Thursday, February 26, 2015

Crowfall, Funding, Creative Control. How Much Do Video Games Cost?

Recently a new MMO has been making waves: Crowfall. I've seen their pitch video, it's a super cool concept, one I can easily get excited about as a designer and a programmer, even if I'm less than enthralled about the PvP aspect of it. They just launched their Kickstarter, asking for $800,000. But one of the big questions folks have been asking is, "Can you make an MMO on just $800k?"

Unsurprisingly, the answer is no. The developers even cop to that themselves in the FAQ portion:
The short answer is: you can’t. At least, not a game with the scope of Crowfall. Fortunately, that isn’t our plan. 
Lastly, we’ve already raised some money and -- as we said in the video -- we will raise more if we need to. We would prefer to be only answerable to you, our players – but one way or the other, we’re going to get this game made. 
ArtCraft took a minority investment round of $2.3 million last year. We will likely sell the rights to Crowfall in foreign territories (especially restricted markets, like China, where we can't ship the game, anyway) to add to our development budget. If that isn't enough, we can always take more minority investment if we need to. 
The Kickstarter deliverable (the core module) can be accomplished with our capital and the crowdfunding money -- providing we are successful in meeting our Kickstarter funding goal.
They've already gotten $2.3 million, some of which I suspect they've already used given they've mentioned that they effectively have a prototype. And as they mention in their pitch video, they have other potential avenues for funding, but if they fill the rest with crowdfunding, they're more likely to retain creative control of the product as a whole. Interestingly enough, that's a concept that resonates with me as a developer on Eon Altar.

Given a high-fidelity prototype you can shop around, there are plenty of publishers and investors out there who would likely be willing to fund your game, but as the Crowfall folks mention, this usually comes with creative control strings. The only way you can assure complete creative control of your vision is to fund the product yourself, or find funding from sources that believe in your vision. Crowdsourcing, private investors, and your own funds.

I don't know where all of Eon Altar's funding comes from personally, but we've managed to retain creative control, which is really important for us to deliver a game we would like to play. I know keeping this vision intact has required us to turn down potential avenues of funding, so I can completely empathize with the Crowfall developers for turning to Kickstarter to fill their coffers for the short term.

But will it be enough?

They have 17 employees listed. If they were getting paid $40k a year each (well below industry standard), you're talking $680,000 a year on salary alone. If they were getting paid closer to industry standard (~93k for Developers, ~73k for designers, and ~75k for artists/animators as of 2012), were looking at a ballpark figure of $1.3M per year. They have a development timeline of Winter of 2016, so about 2 years. That's $2.6M right there if they were paying industry standard. That includes no benefits: no health care, no life/injury insurance. 

Add to that requirements:
  • Equipment (2 monitors plus at least one machine capable of running the tools will likely run at least $2k each in bulk, if not much more); ~$34k minimum, probably significantly lowballing here
  • Licenses for primary tools (Unity Pro is $1.5k per seat perpetually, Maya will run about $1.5k per year per seat); ~$40k minimum
  • Licenses for programming addons (Voxel farm is unknown, Unity addons run anywhere from $20 to $3000+); Unknown, based on Eon Altar's usages compared to their much larger scope, I'd budget ~$10k minimum, probably significantly lowballing
  • Office space (generally running about $1 per sqft in places like San Francisco or Seattle where these companies generally live), so probably in the range of $2k per month, so ~$48k minimum, might be lowballing
  • Furniture (17 decent office chairs, crappy tables): ~$4k minimum
  • Cloud Computing Services for Code Repositories: ~$3k per year
So that's in the area of $142k, and I've probably forgotten a bunch of other costs and underestimated the costs given. I tried to be conservative. That's all just off the top of my head. If we assume they already have a bunch of that stuff (because they do have a prototype), we're talking about saving $60k.

However, toss in another $25k - $50k per year for retaining lawyer services, and we're already at nearly $2.8M total operating costs for a 2 year release cycle.

That also doesn't include publishing fees, or marketing costs. This is just the amount it takes to make the game. It also doesn't take into account a QA department (not listed on their Kickstarter), or hiring contractors for smaller pieces of work for temporary periods of time--a relatively common occurrence, both of which would be significant expenses.

Clearly the people are the biggest expense (and biggest asset) of any operation, and if you can convince folks to work for less (generally because they're passionate about either your vision or working for you), you can save a lot of that money. There are also other options, like deferred payments, where you pay the folks upfront less, and tell them if we make money, you'll get this amount extra at the end. Or in lieu of cash offering a percentage stake in the company proper.

Despite all that, they're likely going to have to raise more private capital. Even with the Kickstarter funds, they'll only have a listed $3.0M (remember, Kickstarter skims an amount, plus taxes). The producers mention they're dipping into their own bank accounts, which is big of them, but won't go very far in the grand scheme of things unless they're millionaires. They don't have enough money--unless the devs are making significantly less than industry average up front--and they won't with Kickstarter. But it'll give them a pretty damn big head start as they look for more.

I hope they can find further investors who'll let them retain their creative vision, because it's actually pretty damn awesome. #IndieDev, #Crowfall, #GameDevelopment


  1. The easiest rule of thumb for estimating costs is just to double salaries. So that gives them a current burn rate of $1.4M-$2.6M per year with your numbers.

    On the other hand, both Walton and Coleman have run studios and shipped successful games. So I would think that they have a reasonable grasp on the finances involved.

    1. Oh yeah, their numbers stated are far more realistic than I've seen of nearly any Kickstarter on making a video game. I think they're above-board in terms of expectations.

      They've stated as much that they have fallback plans for more funding. Kickstarter is clearly just a way to shore that up without having to necessarily sacrifice control. I think they're in a pretty damn good position overall.