Why Are So Many Indie Game Startups Facing Financial Insecurity?

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Why Are So Many Indie Game Startups Facing Financial Insecurity?

Independent game development is growing in popularity. As game development software becomes more accessible and the density of people that can manipulate that software increases, the natural output is more independent creativity in the form of video games.

More and more indie game developers are trying to find their niche in the gaming industry and build a brand for their dream. However, there’s a reason that the list of credits you see at the conclusion of any big-name game is often verylong. That’s because these projects are not simple, and they often cost a lot of money to do well, hence requiring whole teams of hundreds or sometimes thousands of people to work on them.

Indie development, however, is different. Projects often take a lot longer due to limited resources, but on the flip side, they’re often more creative since teams don’t have corporate heads to appease.

Let’s consider some of the major challenges that indie startups have to contend with early on.

Show Me the Money

Any entrepreneur knows that you need to build a compelling argument to earn the confidence of investors to financially support your endeavors.

The same is true for indie game developers seeking initial funding. The standards involved with video game production and development are much higher than most other mediums, as upon production, video games are expected to be a near-perfect product.

To counteract this, more and more games are being able to hit the market sooner with less development and refinement, being presented as “live service” games, where support and updates for the game are consistently recurring.

Nevertheless, the means of acquiring funds for video games require very robust and comprehensive details and planning so that lenders and investors will be impressed enough to contribute a meaningful amount. 

Monetization Systems and Revenue Streams

What investors and lenders want to see in games today are recurring revenue sources in games. You’ll see this a lot in triple-A games where the pressure is much more intense to make a video game product provide a steady flow of sales revenue even after the initial point-of-sale transaction.

The same can be applied to Indie games with the inclusion of in-game monetization practices, such as optional microtransactions for optional content meant to enhance the gaming experience. These most often consist of cosmetic features that do not impact gameplay other than adjusting the appearance of things in the game, such as a player’s avatar or character.

One method indie game startups can employ is sponsoring a popular streamer on Twitch or Youtube to showcase their game. This is effectively a form of advertisement through a third party to inspire consideration for your title for watchers of the streamer.

Liability and Financial Hurdles

Often, indie game development startups are faced with the conundrum of creating their product without sacrificing quality. However, this becomes especially difficult as projects start accruing in costs. The costs involved with an indie project can become astronomically large, and that’s why minimizing costs and recurring fees is crucial in making the first project profitable in any way.

When facing economic uncertainty or a tight budget, startups should focus on eliminating any debt they take on quickly and insure their assets, both digital and physical. Finding avenues to limit liability is key to protecting a new company from being stopped in its tracks early on.

It’s also important to secure any legal licenses on any intellectual property that the startup creates so copycats don’t try to steal any proprietary ideas.

Growing Awareness

Advertising and solicitation of an indie developer are important, just like it is with any other business. Some indie groups relish in the quiet comfort that their audience needs to seek them out, but the wise move is taking your product to them. That’s why hundreds of indie titles are released on gaming portals like Steam to increase their exposure.

But advertisement goes a long way still, even for indie startups! Thankfully, AI-based web graphic tools are becoming more accessible for new companies to take the time and cost out of hiring whole teams to build the brand identity of a small company.

Beware of the Pitfalls of Indie Game Development

Planning every step of the process in any business venture is vitally important for any business to succeed, but it can mean the life or death of a new video game startup if not handled properly.

Indie startups need to anticipate every possible hiccup that they’ll encounter along the journey of building their first title. If an unexpected cost hits the company that it wasn’t prepared for, it could mean the end of the project and likely the end of the business as well. They should also be aware of their competition. This is especially pertinent for women game developers who may face a disproportionate amount of hostility from male-dominated startups.

No one said it was an easy business to get into, but it can be a fulfilling one if the right amount of attention to detail is put into each project from start to finish.

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