Bourne2Game: Melbourne, Victoria, Australia: interactive games innovation blog

I was asked an interesting question the other day.  I thought it would make a good article.  This chap (name omitted) is basically an individual with very little current income and wants to start a game studio from the ground up, build a team then start an original IP game with seven people.  He’s smart and knows what’s involved having worked in the industry as a designer and producer.  He doesn’t have the business experience yet, but that stuff is the easy part, in my opinion.

The question went a little like this (from memory):

So Chris, I want to start a new game studio, start a team of seven and make an original IP game using the Unreal engine. You’ve had a lot of experience starting game studios (Bluetongue, Redtribe), how do you think I might go about that?

The abridged version of my answer –

The term I like to use to describe this approach is “bootstrapping.”  Bootstrapping a business basically means pulling yourself up by your bootstraps.  It means you’re not getting much help from VCs or Angel investors. It means you don’t have any big contracts to start you off.  Basically you just have yourself, your startup team (possibly) and very limited resources (if any at all), and it’s all up to you to get it started.  Both Redtribe and Bluetongue were bootstrapped businesses starting life with nothing more than an idea and a great deal of energy.

At a rough guess, you’re going to need around AU$2 million to build this game, not including distribution and marketing costs.  Traditional verses online distribution are also considerations here.  At some stage, you’re going to then have to convince a publisher or distributor to take it on, although that’s a entirely different topic again!

My suggestions:

1. People

Find people who have talents that might not yet be appreciated by the established games industry.  There are many people who want to get into game development, but don’t necessarily have all the experience required to get a full-time job yet.  This is where you can provide a stepping-stone for them, and in return build up your team. This doesn’t mean they cannot perform the job; it just means the more established companies are not willing to take a risk on them.  There are different arrangements that you can have with your startup team, including:

• You can hire them on a casual basis.  This would mean you utilize more of their services when you need them –as jobs come in.  You have to be careful with the contracts to ensure everything is legal.  If there’s no work, then you pay nothing.  They might be willing to negotiate favorable terms with you for the opportunity to gain more experience and to release games that they can then add to their resumes depending on their own specific circumstances, which will be different for everyone of course.  This is probably the easiest and safest way to start.
• You can offer a share of profits from the sale of the game, but in my experience this doesn’t lead to good outcomes.  You can never predict if a game will make any money, and many games lose money.  If people are relying on profits to make up their incomes, then they won’t be happy if they don’t materialize.  This is especially true when a game company starts out.  You’re going to be working on smaller projects to generate your income and profits are harder on smaller titles.  Not everyone is happy to take business risks.  On the other hand, if you’re working with more experienced developers who do understand the risks, then a profit share arrangement might work well.  I guess it’s about managing people’s expectations.
• A share of the business.  This evens out the risk on any given game, but they’re still taking a risk on essentially a micro-cap company (extremely small and therefore risky company).  You’re not relying on a single game to make a profit; instead, you’re hoping the overall value of the company is increasing and eventually this will be of value to your team.  This has its own risks – beyond the scope of this article.  I would recommend against giving away equity in your new startup.

The other important thing to consider here is that if you’re hiring people with no industry experience, how are you going to find the talent and how are you going to develop the talent.  Some ideas include:

• Make people perform tests.  You can come up with programming tests (where a person has to create a software demo of something within an allocated timeframe).  You can come up with art tests (where a person has to create 3D graphic and texture it within a specific timeframe).
• You can look in much greater detail at the work that they’ve done in the past.  You might have to get to the point of looking through code or having them walk you through the process of creating a graphic from scratch, it can be that involved and very time consuming.  Larger companies simply don’t have the time to do this for each individual (sometimes they do).  It’s really going to come down to you, can you evaluate talent, can you find it, can you convince it to work for you.
• Examine their motivations.  Make sure the people who you hire are prepared and know how hard it’s going to be to succeed.  Find out how motivated they are to succeed at making games.  Without the right levels of motivation, they’re not going to survive the entertainment business.  Experienced staff already know what to expect and this means they are less risky of course.

2.      Money

First off, unless you have some very rich relatives or friends that are willing to give you the $2 million or more you’re going to need, then you’re going to have to get the money another way. That’s pretty obvious, right? I’ve had nearly 15 years looking into the problem of where to get money to make games, and let me tell you it’s not easy.

Getting money from publishers for an original IP game is the hardest thing you could do in our industry.  Even if you have an established team, even if you’re willing to partially fund it yourself, publishers want to make their own games and if they’re funding yours they will likely want to own the IP anyway. So cross publishers off your list, unless you have some serious connections willing to take a risk on your yet-to-be established team, with its yet-to-be established track record, on an unknown IP, and who are willing to fund without wanting to own it all outright (effectively making it their IP not yours).

It’s extremely hard to raise money for games and movies; this is why governments from around the world have created numerous incentives for investors to facilitate this.

Bluetongue and, for that matter, Redtribe built up their teams doing fee-for-service work.  You do whatever jobs you can get your hands on that also happen to be in line with the general direction you would like to take your team, and as you do more and more jobs your team and technology will grow, your processes will mature and hopefully one day you might have enough money to make your own title.  This is what most companies do. They all want to make their own titles, but you have to start someplace, you have to pay bills, you have to pay competitive salaries to keep high quality people in your company, so you do whatever you can.

Bluetongue did web development, domain name software, 3D visualization and communications software, all to fund the development of the team and company in the early days.  Redtribe worked on museum installations, government accredited training courses, government reports, and numerous low budget titles in order to bootstrap the businesses until it was able to win larger contracts.

All these little jobs are tedious, time-consuming and pay little money, but it all adds up. Just make sure you’re still moving in the right direction, you don’t take on all jobs, just jobs you think will push you in the overall direction you’re wanting to head in.  If you’re structured correctly and keep your eye on the future and where you want your company to be, you can achieve it.  Of course, sometimes life gets in the way –or in some cases the economy- but you keep plugging away, in my opinion. Never give up till you reach your goal!

You need to be looking for every bit of assistance you can get your hands on from government.  The Australian government has quite a number of grants that can help propel your company forward, and there are even more state government grants to assist your fledgling company. As your company grows, you will have access to larger grants, so you have to just keep moving forward. Sometimes you have to move forwards before all the ducks are lined up, that’s just how it is. You have to take a big leap of faith in order to find the opportunities that are hidden, until you start. It’s an odd thought, but this has been the case very often for me.

The truth is that you’re going to have to do all these things simultaneously in the beginning to get things off the ground, and just like launching a rocket into space; it’s the early stages of the company’s growth that can be the hardest. Your margins are going to be the tightest at the start, you’re going to have to be working on more titles than you can handle, and you’re going to have to be doing more jobs than one person should be doing realistically; but that’s how it’s done.

3.      Resources

When they think about starting a company, many people will first start looking for money.  There are other things that are of equal importance, however. Everything you can get for free or negotiate on reasonable or very low terms, is effectively putting money into your business.  Some of the things you can do include:

• Negotiate with suppliers.  There are accountants, lawyers and other business professionals who are willing to give startups a chance for a reduced fee or no fee if they believe in you and like you. Family and friends can also help out.
• Office space – this is a really costly one.  Most offices that are suitable for game development are going to be large, need lots of resources, and so on.  If you can find an old, large, unused space and get it for the right lease terms, you’re halfway there.  The other option would be serviced offices that specialize in this type of business. An example would be The Cluster Serviced Offices in Melbourne.  Another option might be to share office space with other like-minded companies and divide the cost.
• Barter for services and goods. Sometimes you can barter for things including office space, equipment and the technology you need. For example, Redtribe formed strategic partnerships with technology providers to “port” technology to new platforms in return for use of the technology in its games for free.  Bartering your own time or expertise in return for something you want or need is a great way to get ahead and actually forms some very useful longer-term relationships that can help your business in the future as it continues to grow.

4.      Business Development

Every startup business needs to have a talented and tenacious business development person who goes out and actively brings in the work. Without this key role filled, you basically don’t have a business. The work has to flow in order for your team to start, grow and prosper. The business development person has to work closely with the team, understand the technology and help to drive the company’s strategy over time.

You can’t just go out and hire a sales guy; it won’t work. They have to understand the industry, have lots of industry expertise and be able to talk with publishers, other developers and any experienced industry people that the company needs to impress and get work from. Some people are naturally talented at business development and find it easy and fun, if that’s not you, you need to find someone who is and whom you can trust.

You can contact me at The Cluster or Redtribe (housed at The Cluster, Level 10, 50 Market St). Happy to answer any questions you might have about how both Bluetongue and Redtribe were bootstrapped.