Go big or go home? What to know before starting an indie game studio

Whatever their earliest game memories involve, many young adults have grown up dreaming about a career in game design, bringing their own stories and mechanics to life for future generations to enjoy. Unfortunately, when the first waves of enthusiastic talent showed up for their first jobs in the industry, many were disappointed to discover that the developer lifestyle is difficult to maintain. Although there have been admirable efforts taken in recent years to alter the profession’s work culture, poor pay, poor treatment, discrimination, long hours and impossible deadlines remain common fixtures in the electronic entertainment business.

To escape, or completely avoid, the inevitable burnout of a corporate developer job, many have turned to an alternative: independent games. Indie-games, created and published by lone developers or small teams, offer game developers more freedom and control over their projects, with successful products raking in millions. These can take many forms. Mobile games, like the notorious Flappy Bird, are often built by only one to two people, but gross vast sums of money through app stores. Minecraft, the best-selling game in history with over 238 million sales as of 2021, was developed by a single developer, who went on to found his own game company. Five Nights at Freddy’s, a controversial but widely played horror game series, was likewise developed by a sole creator who made millions in game sales, merchandising, books and movie deals before retiring from the franchise.

The tales of money and fame in the indie game industry seem endless, but for those interested in starting their own independent studio it can be intimidating to make the jump. Those who run their own gaming enterprises are not just developers: they are business owners too. As with any enterprise, it takes research and dedication to make them successful, and to those new to the industry the challenges can seem insurmountable.

In this article, we seek to answer allay some of these concerns by sharing guidance from successful indie game developers as well as advice for setting up a by-the-book studio. By the end of this article, readers can expect to have a development roadmap and a clear understanding of the initial legwork required to legally establish their business model.

Development Roadmap

So you want to make a successful game? While there is no one method for bringing your idea to life, you can break the process down into several important stages. Here we cover some major aspects of running a successful team, managing the day-to-day workload, marketing to your player base and clearing the necessary stages of game development.

The idea

Surprisingly, coming up with ideas for your first studio project is the simplest task in this list. Take any game and break it down into its most basic elements. Among Us is essentially a mafia-style party game in space. All Mario games are platformers, with additions such as water jetpacks, gravity-defying physics and hat-based animorphing. With Minecraft you break blocks. In Doom, you shoot demons. The base idea can be as simple as you prefer, in fact the most simple ideas can turn into surprising successes. Untitled Goose Game, a massive hit in which the titular Goose terrorizes a small town, started off as a joke, according to developer Michael McMaster. Speaking in a YouTube interview with the British Academy of Film and Television Arts, McMaster explained: “I think we spent basically the first year of production of this game assuming it was only gonna be funny to us.” With enough refining, any idea you bring to the table can become successful, so do not be afraid to take chances.

Groundwork

Once you have this simple idea, you have the foundation you need to expand it into an entertaining experience. This is the point where you develop a gameplan, turning your inspiration into a project. Much like film, there are several consecutive stages in video game design that developers must clear in the right order. They are as follows: planning, pre-production, production, post-production, launch and post-launch. Using your idea, write a list of goals for each phase of development. For example, during pre-production, you should aim to have the vast majority of creative work out of the way, meaning plot points, voice line scripts, character designs etc. When entering production, you will focus on scripting your game, recording voice overs, modeling characters based on your designs etc.

Team building

A majority of indie studios are formed between friends or mutual acquaintances, but sometimes amazing talent just appears. Prior to joining the DLC team for cult classic The Binding of Isaac, Nikola aka LeatherIceCreme was a fan artist and modder. “My Isaac obsession started with me making animations of the Duke of Flies and “Isaac of Isaac: Reisaac” on YouTube before becoming the room/enemy designer for Anitbirth. And today I’m still doing that but for the official game,” she said. As an independent developer, your current network is your best bet for finding people who are willing to work with you or under you. Game jams, short competitions to produce the best video game in a short amount of time, are an excellent way to meet local developers who share the same passions as yourself.

Leadership

When it comes to managing a team, the internet contains a treasure trove of advice, resources and opinions. As an indie developer, it may be your first time leading a professional team. While your leadership style should adapt to the personalities of your studio’s employees, the most important aspect of leading a development team is communication. Clarity and inclusion are your best tools here. Offer realistic goals, and clearly define each of your employee’s roles in the project. Include your staff in discussions, make sure they update each other on progression and interact with them to make them feel like contributors rather than followers. Meeting and chat apps such as Slack, Discord, GroupMe etc. are some of the most convenient and cost-effective ways to keep the cycle of communication spinning amongst your fellow developers.

Working alone

If working alone makes more sense for you, then you are in good company. A majority of indie studios are run by a sole proprietor with no employees, giving the developer complete control over the design process, working hours etc. Beloved farming simulator Stardew Valley was created entirely through the efforts of one individual, Eric Barone. Speaking to GQ, he explains that his goal was, “To shatter expectations of what one person can do in an indie game.” However, there are limitations. For one, the time it will take to move from one stage of development to another will increase exponentially with the complexity of your idea. Barone echoes this in the same interview, saying, “I put in thousands of hours on pixel art just too get better at it and better at it.” Akuma Kira, Spooky’s House of Jumpscares developer and creator of the peculiar horror title Lost in Vivo, told Bloody Disgusting, “It was difficult at times working mostly by myself…During the first half of Lost in Vivo’s development I was still taking online classes, and progress was certainly slower during that period.”

Funding

It may surprise you to know that indie game developers have access to multiple sources of funding to help them manage their workloads, expenses and more. Consider looking into state or federal art grants, which are increasingly recognizing the legitimacy of video games in the art world. Crowdfunding platforms such as GoFundMe and Kickstarter can help jumpstart your project, if you can generate enough attention. Certain sites also exist specifically to help indie developers focus on their projects. While your mileage with each of these methods may vary, these methods can offer you financial support when you need it most.

Advertising

The decision to advertise depends on the game you are making, and what kind of budget you have for marketing. Posting videos of your game to social media, especially in game friendly groups, is one possible way to generate excitement. Discord channels which allow fans to speak with each other can foster a sense of community. Hosting a YouTube channel with regular developer update vlogs is another. At the very least, consider making a website for your game or studio, especially if you have long term plans for this and other projects. This also provides an excellent chance to see if your preferred domain name or url is available.

Playtesting, Demos and Early Access

While you may feel protective over your work, allowing your future customers to playtest the game and offer their feedback is essential for a smooth launch. It can also highlight major oversights, such as glitches, overly-complicated mechanics or uninteresting plot points. However, since many developers cannot afford to hire professional playtesters, their options are usually limited to two choices: demos and early access.

Selecting which one to use can be tricky. Both are ways to drum up enthusiasm, and the latter can even generate revenue depending on the host platform’s guidelines. However, there are thousands of promising games with demos and early access launches which never left the beta stage. Because of this, buyers are often likely to react negatively to indie titles with unimpressive pre-release builds. Whichever option you choose, your product must be solid. You may be excited to share what you have with the world, but if you release an early-access version or demo and fail to excite or impress players, you weaken the eventual launch of your game, especially if money is concerned. Here are a couple of rules to keep in mind. First, only release the game when you have a firm launch date in mind. Second, use your pre-release launch to incorporate player feedback or snuff out issues, rather than as a marketing ploy.

Pricing

There are no hard or fast rules here. Consider the length of the game, the level of detail and work that was put into it, how big the potential audience is, what competitors charge and how much customers would be willing to pay. While you may feel tempted to charge a higher price than normal, given the amount of time spent to bring your project to completion, keep in mind that overcharging runs the risk of impacting the game’s review score.

Publishing and revising

Publishing is the easy part. Most game platforms, such as Steam and the Playstation Store have websites which allow you to publish your game easily. The hard part is making revisions. Given the variability of PC configurations, glitches on launch are essentially guaranteed. Tracking them and responding to them quickly enough to avoid affecting your review score can be a challenge. One way to track when users encounter an issue is to set up an email account exclusively for reports. This can help you early on in the post-launch phase since you can ask users to attach supporting photos and videos. However, as time goes on, it may be more helpful to rely on crash report mechanisms in most platforms.

Scaling

After completing and publishing your game, you have the option of making it available to wider audiences by making it available on other platforms (assuming you haven’t already done so). While it can take some effort to host multi-platform launches, the extra streams of revenue can bolster your plans for a sequel and grow your audience many times the size of your original player base. However, each console, storefront or digital retail site has its own list of qualifications and standards, so be sure your product does not break any company rules.

Merchandising

Depending on the type of game you make, and how its characters or mascots resonate with the public, you have the options of using your copyrighted materials to sell your own merchandise or licensing them to another company. Unless you can handle shipping and handling on your own, you should seek reputable partners with their own business operations. Platforms such as YouTooz, which also offer in-house product design, are an increasingly popular option for indie developers.

What’s next?

This depends entirely on your experience throughout the process. If you found it overly stressful then you can take a well-deserved break, letting future-you decide when they want to come back to the developer table. If you feel more energized than ever, you can consider putting the income earned from your last project into a new one. If you are working with a team, you should be sure to take their considerations into account. While it may be helpful to keep your studio running on paper for business and legal reasons, know that many successful developers before you have retired their indie game hat for one reason or another.

Business Model

Starting your own studio means running a business. In this section we will discuss how indie game developers can start their companies, and answer some common financial and legal questions. Note that your studio does not need to register as a business, unless you plan on making significant revenue or treating your fellow developers as employees. Since this article is written for those interested in heading their own profitable studio, we have focused on LLCs with only one owner or sole proprietor. However, keep in mind that there are many paths to starting a company which may work better for you. If you prefer something more concise, you can check out a similar guide from this indie developer on YouTube.

Starting an LLC

An LLC is a limited liability company, a model which gives small business owners the same level of protection as a corporation without the weight of corporate tax. For our purposes, this means two things. First, entrepreneurs heading an LLC pay their taxes at individual income rates, paying virtually the same as an employee of another company who makes the same salary. Second, if their companies accumulate debts or financial losses, these owners cannot be held personally liable, meaning that their personal assets cannot be seized.

Most indie game studios in the U.S., regardless of the number of employees, are likely to start as an LLC since there are few barriers to entry and the process is relatively simple. Future studio owners should research their state statutes to know what the requirements are. Once you know the rules, either go through your state’s official registration channels, or consider working with a platform like Rocket Lawyer or Legal Zoom to sign all of the paperwork and handle the incorporation process. Note that, although the final price tag should be manageable, there are some fees, both to register with most local governments and to use the legal service.

Assuming you started the company on your own and without a partner, you are now the sole proprietor of an LLC. While this title is important for legal reasons, it really just means you are a small business owner. Congratulations! In the next sections, we dive into what exactly this means.

What is liability?

The LL in LLC stands for Limited Liability, and while you may never actually need it as a video game developer, you will regret it if something goes wrong. Simply put, if a bad thing happens and your business is on the hook for money, your personal assets are protected from seizure. Say your business takes out a loan but fails to pay it back or breaks the terms. The bank or provider will not be able to come after your car, house, personal bank account etc., only the assets owned by your business. The same applies for lawsuits. Say you launch a video game with intense flashing lights, but fail to adequately warn consumers. This leads to a seizure in a photosensitive player, who sues you for their hospital bills. Unless the lawsuit names you as a defendant, the court can only go after the business’s revenue and property. However, the most important thing to remember about liability is that it is limited. You do not have guaranteed protection in the event that something goes wrong, which is why it is essential to balance your budget and ensure your products are safe.

Salary

What you pay your employees is entirely up to you, so long as you keep accurate payroll records. However, paying yourself as the studio owner is where things get complicated. Since you are presumably the sole owner of the business, your income and the company’s profits are considered one of the same. This means that you will not be filing separately for the LLC and yourself: instead you will include all business income in your personal return.

Business Expenses

Your studio’s operating costs, money spent on things like building a new work PC or purchasing office space, can be claimed on your tax returns as business expenses. These qualify as deductions, values subtracted from your income as the sole owner of the LLC. While the IRS keeps a thorough list of what does and doesn’t count as a business expense, which you can read about here, the majority of purchases you make to keep your company running qualify as a deduction. Keep in mind that your own salary, aka the profit earned by your company, cannot be claimed as an expense. This is because, as the sole owner of the company, you are not technically counted as an employee. Any money that goes into your pocket from the business counts as income, not an expense. This distinction is extremely important since it can protect you from fraud charges in the event of an IRS auditb.

There are many challenges to starting your own studio. As a developer, you have to plan, inspire, code and revise. As a business owner, you must take great care to ensure that everything operates legally and safely. But whatever happens, keep in mind that mistakes are normal. Even the most successful indie games can have humble beginnings.

“The more time passes, the more impressed I am with what we managed to pull off. We were just kids and we had no idea what we were doing. I cannot stress enough how little we knew what we were doing. To be fair, I still don’t know what I’m doing,” said FEZ Developer Phil Fish.