Why making money off of an indie game is so damn hard
70% of commercial indie games are considered failures - they don't generate enough revenue.
On top of that, based on the same source, only 30% of all games are considered financially successful — but of that slice, only 7% of those games will generate enough revenue to fund a second project.
Another source by Andrew Johnston — a fellow writer for SUPERJUMP — dug out some interesting data: while the total indie game market surpasses 1 billion US dollars, the entire gaming market as a whole sits at 137.9 billion as of 2018. That means indie games, despite comprising the majority of games out there, feasted on less than 1% of the total revenue share.
First of all, it’s no surprise that indie games are largely developed on the merit of passion and love for gaming. Otherwise, the financial opportunities — or lack thereof — are seldom enough to incentivize developers to invest their energy into games.
So why is making money so damn hard, and what makes indie teams motivated despite the challenging road?
Money is hard to come by, because…
A competitive AAA market
With Microsoft’s $69 billion dollar deal of acquiring Activision Blizzard on the horizon, many weren’t surprised to see the business transaction run into several hurdles. Namely, an anti-competitive basis was brought forth by the FTC (Federal Trade Commission). Several in the organization claimed that the deal was a clear threat to competition in cloud gaming, the console market, and game subscription services.
While the attempt to pause the transaction didn’t go through, let’s understand how this impacts indie game developers.
While this may not impact indie developers directly, the deal itself poses a broader idea that some of the world’s major AAA (Triple A, a way to describe large-hit game titles) games would be controlled in a worldwide oligopoly; Sony, Microsoft, Activision Blizzard, Nintendo, EA, Epic Games, and Ubisoft are some of the largest players in today’s market. Their game development teams have millions, if not billions, of cash reserves ready to compete for the next hit title in a variety of game genres. Additionally, no one could underestimate the branding and reputation these studios bring based on their history of past titles.
The mass of players (customers, per se) who buy these games may only direct their attention to AAA titles from these large players first before even peeking at what the indie market has in store. It’s a natural competitive advantage just based on cash and reputation. If large companies like Microsoft acquire other well-known studios, the market will surely grow less competitive.
Natural saturation
It takes months, if not years, just for a game demo to be released to the public. A demo; not even the full game.
While the demand for high quality games remains forever high, saturation remains as dense as ever.
Even for indie games, the investment and dedication needed to drive ideas from conception, to development, and finally to completion, is off-the-charts. It’s simply rough out there. While today’s game development tools couldn’t be of higher quality, especially given the AI capabilities just within reach, the market will simply shift, not thin out.
Everyone will try to get their hands on the latest technologies to better improve their indie games — and with thousands of indie teams joining the market every year, the market only gets more and more saturated.
Of course, teams can play the game of economics, and sell their games for dirt cheap. Maybe that’ll drive acquisition. But again — that only plays into why making money is so damn hard.
And because of how long it takes to complete a game vs. finishing one, it’s difficult for indie teams to financially succeed without failing the first couple of times. That being said, market saturation is real, but it’s not impossible for small projects to win. Developers need to dedicate as much energy and time to fail fast with their games until they hit the right sweet spot. They need to be willing to weather countless storms until that sunny day finally arrives.
Game quality matters
Within the past few months, I’ve also been part of an indie team developing a third-person RPG maze-based game. As a game producer, I learned more about the internal struggles regarding game development, as well as the importance of marketing when it comes to release. I can tell you now from experience, game development is one of the hardest paths of software development I’ve ever touched.
With AAA studios putting their utmost efforts into near-perfect game quality, indie studios are forced to play catch-up. From personal experience and from interviews with others, I’ve learned that players naturally throw their money and time toward higher-quality games (sounds like common sense!). Indie teams naturally have scarce resources to achieve similar quality, so of course the ladder will be more difficult to climb.
This is why you rarely see one or three-person teams succeeding in today’s market. Of course, you’ll find the occasional exceptions — such as another Toby Fox or Eric Barone — but don’t let that mislead you into thinking you too can do it easily. The chances of success are obviously higher when you have a team of dedicated and talented individuals who believe in the same collective vision.
Still, indie teams remain more motivated than ever — and it’s worth remaining hopeful
One of the main hopes among the community is that indie games may very well grab a larger marketshare within the future of the gaming market. Considering the negative lingering sentiment which AAA studios have left behind regarding total market control, I don’t blame the indie community.
Remaining hopeful isn’t a bad thing at all. With the rise of new technologies, game development speed will increase drastically, and indie teams will learn how to “fail fast” and be able to experiment with their target audience at a faster pace. Whether it’s a better UX experience with tooling, generative AI, powerful GPUs, easier game engines, or a mix of everything, the learning curve for game development will be lowered.
With the gateway into game development easier than ever, and with the power of remote work, I suspect that we’ll see more amazing indie games beating AAA titles in revenue or player acquisition more frequently than ever before. Even if that means the current game market continues to feel oligopolistic, it’s best to keep an open-mind. Don’t forget — as more angel investors and game publishers arise, the more money will become available for indie teams.
About Me
My name is Kasey, AKA J.X. Fu (pen name). I’m passionate about writing, and thus I’ve found myself deep in the abyss on weeknights creating novels. I do this while working a full-time tech PM job during the day.
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