You build games, right? Of course you do! So let me take you out of your comfort zone and suggest that you build games AND value. Whether you like it or not. The question is, do you nurture that value and make it grow or let it go to waste?
A story about value creation
A lot of game developers bank everything on one game release. They pour passion, time and money into a game and then hope for the best. If the game succeeds, amazing! If the game fails, well, too bad. This might force the developer to make drastic changes, or even worse, close down the business. But let me yet again challenge that perception. I built a game studio along with a few other co-founders several years ago. We released very few games that generated more revenue than the cost of development. In fact, we were more than once close to going bankrupt. Even so, in the end we managed to sell the company. All founders got a nice payback for the time, passion and money invested, even though the company never really was financially very successful! So, while we never created short term value (a hit game with great sales) we did create long term value which was realized over time.
So, my statement is this: A game developer does not have to create a hit game to create value for its founders. Sounds weird? Not really.
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
How to create and grow your value
To an experienced entrepreneur the following advices might seem like no brainers, or just plain silly. But to an indie game developer with more passion for games than business development, the points below should be a guide for simple ways to build additional value besides the actual games.
Keep your contracts in place
Make sure all assets created actually belong to the business and not the individuals working on the game. Keep an NDA as a standard part of the employment or freelance contracts. Fight before you sign contracts, not after. If you get an opportunity to sell your business, merge with a larger entity or need to buy a partner out, your papers need to be in order.
Maintain ownership of your assets
This means all assets, such as code, art and IP. If you work with a publisher it is not certain you can retain all rights. But, you always need to negotiate to get your part of any deal as reasonable as possible. Perhaps retaining your code ownership is ok with a partner if you sign a perpetual license for them to use the code? Keep in mind that a publisher often ask for more than they really need, just for the sake of not missing out on any potential upside. But they can often be persuaded to step away from their standard contracts.
Say no to bad deals
This kind of relates to the point above. You'll always have to ask yourself: What is my dream of making games worth? I've turned down several high budget projects simply because I felt the other part was asking for too much. Furthermore, when potential partners start to play tricks and show poor manners already when negotiating, it is in my experience a sign of worse things to come. Getting stuck with a shitty contract is a painful experience and will keep your focus in the wrong place.
Maintain low costs, when possible
Keep an eye on all your costs and always negotiate. If you can lower costs with 10% and increase income with 10% it adds up nicely. Keeping a low cost profile is generally the way to go. However, sometimes you need to make investments in order to scale up. As an example: My old studio developed an online game that grew exponentially and caused our servers to crash three times in three weeks. Instead of putting in the cash for additional server power we opted for cheaper solutions. In hindsight it was a waste of future revenues to NOT invest in hardware at that time.
Diversify your revenue streams
Relying on only one source of revenue is risky. If you can place your eggs in several baskets instead of one, do so. This isn't always easy as you might focus on developing one game. But you should at least consider what options you have to generate revenue from several separate sources.
Take care of what you create
In my experience, developers often love to build specific solutions to all problems. It is rarely worth it from a business perspective. But lets say you do build solutions for specific problems, because you can't find an out of the box solution. Then you are building something that others potentially could be interested in. You should recognize this as a value. Perhaps you could sell or license the solution to others?
Network
Keep in mind that business deals are made between people and not the business entities themselves, regardless of what the contract says. In order to boost your value creation you'll need to get out and meet others. Building a reputation and getting to know the right people is a great way to increase your chances of growing value.
Take reasonable risks
I basically mean that you don't always have to stay on the treaded path. The road to success is rarely straight and more than often you can find value in places you'd never imagined.
In the end, it comes down to having a mindset. Building value is not really hard, certainly not harder than making a great game. So, why not do both?
