Raising a game dev studio

Creating a game concept is one thing. Staying alive as a studio is another.

Sometimes, people tend to believe that putting a project on Kickstarter and letting people decide is an easy process. In fact, it’s tied to a lot of efforts and sweat – especially when you’ve just founded your own company.

So we’ve set up our game concept for Splee & Gløb straight after our game design studies. But it’s a long way to create a game from there. While indie developers are typically associated with unlimited creativity, they’re also prone to self-exploitation. The truth is that there’s always a business and administration side of things. Unless you’ve already made your money, won in the lottery or develop in your spare time, you always need to figure out how you can pay for your rent, food and clothes. And if you want to work together as a full-time developer team in an efficient way, you also need to finance hardware, software licenses and – most obviously – an office space.

Unfortunately, raising capital to cover these costs is extremely difficult in Germany if you’re working on anything that is not a classic industry. The classic way is working with a just as classic publisher. They’re not the right folks to talk to if you’re working on a risky endeavour, though. And any game developed by a new team that hasn’t yet proven that it can deliver in time and money is a risk. We tried nontheless, wrote countless mails and met people at gaming events – to no success.

So there’s another way – by searching for money outside of the games industry. For classic industries, a bank is the first place you go to. There are even banks in Germany that have the purpose to make fundraising easier for startups, since they take over a large part of the risk that the house bank isn’t willing to take. As a game developer however, this path totally doesn’t work. Banks are quite risk-averse and when they don’t have people to evaluate your project, they will refuse to go any further. Unfortunately, they have no experience in games and will typically prefer classic industries that they are familiar with.

More venturesome people can be found at Venture Capitalists (VCs), but VCs are not equal globally. While in the USA, there is a enterpreneurial culture that allows people to fail and try again, VCs are generally more risk-averse in Germany. In general, the culture in our country sees failure as something very negative that one shouldn’t talk about at best. Of course, this attitude is not very helpful to create a thriving startup culture. Ironically, the most innovative projects are the ones with the highest risk and so, you end up with old business models being financed while innovators typically look out for other countries.

The other oddity you can run into are VCs or business incubators that race after trends blindly instead of trying to set trends. One quote we heard too often was “great game, but could you do it for mobile?”
Of course people were impressed by the tremendous success of titles like Angry Birds or Clash of Clans. Unfortunately, that was more of an exception rather than the rule. Nontheless, people tend to blow up these successes into market trends that one must follow: “PC is dead, consoles are dead, mobile is the future” is the repetition we’ve heard far too often and let us question the due diligence process in these VCs and incubators. Of course, with a growing number of mobile devices, there is a growing market. But thinking that these rather casual devices are substituting platforms for die-hard gamers appears a bit naive.  Exactly this market trend is one of the reasons why we intentionally went to the PC as primary platform. We don’t have to subject our game design to the monetization design here and while everybody crowds mobile, we can go to a platform where there’s at least the chance of the game getting noticed. We’d even love to ship the game on the written off Wii U because we think that the game will fit nicely with the community and furthermore: when there’s less competition, the chances of your game getting noticed by anybody increase.

So, we’ve spent a majority of 2013 listening to hot air and doing contract work to keep the studio running. While this brought up some interesting work such as creating the teaser trailer for the Crysis board game we’ve designed earlier, we needed to be more creative in terms of fundraising. Thankfully, the federal state of Northrhine-Westphalia (NRW) knew of the funding problems for media startups. So, we applied for two programs that we were both approved for: One was a public prototype funding program by Film- und Medienstiftung NRW that allowed us to finance the prototype that we can now present to you on Kickstarter. The other one was a public incubator (Mediengründerzentrum NRW) for media companies that not only allowed us to finance most of our hard- and software, but also came along with intense coaching. This was particularly helpful since we were all coming from rather creative studies and were lacking experience and knowledge in tax and employment laws and accounting. Needless to say that Germany’s tax laws are the most complex on the planet.

The tax laws and other administrative questions held us off from launching the Kickstarter campaign for quite a while. For instance, US projects do not need to pay VAT for the funds they receive through Kickstarter. According to European laws however, we must. This makes projects ~20% more expensive than their american counterparts and had us question whether we could effectively collect the required funds at all. Fortunately, our contract work and public funding allowed us to cover some of the project costs, which is why the Kickstarter goal is not set as high as it would be to realize the whole project. Apart from the tax laws, Kickstarter projects still can’t be launched from Germany and we had to find an international partner to use the platform. Luckily, we found this very partner in Application Systems, which are now also throwing their vast experience into the development of the project.

Overall, it’s been almost two years of preparations until we could reach the current stage with the project. And Kickstarter is really a point where the circle closes: We’ve been very involved with our fan community when we were still creating mods – and now we’re going back to working directly with the gaming community to fund our first complete title. We’re thrilled to see where this adventure will lead us in the upcoming weeks!

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