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June 22, 2015

Telepath Tactics: brass tacks and sales stats, Part 1

I’ve posted a lot about the development of Telepath Tactics: my design philosophy, my month-to-month progress, and so on. Now, a couple of months out from the game’s release, I want to take an in-depth look at Telepath Tactics from a financial standpoint.

Prior to Telepath Tactics’s release, I did not make games full-time. Rather, I had to maintain a day job in order to pay my bills (and to hedge against the possibility that Telepath Tactics might not be commercially successful).

I haven’t made a secret of the fact that I dislike having to compromise like this, nor have I hidden the fact that I very much want to go full-time with game development. Will Telepath Tactics tip the balance of my finances in favor of being able to quit my day job and develop games for a living? That depends entirely upon some cold, hard numbers, which we will now examine!

What did it cost to make?

I began developing the Telepath Tactics engine in April 2009, a little over 6 years ago. I worked on it only occasionally until March 2012, at which point I began regularly devoting 10-20 hours a week to the game on top of my regular full-time employment. For a four-month period during the summer of 2013, I took a sabbatical from my day job and worked on the game for 40 hours per week. Other than that sabbatical, I did not receive pay for any of the time I spent working on the game.

In total, I spent $13,266.25 out of my own pocket to pay for art, tools, and marketing opportunities for Telepath Tactics over the past three years. Of that, $6,034.38 was spent before (and during) its second Kickstarter campaign, all on expenditures to secure the assets and attention needed to crowdfund the game successfully.

The game’s first Kickstarter campaign did not succeed. The second Kickstarter campaign, however, raised $41,259.00, or 275% of its funding goal. After accounting for Amazon’s cut, Kickstarter’s cut, and pledges that didn’t go through, I eventually received $37,161.75. Of that, I was able to spend $29,560.78 on the game before the end of 2013, thereby dramatically reducing the taxes I would owe on the Kickstarter money come April 15, 2014. Still, I ended up owing several thousand dollars more in taxes for 2013 than I did the year before as a direct result of what I’d raised on Kickstarter; these taxes ultimately had to come out of the Kickstarter funds as well.

Counting my out-of-pocket expenses, the available Kickstarter budget, and all of the cuts taken out of the Kickstarter budget by the government and various private middlemen, Telepath Tactics’s monetary cost to develop totals $54,525.25.

Money isn’t everything, however. With all the recent brouhaha over developers underselling people on the cost of developing games, I feel obligated to mention that the true cost of developing Telepath Tactics is actually a good deal higher than that. Other than a small chunk I used to keep myself alive during the 4 months where I coded full-time, I did not pay myself for my work. The average entry-level salary for a full-time game programmer is something like $66,000 per year. The average calendar year has an average of 2,087 working hours for a full-time employee, making the corresponding hourly wage rate something like $31.62 an hour.

Starting around March 2012 and ending with the game’s release, I coded without compensation for 32 months at 10-20 hours per week (which we’ll average to 15 hours per week, times 4 weeks per month); prior to March 2012, I’d give a lowball estimate that I put in 400 hours or so getting the engine prepped. That’s 2,320 hours of work.

At $31.62 an hour, 2,320 hours of work puts an additional $73,358.40 of uncompensated labor onto the game’s true cost to develop. Had I compensated myself fairly for all the time I spent developing Telepath Tactics, the total cost of development would actually be something closer to $127,883.65.

Telepath Tactics Budget Pie Chart
image-3570
As far as money actually spent, the game’s budget breaks down like so:

  • $26,497.60 for visual art
  • $10,201.53 for marketing (mostly appearing at conventions)
  • $8,000.00 not starving or becoming homeless during my 4-month coding sabbatical
  • $5,326.12 for tools, Kickstarter reward fulfillment, and misc. business expenses
  • $4,500.00 for music

I was not even close to being able to pay for my own work on the game out of the game’s available budget. Thankfully, I went into development of Telepath Tactics assuming that I would be working without pay, and ultimately subsidized this cost by keeping a day job. This was what allowed me to make the game with the budget I had.

So what does that mean? Is that good?

Yes. RPGs in general are extremely costly to develop due to the high number of required assets and content compared to other game genres–this remains true of strategy RPGs as well.

Telepath Tactics’s budget is incredibly small given what we achieved with it. Compare Telepath Tactics to Fire Emblem: Awakening, for instance. Fire Emblem: Awakening costs $39.99 at full price; it reportedly needed to sell 250,000 copies at that price to be considered “worthwhile” (which we can assume means “profitable,” or something close to it). 250,000 copies sold at $39.99 equals just shy of $10 million. That’s about 200 times the budget that Telepath Tactics had (or 78 times its total cost to develop that includes my theoretical salary).

Hitoshi Yatagami of Nintendo has said that a WiiU Fire Emblem would need to shift 700,000 copies to cover the costs of development; WiiU games typically cost $49.99 or $59.99 new. Giving the benefit of the doubt and assuming the lower of these two prices, that means a WiiU Fire Emblem game would cost roughly $35 million to make. That’s about 700 times Telepath Tactics’s budget, or more than 273 times its total cost to develop.

But even without comparing Telepath Tactics to other sRPGs, it’s pretty impressive that it got made on the budget it had. This was a focused but ambitious game–and knowing the limited resources I had available, I tried to make every last dollar go as far as it could. Still, I was forced to procure a lot of assets:

  • There are 23 base character classes in Telepath Tactics; 20 of the 23 base classes have both male and female sprite variations (male and female shadowlings look identical, and the bronze and stone golems do not have gender). Each of those 23 base classes has sprites for a promoted version of that class, with both male and female gender variations for 20 of them. There are also a handful of unique sprites for certain characters. All of the game’s character sprites are high resolution and smoothly animated frame-by-frame at 15 frames per second. There are a whopping 660 sprite sheets in the game, the vast majority of which animate in 4 directions, meaning that there are something like 2,400 high res, 15 fps character animations in Telepath Tactics. (I leave it to someone else to guess how many individual frames of animation that is.) Paying standard industry rates, this alone would have cost me more than the entire game’s actual, real-world budget.
  • There are 58 different visual effect animations that accompany the game’s attacks (including several big AOE effects with individual frames as large as 292 x 292).
    Telepath Tactics Portraits Selection
    image-3571
  • There are 118 different character portraits and portrait variations in the game, each a pixel art graphic somewhere between 256 x 256 and 512 x 384 in size.
  • There are 6 tilesets containing approximately 1,800 pixel art tiles, each 64 x 64 pixels in size.
  • There are 210 destructible object graphics.
  • There are 91 different icons depicting the game’s various items.
  • There are 133 different images used to represent the game’s enormous roster of attacks and character abilities.
  • There are 5 large (940 x 580) pixel art cut scene backgrounds.
  • The game’s musical score consists of 26 original tracks. 22 of the game’s tracks were composed by Ryan Richko; the title theme composed by Nick Perrin; and I did the last 3 myself. The 23 tracks I didn’t write myself contain a whopping 57.5 minutes of high quality, original music.

And this is without getting into the title screen art or miscellaneous user interface graphics. Given the budget I had, this is an astonishing amount of graphical and musical content to have procured. My artists understood my budgetary position, and they graciously agreed to accept compensation far below what they truly deserved in exchange for making the game possible. Frankly, I feel bad that I wasn’t able to pay them more.

Despite my ruthless efficiency in getting as much out of the game’s budget as I could, I still had to make some hard choices on how to spend the budget I had. I dropped a variety of wish list items from the game, including: animated character portraits, idle animations, hurt animations, swimming animations, battlefield corpses for each class type, and custom character sprites for all unique characters. Faced with the choice of making the game deeper or making the game prettier, I sacrificed innumerable pieces of polish like this throughout development in favor of focusing on giving Telepath Tactics as much complexity and depth as possible. I don’t regret my decision, though I believe that this ultimately hurt the game’s commercial appeal.

How much does it need to make?

Now that we’ve established the game’s cost to make, and established that I was being extremely (perhaps overly) efficient in allocating its limited budget, let’s get into what sort of sales revenue I need to meet my goals.

My first goal is the same as every developer’s first goal: don’t actually lose money on making the game. To hit this goal, I only need to make back my out-of-pocket costs, or $13,266.25.

Thanks to the generosity of my Kickstarter backers, any sales I make beyond this “out-of-pocket expenses” level will give me money that can compensate me for my time spent (which I don’t care too much about) and can allow me to survive while making my next game (which I do care about). Since I’m not interested in taking back-pay for this game, we’ll operate under the assumption that 100% of excess funds will go toward funding my next game.

My second goal is to make enough money beyond the first goal that I can quit my day job and survive as a full-time indie developer for as long as it takes to put out my next game. This second goal is trickier to calculate, but still doable.

On average, the last two games I’ve made have taken me something like four or five years each to create. However, I made both of those games while holding down an unrelated full-time job. Development of my next game will occur much more quickly if I am able to work on it full-time. Let’s say that it will take me two years to create a new RPG while working full-time and reusing the existing Telepath Tactics engine and assets.

I am used to living on relatively low income, and can survive without any great privation on $24,000 per year. As established above, my time is actually much more valuable than this by any reasonable market standard, but we’ll use $24,000 per year as a baseline. Keep in mind that that’s not enough money for me to commission much in the way of new art or music, let alone visit conventions to promote the game–I’d probably need to run a Kickstarter campaign to get money for those things–but it will be enough to keep me not-starving, not-homeless, and with the necessary utilities (such as electricity and internet) while I work. Frankly, it helps a lot that I do not live in New York or San Francisco, and don’t have any children.

Two years at that income level is $48,000; however, self-employment taxes in the United States are more severe than the taxes one pays while working as someone else’s employee, so I actually need to earn more to remain at my baseline standard of living! Let’s inflate our two-year figure to $54,000 just to give me a safe buffer. For our purposes, then, $54,000 is the bare minimum in profit that I must make to hit my second goal.

To hit both goals, then–to both make up my out-of-pocket costs and then go on to make $54,000 in profit–the game must net me at least $67,266.25.

How many copies must the game sell?

Now that we know how much money the game needs to make, let’s figure out how many copies I have to sell to make it.

I’m selling Telepath Tactics at a $14.99 price point; in an ideal world, I’d be able to get really good sales numbers just from selling it direct to consumers. I use BMT Micro as a payment processor for direct sales. BMT Micro takes a 9.5% cut of each sale, which means that I make about $13.56 for each copy sold directly to players, before taxes. At that rate, I’ll make back my out-of-pocket expenses after 979 copies sold; to hit the second goal, I must then sell an additional 3,983 copies of the game directly. To make $67,266.25, I must sell a total of 4,961 direct copies.

This is unrealistic, however. In the current environment, most gamers buy games through distribution platforms, not directly from individual game developers. This means that I cannot expect to make the bulk of my money from direct sales. It is public knowledge that most online distribution platforms take something like a 30% cut of all sales. I am not at liberty to confirm that figure, but for our purposes here, let’s assume that it’s at least close to correct. This means that even without sales discounts, I receive a much smaller portion of each sale made through a distribution platform: specifically, about $10.49 for each copy sold at full price, before taxes (versus $13.56). Under those conditions, Telepath Tactics would have to sell 1,265 copies at full price (i.e. without any discounts) for me to recoup my out-of-pocket expenses via distribution platform sales. To hit my second goal, I would then need to sell an additional 5,148 full-price copies. To make $67,266.25 via online distribution platforms, I must therefore sell a total of 6,413 copies.

Even that isn’t realistic, however, as many of my sales were made during launch week (when the game was discounted by 10% on both Steam and GOG), and during the Steam Summer Sale (when it was temporarily discounted by 25%). Let’s make a rough guess and say that the game needs to sell 15% more copies to make up for revenue lost due to discounting–this bumps us up to 1,455 copies sold to make back out-of-pocket costs, and a final goal of 7,375 copies sold in order to go full-time as a developer. According to Steam Spy, this is well below the median for a game sold on Steam in any category, which is good news.

I’d like to end this part of our analysis with one final thought: it made a big damned difference to have (1) a successful Kickstarter and (2) an outside source of income during this whole process. Had I not run a successful Kickstarter, and had I found it necessary to pay myself the equivalent of a $66,000 annual salary for my work during the game’s development, I would have had to sell 14,020 full-priced Steam and GOG copies to make back my initial costs (versus 1,455), and 19,940 full-priced Steam and GOG copies to meet both goals (as opposed to 7,375).

Next time, on Brass Tacks and Sales Stats: I’ll reveal some initial numbers on Telepath Tactics sales, compare them to my sales targets, and discuss what they all mean for the future. Stay tuned!

UPDATE: Now continued in Part 2!

  • Enigma Dave

    I dig this kind of gritty detail on indie game development something fierce. Thank you thank you for not only delivering it in such an understandable format, but for putting personal stuff like your financials out there.

  • Kvn

    I’m with Dave, thank you for sharing this information — especially with the commentary to put it into perspective. I’m fascinated by the inner workings and I’ve been checking your blog specifically hoping for a post just like this. I think many people have tactical role-playing games they code on and off, and they’re all wondering if it’s worth taking the leap and putting more time and effort into them (and perhaps taking a 4 month sabbatical from work.) I hope this works out for you in part two, but either way, it’s fascinating and I appreciate your willingness to share the knowledge.

  • Washington Irving

    That’s some epic level teasing

  • Dennis Carr

    Thanks for this! It was very illuminating for someone who is just starting to think about making money via game development.

  • Jack Awesome

    Kinda makes me want to buy another copy of the game…

  • Very interesting stats and info, thanks a lot for sharing! I hope you’ll met your sales exceptations :)!

  • Pingback: Telepath Tactics: brass tacks and sales stats, Part 2 - SinisterDesign.net()

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  • priscillaronan

    Nice writing ! Coincidentally , people a IRS 940 , my kids filled a template version here https://goo.gl/l9cBVd.

  • CHET SCHEETZ

    Good article, Thanks!