The Trick to Earning 9.9 Times More Selling Indie Games...
Okay, I'm sure this is applicable outside of game development, but there's an interesting discussion over at IndieGamer about the "Long Tail of Indie Games." If you have no interest in the nuts and bolts and dollars and cents of the indie game business, this article might bore you to tears. Sorry. There are lotsa numbers get strewn around, approximately half of which are grounded in firm data.

Blame it on my latent power-gamer-ism. I like looking at the numbers and figuring out how to max 'em out. Reflexive Arcade provided some very interesting numbers to chew on this week. Thorbrian took sales across all their games for the last four years, first- and third-party, and normalized the data to the average sales per week for each game's second week of sales. So whether a game sold 100 copies per week, or 0.25 copies per week, that was given a value of 1.0. That allowed all the games to be averaged together to get an interesting picture of the sales cycle at a mid-tier gaming portal. Thorbrian kindly gave me permission to use these charts for this article. The guys at Reflexive (and, I should add, ArcadeTown) are really cool about helping developers reach their full potential, and this kind of knowledge helps.

Nearly 10 Times Normal Sales the Second Week
First off, here's the "average" sales cycle for indie games in a four year period across all games. Again, don't read too much to the numbers on the left - that's simply a relative value that could mean any number of sales. Click on the picture for a larger link, but it's the shape of the curve that's important. The numbers at the far right are more erratic because they don't have many games that have been on the market for four years. The most remarkable thing about this graph is how well things stabilize at about the 15 month point. Sure, the game sells MUCH more the first nine weeks its out at the portal, but eventually it settles down to a pretty steady rate of sales.

Now, for more information, click this link for a breakdown by game category. What's interesting here is how similar these curves are. Though it's clear the top performers after 4 years are actually the less popular titles --- they tend to maintain even more constant sales performance. Of course, after you get to a certain point, it's hard to go much lower :) Again, the meaning of "1.0" might vary wildly. Also, I would like to stress here that this is a portal that thrives on a constant influx of games. Once a game drops out of the "new" and "top ten" categories, it dissapears from the front page, which undoubtably magnifies its drop in sales.

Man, that 9.5x at the second week of sales sure looks nice, huh? The reason it takes a week for sales to ramp up to that level isn't obvious at first, but it's the nature of portals. They don't have the big advertising push to generate the frontloaded sales of mainstream games, first off. People tend to check it out when they get a newsletter, or on a weekly basis. Secondly, the almost universal model for downloaded games is "try before you buy" - playing a demo version for an hour or so. So it might take a day or two (or a week or two) for someone to get around to buying it. In fact, it might be on their second weekly visit, where they still see the game they enjoyed proudly listed, and think to themselves, "Hey, that was fun, I think I'd like some more of that."

But 9.5x normal sales. Wouldn't it be nice to earn that EVERY week?

I'll bet ya you can! But there's a trick to it. And I believe there are developers out there (primarily casual game devs, emphasizing portal sales) doing exactly this.

Cumulative Sales - WARNING! MATH!
Okay, moving right along. Given all that, here's a graph of the cumulative sales of a game during a four-year sales cycle. Notice something interesting? That sudden rise during the first few weeks sure is steep, but relatively speaking the lion's share of its earnings take place after the sales curve has turned into a steady line.

And that's the one that's most interesting to me. Now let's say you manage to crank out games at a rate of one new game every 8 months (36 weeks). 8 months after the release of Game 1, you've sold 100 times your weekly income from that game during it's second year (which we'll call "x"). So if a game, on the average, earns x dollars per week in its second year, then during the first eight months it generates 100/36 = 2.78x.

Now lets say you crank out a second game during that time period. You are just that good. Now, during the second 8 month period (months 8-16), Game 2 is earning 2.78x. But Game 1 is still selling. From that cumulative chart, it's cranked out 145x in sales. 100 of that was during it's first 8 months, which means its generated 45x. So 100x for the new game, 45x for the last one, means you've earned 145x / 36 or 4.03x per week. We'll round it down to 4x.

Now, for each game thereafter, your most recent and second most recent games are bringing in a combined 4.0x. Your third most recent, and other titles thereafter, seem to be generating a pretty consistent 1X flat rate of sales at this point. So combined revenues for Game 3 will be 5x for 8 months, 6x for Game 4, and so on.

After you have 7 games under your belt, that's 9x. Very close to peak performance. Now, after that, sales may dwindle a bit further, so we'll cap it at that point. Maybe by that point you've already hit the law of diminishing returns, and are only earning 8.5x. Some of the top games on the list show a clear drop during the last six months or so in the category breakdown list. So we'll conservatively say 8.5x.

Now, if you are going exclusively through portals, you can now solve for x and figure out how much your games are going to have to pull in as an average, flat sales level. If $8500k would feed your team and keep a roof over their heads, then you'll have to shoot for a game that can average of $1k per week in sales across all the portals (assuming they all have similar sales curves). That's fairly aggressive, but I'm sure the top games are achieving that. In fact, based upon the curve provided, if you sell through Reflexive you can guess how well they'll do just by plugging in your first month's worth of sales.

Nevermind the fact that there are several "evergreen" games out there that are still generating sales after more than ten years (Snood, Pretty Good Solitaire, I'm looking at YOU, fellas!) --- but that's a special case condition.

In fact, lets' talk about special case conditions.

Do It Yourself Mulah
Now here's the deal... different portals tend to sell different games. A game that walks on water on one portal may be only a "good" performer on one. And a "good" performer on one may languish on others. They all have a different audience. And all their curves look a little different. Brian Fisher of ArcadeTown says, "the top 5% of games continue doing very nicely for a long time, top 25% stabilize around 25 - 50% of launch sales, and rest tend to drop off pretty quickly."

So Brian's chart might have a little smoother peak and more gradual drop-off. So your mileage may vary. But here's trick #2:

Sell it yourself.

Most portals have non-exclusive deals allowing you to sell it through your own site, though that's not universal (and may become less common over time --- even GarageGames offers a higher royalty rate for exclusives).

I never had a CLUE how hard it would be to sell games on my own site when I first started. There's a ton of work involved. Work I usually don't have time for. Work that sucks time away from game development, which is still my first love. Just putting a game on your own website and waiting for a world to beat a path to your door just won't happen (by "won't," I mean 99.99% statistically unlikely).

But for the sake of an argument, let's say you manage to work your butt off on your own site (or pay someone to put it together and market it). Let's say you manage to sell 1/10th as many of the games on your own site as the portals sell. And that's only after a lot of work. That number's not unfounded. I don't know about top-10 portal games, but there are many games out there that do much better on their developer's site than on the portals. I know in my own case, Void War (a very non-casual game which was not a top-10 performer on those portals it went to), I sold as many at Rampant Games as all of my portals and affiliates combined. So I did much better than 1X.

The other trick with doing it yourself is that your sales curve is probably very, very different. Sure, Reflexive's own games resemble the curve - but for many other indies, the curve is much more gradual. Many indies report sales actually peaking (sustained peak) two or three YEARS after release, though most established indies spike at initial release. They don't have the churn, or games dropping off the front page quite as quickly. The two games I mentioned above that are still selling well 10 years later never really did the portal thing.

So ... going back to the example. Lets say you manage to get your site so that you are selling a sustained rate of 0.1x. That sucks, right? Okay. Now across all 7 games... that becomes 0.7x, on top of the 8.5x we conservatively estimated above. Suddenly, you are now making 9.2X in sales... even closer to the 9.5x of the game's peak it's second week of sales!

But there's more! Since you are bypassing the middleman, you actually making two or maybe as much as three times as much per sale. Let's say twice as much... going from 45% to 90% of the retail price (you are still going to take a 10% hit on credit-card fees, possibly more for chargebacks and all that other crap). So your 0.7x is actually 1.4x... which brings us to a total of 9.9x, nearly ten times the sustained sales rate of a single game alone.

I'm making up numbers here - mileage varies greatly from game to game and portal to portal. But that's a plausible scenario.

X Is Not A Constant and Other Sobering Tales
Okay. Like Phil's $42,000 cap on how much you can make on an indie game, the above is more or less so much bull, but plausible bull. There are a lot of broad assumptions being thrown about there. I mean, eight-month turnarounds... assuming you can survive the four years necessary... x being a constant (a hit game will outsell ten other games COMBINED, let's be serious here). And there's always more to the story, and ways to hedge the bet. There's always additional revenue streams, especially when you own your own IP and if you can develop a busy site. Advertising, contract work, physical "bundleware" deals, etc. Actual numbers and relative values are "How Long Is a Piece of String?" type questions.

So in the end, all that math above isn't some magical formula that you can just plug in and watch your games business take off. It's just one of many models that help give a clearer picture of how things work. The biggest take-away (in my mind) is simply persistence. Multiple streams of revenue across multiple games. A successful indie game developer is in it for the long haul, and has to figure out how to juggle short-term survival with long-term success in whatever way works best for them.

And now I REALLY have to work on my 8-month turnaround!

(Vaguely) Related Insane Ramblings:
* Console Indie: Interview With Steve Taylor of NinjaBee
* Why IP Rights Are Important: The Story of Platypus
* Should I Become An Indie Game Developer?
* Is $42,000 All You Can Make With Indie Games?
* Alternatives to Front-Loading Game Sales
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Labels: Biz

- posted by The Rampant Coyote @ 8:00 AM (Permalink)