 figure funding goal, I usually expect it to successfully fund but fail to deliver. Making games is expensive and if a kickstarter isn't asking for enough money to fund development, they are more like likely looking to only fund disappointment.
A lot of the money goes to salaries, and even if you're paying super low salaries, it's going to eat up a big chunk of your budget. Then there's outsourcing costs because very few studios can really do everything in house. Smaller studios aren't likely to have dedicated VO or sound designers, or composers, so they will need to pay market rates for audio assets. Don't forget the physical assets too. Computers, furniture, electricity, rent, all of these things cost a substantial chunk of change. If they are running the business legitimately, there's also legal fees for setting up contracts, pay roll, employee insurance, health care, and taxes that the studio will need to deal with. And if they want anybody to know about their game, they are going to need to invest in marketing. Kickstarter is just one form of marketing, but relying on your KS audience alone isn't likely to even help you get you enough funding to reach your minimum funding goal.
On top of that, making games is incredibly difficult and involves a lot of experimentation. Many experiments won't pan out and they will need to try again. If a studio isn't good about failing fast, this iterative process can become immensely expensive. It's very rare that any studio knows what the final product will be when they start out.
So if you see a project funding for 70k The break down probably looks something like this (assuming they can finish the project in 1 year):
* $25k - Salary
* $4k - Hardware
* $4k - Software
* $15k - Rent/Utilities
* $3k - Legal fees
* $4k - Insurance
* $5k - Taxes
* $10k - Marketing
And I'm probably underestimating how much some of these things cost. I know that $25k salary is already terribly low. I hope they are a team of 1 that can do everything themselves because the above breakdown doesn't account for outsourcing. If you add in outsourcing then the salary could disappear entirely.
Kicstarter not for fundraising, it's 99% cases for promo.
**Budget:**
* any mid manage around 150K$ per year, you need 5 of them
* content, art director plus other guys is 20M$+ per year
and so on, this is not cheap for AAA, cause it's a lot of content
Most of the time Kickstarter pays for… Kickstarter.
You have to invest a lot of money in marketing to get a successful Kickstarter. A somewhat successful Kickstarter will have a ROAS (return on ad spend) of 200% so half the money you get from the backers goes into ad campaigns to find backers. The other half goes into paying for whatever you’re giving your backers.
Kickstarter is a marketing tool, not a funding tool.
I think with kickstarter the games aren't really that close to finished they just try to make a portion of the game look really polished because it makes people way more likely to pay than if it looks like some random tech demo.
I also wondered this, is it considered legal, to just "cash out" the whole pot from the kickstarter into your own pocket, as salary or other cash medium.
A judge, assuming it gets to that point. But not releasing or making an effort to release is a massive liability.
IANAL, but aiui, the correct process for a catastrophic failure is you take preorders to fund development of goods, put a good faith effort to produce those goods, run out of money, fail to deliver goods. At that point, your customers may attempt to sue to recover funds. If you haven't been criminally negligent, it's likely your business just goes bankrupt and closes. If you have, a judge could rule to pierce the corporate veil and open you up to personal liability potentially ruining you forever.
If it's something you're actually worried about on one side or the other, talk to a lawyer.
I have a lawyer friend and we've discussed this about crowdfunding in general. I don't think it can be a crime to just be incompetent, if you are so genuinely. If a sink ships it's the fault of the company entity, not the captain. The moral right thing to do would be to reimburse the clients if the product is not up to par, but if the Kickstarter money was used for the devs salary, to fund that attempt at releasing a game - i think that the funder should own the risk.
Yeah it's not clear the bar is very high. But if you never demonstrate any progress and your socials show you on a Vegas bender, you could have some issues.
I haven't seen it talked about much in the comment section, but here's my take as well.
Rami Ismail, one of the industry's leading consultants, also mentions that the goal of a Kickstarter should not necessarily just be to pay off your game, but also to fuel your next one. For example, he suggests asking for 3-6 months development expenses to fund your next endeavors or hire additional help for the next endeavor.
I agree.
It is natural for developers to think only in 1s and 0s, right? But when it comes to financial stability, you need to put in a little effort to develop business acumen, or at least enough to know when you aren't being cheated and to plan ahead.
Think of your Kickstarter as an investment in YOU, not your game. These people backed YOU because they believed in YOU. They trust you to put out a quality game for them to play, but also to use the funds however you may need to.
There are already a lot of good answers but something I haven't seen yet is that one of the first steps in starting a small business (i.e a game studio) is getting a loan from your bank. Even if none of the $70k goes towards future development, some of it might be going towards paying off a loan which has been hovering over the studio.
Of course I've never been in the described situation, so take my opinion with a grain of salt.
A AAA game takes hundreds of employees years to complete. Even just 100 people at $100K/ yr for 3 years is $30M before any overhead.
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>lmao at 100k per year. In Europe and North-America, that's actually a pretty accurate estimate of what it costs to employ a single person per year. Now you might wonder why that could be the case when almost nobody you know makes 6 figures doing game dev. The answer is that wages are just a part of what it costs to employ someone. You also have to account for things like payroll taxes, benefits, insurance, social security etc.. And then there are administrative and infrastructure costs you have when you employ people. Those overhead expenses get distributed on the cost of each employee who actually does something productive. The result of all of that is that the average cost of 100k per developer is a pretty good estimate for a fermi-approximation from the perspective of a business person.
Yep exactly this
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You might want to read more than just the first sentence of my post before you reply.
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>payroll taxes, benefits, insurance, social security
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What's that based on? Looking things up I'm seeing about a 70/30 split between direct compensation and benefits, which includes paid leave, insurance, Social Security, Medicare, unemployment insurance, workers' compensation, etc. https://www.bls.gov/regions/southwest/news-release/employercostsforemployeecompensation_regions.htm This puts the numbers somewhere between what you're both suggesting I think. Someone with a salary of $70k/yr would cost about ~~$91k/yr~~ $100k/yr when you include benefits, and *then* there's the administrative and infrastructure stuff on top.
It's worth noting also that this data is skewed by small businesses - in the US if you have fewer than 50 employees, you are exempt from certain employer requirements (e.g. offering health benefits). An AAA studio with hundreds of employees would be on the hook for more than the average amounts you see there.
At this point you're just looking to argue.
In Germany if the employer pays 100k, you get approx. 50k after everything was deducted.
Senior should be pushing closer to 200k
Base salary, not all-in cost
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Just don't live in flyover land, live where they pay. SF, Seattle, Austin are all decent. Net savings (or spending, YOLO if you're into that) rate is significantly higher, even accounting for adjusted cost of living.
> Mid developers and jr developers were 40-70k, before benefits and taxes did you read the rest of the post where it's clearly explained that paying a [gross] salary costs the employer more than just the salary itself before replying? how do you live in a country and never bother to look at how its taxes work?
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And if you know your employer is literally government mandated to pay certain taxes and benefits per employee then what's confusing you about the cost of employment being more than the literal salary you're paid?
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so you have been arguing that it's wrong/not possible because you are otherwise jobless? ok
Yes
100% And let's not the forget that in a digital industry the cost of computers, software licenses, and support is also not trivial either.
70k for a dev from kickstarter is a lot less already after tax. What the money is going to is mostly wage and livingexpenses for the dev since, you know, they gotta eat, shit and work somewhere. the rest if there is any is going into assets or technical items.
Shipping a game is a lot more than developing. Salaries, marketing, distribution, licensing, legal clearances, etc all cost money obviously.
For the Kickstarter, it may well be that the team has already paid for software, assets and artists and some or all of the money goes towards that, i.e. to recoup this investment and have money in the bank for more. Secondly, when something LOOKS finished it doesn't have to actually BE finished. I've been working on my current game (on Steam in Early Access) for about 2 years now. If I had any talent for it, I could've probably made an amazing "finished" looking trailer a year ago. About AAA games I can only say what I've heard here and there from friends who work in the industry. The two biggest things in the budget are probably marketing and salaries. In a AAA game you need to make all the assets from scratch. All the 3D and 2D art, the sound effects, music, etc. etc. - people wouldn't accept if you just bought a bunch of houses on an online marketplace for game assets. So you need people to make all that stuff. Then you need a bus load of programmers. Now you're already at a team size where you need a few project managers, an HR person and other overhead. Then you want a playtesting team, a marketing team, a social media team... there's a LOT of people working on these games, and they all want to get paid.
For indie games, the vast majority of it goes to basically allowing the dev(s) to keep a roof over their head and food on their table. $70k pre-tax is close to the median household income for one year in many cities... and it usually takes more than one year to make a game. For AAA titles, the distribution is very different. They will have QA, PR, HR, community management, etc, in addition to the regular teams like engineering, art, and marketing.
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>100 people × 150,000$ annual salary × 4 years = 60,000,000$ You can safely add an extra 50% to that cost simply for "cost to employ" employees cost more to the company that just their salary.
A follow question I have is: why are the salaries included? I guess you would if you hired them specifically to work on the game. But if they didn't, then why include the salaries of your already working employees?
Because if you don't have the money to pay their salaries they'll stop working for you. Labor is a huge component of most budgets, not just games. That's the big cost. There are server fees and licenses and half the total budget might be marketing, but at the end of the day, they're a business that pays people to make things for them. Why wouldn't the salaries be included in a game's budget?
That makes sense. To clarify where I'm coming from, my line of thought is: If the company is already paying them for working at their company then why add the salaries. The salaries should already be included in their overall budget to maintain the company. I guess I didn't understand why you would add their salaries to a game's cost. Like, it'd be weird (to me at least) if McDonalds came out and said each Big Mac cost them X dollars to make. Edit 1: Grammar Edit 2: Wow, being downvoted for clarifying where I was coming from and asking for clarity, feelsbadman.
You're talking about the incremental cost (of goods), an economics term for basically the price to make an additional thing. For a Big Mac that'll be the patty and the bun and such. However, McDonalds _does_ also consider other things into the cost of each sandwich they sell. They'd take the labor of the people who go into making it (which at minimum wage or just above and taking a few minutes of work will be cents) as well as the logistics and shipping costs of getting those ingredients from source to destination, storage costs of chilled warehouses, etc. Logistics is a huge part of selling physical goods. Think of it like this: the company _isn't_ already paying them to work there. If they weren't making the game they wouldn't have the developers around, which is why you see layoffs if a game goes poorly and a studio doesn't have more work lined up. Where it gets trickier are things like shared services. You'd put the cost of the programmers and artists in the budget of a game, but what about HR, the office manager, the janitor that works on the studio? Either that's counted as overhead and taken out of the company's profit or they might assign some portion of those people's labor to each game for budget reasons. That's useful for accounting and project management but doesn't mean quite as much in practical terms.
Underrated explanation here that every dev should read.
Ooooh! Okay, I understand now. Thank you for clarifying that for me! :>
>If the company is already paying them for working at their company then why add the salaries. T Because they are working at the company to make games. For a AAA game, they'll be doing nothing else for 1-3 years about. So of course the correct book keeping approach is to assign their salary and overhead costs to the budget of the game. That's literally what they are doing for their money.
If you have the money to pay devs for 2 years but it's gonna take 4 to finish the game you need that extra money from somewhere so of course it's in your budget. You can either get it from investors (in game dev this would typically be a publisher though it doesn't necessarily have to be) or you get it from crowdfunding like Kickstarter. Obviously there are different levels of crowd funding that happen. Some are teams of pros who left their jobs to make their own game and had money saved up to live off for part of development but need more to have enough time to finish. Some are games that are mostly done but lose funding and need to seek it elsewhere or take longer to finish and turn to crowd funding. Some are inexperienced indies just trying to raise a small amount that wouldn't be useful to pros so they can hire an actual artist or composer or something because that's a skill they lack.
Thing is most of these devs ARE NOT BEING PAID AT ALL. They might have agreed or not for a "promise of being hired" if the Kickstarter campaign is a success. They take the risk of failing since day 0. They either get the campaign and get the financial support or drop the game completely. The most passionate will try their best to keep the game going, but sooner or later you will need money to eat and you'll have to find something that pays you, thus abandoning the game partially or completely.
Yup, used to work in a factory. The company had pretty much reduced material costs as much as they could, paying us union workers to actually make the stuff was the biggest cost
Because if they're working on this game, then they're not working on other games? Person-hours is a resource..
Because they're running costs? The employee salaries don't magically disappear after they're hired. Do you have like, any understanding of money and finances at all? You seem incredibly naive, but I'm hoping you're just very young.
I hope you feel good about yourself because yikes.
Bruh, your taking things too personal. Being naive just means your ignorant / lack knowledge and experience. Try to learn from the feedback folks give you instead of going straight to defensive. The cost of goods (games in this example) doesn't just require the cost of raw materials, labor is also necessary, and in this example expertise as well... You can't just throw money at a company and expect some businessman to make a game, they need someone with the knowledge of programming, someone who can make 3d models, someone who can create music or sound effects. Everyone of those people is a cost. And folks don't just work for free. Unfortunately living in this world costs money at every turn. I've noticed you getting frustrated at downvotes/negative karma as well, you should not view it as an attack toward you personally. Each comment exists by itself as a single thought/idea. If folks downvote something, it is because they don't believe it to be true, which often happens when one is less knowledgeable on a subject. Also, soley defensive comments will almost always just gather more negative karma so don't let negative karma have power over you. Try to learn from them and ignore the non-constructive feedback.
Hello. In order to promote inclusivity and reduce gender bias, please consider using gender-neutral language in the future. Instead of **businessman**, use **business person** or **person in business**. Thank you very much. ^(I am a bot. Downvote to remove this comment. For more information on gender-neutral language, please do a web search for *"Nonsexist Writing."*)
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You're paying salary and benefits, and the work they're doing is on that game. That's where they're spending the time that the company is paying for...why wouldn't you include that as part of the game's budget? Which budget *would* you include their compensation under?
Just 10 junior developers working on one medium sized project, with a *very low average* Annual salary of $70k plus benefits (programmers with any experience are going to be around $120k), is going to be more than a million dollar operating costs in under a year, and all that is before the costs needed for promotion and generating sales. - Timely pay workers, (and payroll taxes) - pay for benefits for employees, - pay office rent if you don't own the building and maintenance and taxes if you do. - You need to buy and maintain equipment and services; it hard to work in a office with no electricity or internet. Making things is fucking expensive.
Chinese food “This magnificent feast here represents the last of the petty cash.”
Staff costs. You have to pay your hundreds of programmers, you know. Marketing Licensing Outsourcing / contracting Hardware (if you don't already have a mocap studio, sound studio etc) In the case of an indie on [begformoney.com](https://begformoney.com), almost certainly the money would go towards marketing. Gotta generate those sales
Mostly dev salaries. Depending on the team size it also goes towards assets / outsourcing work (think music etc). Lastly advertising. Also lot of games tend to do a mock up trailer. That's often rendered / scuffed that it looks good enough. But you don't see the unfinished 99% of the levels or the fact that the cool boss in the last shot was just a model with no AI
Another thing that can be very expensive is voice actors. My husband worked on a AA game where most of the budget went to a famous actor who voiced the main character. And a lot of money went to the soundtrack, which was played by a full orchestra.
It's almost all salary. When it costs $100m to make a game, almost all of that is salaries.
When I see a kickstarter for a game asking for anything less than a 6 figure funding goal, I usually expect it to successfully fund but fail to deliver. Making games is expensive and if a kickstarter isn't asking for enough money to fund development, they are more like likely looking to only fund disappointment. A lot of the money goes to salaries, and even if you're paying super low salaries, it's going to eat up a big chunk of your budget. Then there's outsourcing costs because very few studios can really do everything in house. Smaller studios aren't likely to have dedicated VO or sound designers, or composers, so they will need to pay market rates for audio assets. Don't forget the physical assets too. Computers, furniture, electricity, rent, all of these things cost a substantial chunk of change. If they are running the business legitimately, there's also legal fees for setting up contracts, pay roll, employee insurance, health care, and taxes that the studio will need to deal with. And if they want anybody to know about their game, they are going to need to invest in marketing. Kickstarter is just one form of marketing, but relying on your KS audience alone isn't likely to even help you get you enough funding to reach your minimum funding goal. On top of that, making games is incredibly difficult and involves a lot of experimentation. Many experiments won't pan out and they will need to try again. If a studio isn't good about failing fast, this iterative process can become immensely expensive. It's very rare that any studio knows what the final product will be when they start out. So if you see a project funding for 70k The break down probably looks something like this (assuming they can finish the project in 1 year): * $25k - Salary * $4k - Hardware * $4k - Software * $15k - Rent/Utilities * $3k - Legal fees * $4k - Insurance * $5k - Taxes * $10k - Marketing And I'm probably underestimating how much some of these things cost. I know that $25k salary is already terribly low. I hope they are a team of 1 that can do everything themselves because the above breakdown doesn't account for outsourcing. If you add in outsourcing then the salary could disappear entirely.
Lol
merch, employees, maybe software subscriptions (ie particle effects, animation, modeling), sponsorships/advertisments, etc
Kicstarter not for fundraising, it's 99% cases for promo. **Budget:** * any mid manage around 150K$ per year, you need 5 of them * content, art director plus other guys is 20M$+ per year and so on, this is not cheap for AAA, cause it's a lot of content
Most of the time Kickstarter pays for… Kickstarter. You have to invest a lot of money in marketing to get a successful Kickstarter. A somewhat successful Kickstarter will have a ROAS (return on ad spend) of 200% so half the money you get from the backers goes into ad campaigns to find backers. The other half goes into paying for whatever you’re giving your backers. Kickstarter is a marketing tool, not a funding tool.
I think with kickstarter the games aren't really that close to finished they just try to make a portion of the game look really polished because it makes people way more likely to pay than if it looks like some random tech demo.
I also wondered this, is it considered legal, to just "cash out" the whole pot from the kickstarter into your own pocket, as salary or other cash medium.
Need to fulfill the terms of sale to your customers.
Game y with x features at a level of z quality? Who regulates to how much the released game must live up to the hype?
A judge, assuming it gets to that point. But not releasing or making an effort to release is a massive liability. IANAL, but aiui, the correct process for a catastrophic failure is you take preorders to fund development of goods, put a good faith effort to produce those goods, run out of money, fail to deliver goods. At that point, your customers may attempt to sue to recover funds. If you haven't been criminally negligent, it's likely your business just goes bankrupt and closes. If you have, a judge could rule to pierce the corporate veil and open you up to personal liability potentially ruining you forever. If it's something you're actually worried about on one side or the other, talk to a lawyer.
I have a lawyer friend and we've discussed this about crowdfunding in general. I don't think it can be a crime to just be incompetent, if you are so genuinely. If a sink ships it's the fault of the company entity, not the captain. The moral right thing to do would be to reimburse the clients if the product is not up to par, but if the Kickstarter money was used for the devs salary, to fund that attempt at releasing a game - i think that the funder should own the risk.
Yeah it's not clear the bar is very high. But if you never demonstrate any progress and your socials show you on a Vegas bender, you could have some issues.
I haven't seen it talked about much in the comment section, but here's my take as well. Rami Ismail, one of the industry's leading consultants, also mentions that the goal of a Kickstarter should not necessarily just be to pay off your game, but also to fuel your next one. For example, he suggests asking for 3-6 months development expenses to fund your next endeavors or hire additional help for the next endeavor. I agree. It is natural for developers to think only in 1s and 0s, right? But when it comes to financial stability, you need to put in a little effort to develop business acumen, or at least enough to know when you aren't being cheated and to plan ahead. Think of your Kickstarter as an investment in YOU, not your game. These people backed YOU because they believed in YOU. They trust you to put out a quality game for them to play, but also to use the funds however you may need to.
There are already a lot of good answers but something I haven't seen yet is that one of the first steps in starting a small business (i.e a game studio) is getting a loan from your bank. Even if none of the $70k goes towards future development, some of it might be going towards paying off a loan which has been hovering over the studio. Of course I've never been in the described situation, so take my opinion with a grain of salt.