Video game development is a glamorous occupation. Many developers would love the chance to start their own gaming firm. Up until the last few years, it was difficult for most developers to launch a successful online gaming business. Most games were produced by developers such as Activision or Electronic Arts. That has changed in recent years and independent gaming companies have gone mainstream.
In the past several years, many independent developers have gone head to head with Blizzard, Electronic Arts and many other gaming companies. What do you need to do to start an indie game company?
You will need to answer these following questions when you launch your company.
What’s Your Goal?
Many people believe developing video games is fun. It certainly can be, but you are also running a serious business. You need to have a goal in mind if you are going to be trying to accomplish.
Regardless of what your business is trying to achieve, you will need to establish a roadmap to help you reach those goals. Write a business plan to layout both your short and long-term goals. You will also need to detail a clear strategy as to how you expect to reach those goals in the coming months and years.
Who Are You Trying to Reach?
Indie game developers are creative professionals. Many of them get caught up in a great idea for a game without understanding who their market is. This is one of the biggest reasons many indie gaming firms don’t make it through their first year.
Before you launch your company, you are going to want to know who your market is and what kinds of games they are going to buy. Always keep in mind that you are designing games for your audience. You can always build games for your own entertainment on your own time.
Make sure you understand the scope of your target demographic. You will probably need to conduct some marketing research before you can know this. Here are some questions you will need to answer in your survey:
- How many people are in this market?
- How much are they willing to spend on video games?
- What games do they want?
- Who else is marketing to them?
Understanding your target market is vital to making it in the gaming industry. Don’t spend a dime developing your games until you know you’ve found a profitable market that you can reach effectively.
How is it going to cost to make your first game? Here are some costs you need to take into consideration:
- Living expenses for developers. They will probably need to work on the game full-time for an entire year.
- Costs of marketing the game.
- Business licensing fees.
- Computer hardware and other capital.
Startup costs can vary depending on a number of factors. However, according to some analysts you will need at least $75,000 to run your company.
How are you going to raise that capital? You have a few routes you can pursue:
- Use your own capital and resources from your friends and family.
- Pitch your idea to private investors.
- Take out a line of credit or bank loan.
- Get grants from government institutions and centers for entrepreneurs.
You have a variety of options available to you. Regardless of what approach you take, you are going to want to need a great pitch and a solid business plan.
Launch Your Company
You have built the foundation for your company. Now you can start gearing up to launch your business.
You will need to decide on a legal structure for your company. You can operate as a sole proprietorship, limited liability corporation, corporation or S-corporation. The structure of your business will determine your liability and how you pay taxes, especially when you consider the recent tax law changes that have taken place over the years. The Small Business Administration website provides the details you need to know about these various options.
Once you’ve selected the appropriate structure for your company, you will need to take the following steps:
- Register a name for your business with your state department of revenue.
- Register for taxes. This means you will need to obtain a tax identification number with the IRS. You will also need to register with your state and local governments.
- Obtain the necessary licenses and permits
- Hire a small team of developers to help you make your vision come to life.
You may want to consult with a small business attorney if you need some additional perspective.
Starting an indie gaming company is going to be a lot of work. Don’t let that discourage you, because it is worth it in the long run. You are going to be going head to head with some of the biggest companies in the industry, such as Activision and Blizzard. Don’t be intimidated by that either; you can set the world on fire if you have a great game and a solid marketing plan.