The harsh reality of gamedev — the real profit of a successful project en ru

The creative director of Moon Studios (developer of Ori) shared on X (Twitter) some "sad" statistics about the revenue from a successful debut game by unnamed developers that sold two million copies. The tweet is discussed on Reddit.

This sparked a lot of thoughts, and I’m going to share every single one of them with you — whether you like it or not :-)

We can look at this situation from a lot of different angles. There are many nuances, as they say. No single point of view will reveal the whole truth, but if we gather them together, we can get a more or less complete picture.

Everything is terrible in gamedev

To earn money, you need to make a very successful game. A lot (most?) of PC games do not break even; even good games only break even.

Gamedev still isn’t a carefree pirate sailing — it's a complex expedition on someone else's money. If you are an extremely charismatic and lucky pirate, you will have some freedom of action. Still, usually, you serve the interests of capital owners or the mass market of players.

The only true freedom in gamedev is independent author-driven projects, which are often developed as a hobby.

A "predatory" publishing deal?

Based on the numbers, the agreement with the publisher was not in favor of the developers. I called it predatory for dramatic effect (it may be ok), but these terms are somewhere in the lower third of the market (as I saw it a year ago when studying such practices for world builders).

A 70/30 split with no bonuses for meeting metrics (for delivering on time, within budget, with a good rating, selling over a million copies, etc.) is quite greedy for a contract with people who can create a game with millions of copies sold. They may have been complete unknowns at the time of signing the contract, but still.

Possible planning mistakes?

Mistake 1: Too low price?

Let's recalculate the numbers based on a price of $25 (+$5):

• 2 million copies sold.
• Development cost — $10M, funded by the publisher.
• The publisher also spent $2M on marketing ($12M total).
• The game is priced at $25, but with discounts (sad reality), the average price is around $12.50.
• Total revenue from sales was $25M.
• After deducting Steam fees (30%), $17.5M remains.
• The publisher, exercising their preferential right, takes the first $12M to cover costs.
• The remaining $5.5M (instead of $2M) is split according to the agreement 70/30 in favor of the publisher.
• Developers receive $1.65M.
• After deducting the cost of tools (~$15K) and taxes (around 50%), approximately $817,500 remains (instead of $292,500).

We can see that by increasing the price by $5, the developer could have earned 2.8 times more.

Of course, by increasing the price, we can not guarantee the same sales volume. However, in the case of a very high-quality and successful game, in my opinion, the drop would be significantly less than the price increase.

Even in the case of Ori, we can see that the first version of the game has a price of $20, and the second — $30 — the developers drew conclusions.

Mistake 2: Something with taxes?

A 50% tax rate for the company seems like a lot. In many countries, even if you withdraw money from the company, the tax is progressive, and it is not a fact that it will reach 50% of all income.

I would recommend consulting with tax advisors in such cases.

Generally, if you have a budget of $10M, it makes sense to consult tax advisors and lawyers before spending that money. There is a chance that maintaining proper records in documents and invoices can help save on taxes and ultimately result in a higher return.

Hidden profit

This is the most interesting part and what was clearly omitted from the original post.

Releases on other platforms

Successful games are a must-to-release on other platforms. Often, such work can even be outsourced. Releasing on consoles like Nintendo Switch, Xbox, and PlayStation can significantly increase revenues.

Related products

A successful game not always, but often means a successful intellectual property. This means that various products can be released based on it.

For example, a quick Google search reveals that Ori had plush toys released.

Besides toys, there are books, t-shirts, stickers — anything you can think of.

These side products don’t always bring in much, but you can outsource them — look after the pennies and the pounds will look after themselves.

Salaries of developers

Because salaries weren’t mentioned in the post, it is reasonable to assume that all developers, including the company founders, were paid. Maybe not as much as they should be, but in a way that allowed them to live and perhaps even save some money.

In other words, the mentioned final income is a company's money, not the developers' money — developers' salaries are in $10M development cost.

The mature company and team

The most important and valuable!

The organizers of this entire enterprise gained valuable experience, established connections, built a team, and formed a company.

In effect, the money from the publishers was used to create a company and assemble an experienced team that has proven, in practice, its ability to produce successful games. Work processes were established, many everyday gamedev routine issues were resolved. Even CI/CD, I believe, was set up.

The company and the team are an epic asset that cannot be ignored:

• The next publishing deal will be more favorable.
• The next game will be made faster and with higher quality.
• The company holds some intellectual property that can be utilized in the future.
• The company has a fanbase that can provide valuable support in marketing.

Play the long game

Here are my personal beliefs. They are about the whole "gamedev situation" not about the specific case of the original post.

If you prioritize money over self-realization and bringing value to people, do not enter the gaming industry. There are simpler ways to make big money. You will do good both to yourself and to the people who won't have to play your junk.

If your goal is to express yourself through the finished product — do not go into big projects, do not start them on someone else's money. Money and the mass market impose severe restrictions on creative freedom [ru] — you will either have to step over yourself or go bankrupt.

Most big-budget projects are just chewing gum for the brain. The same goes for most blockbuster movies.

The large projects in gamedev are good for narrow seasoned specialists. If you like making the coolest shaders, or drawing the hairiest NPCs, or writing dialogues that players read 2% deeper than competitors — then AAA is for you. But keep in mind that, on average, your project will be high-rated chewing-gum [ru].

And it is possible only if you are already skilled specialist. Otherwise, you will end up on an assembly line with monotonous tasks that won't let you grow.

And even if you are skilled enough, not everything can go smoothly. Have you recently seen mind-blowing AI in AAA games? Or a story that really pulls at your heartstrings? You can find something like that in AA, maybe even in A games, but not in AAA. And there are professionals who would like to do this (even I wanted to go into game AI, but I got an arrow in the knee), but AAA budgets are not allocated for this, because the mass market does not appreciate it.

So, what should we do?

Do not chase millions, do not play the lottery.

Instead, build a sustainable business step by step. Start small: create a small team that produces small but solid games, gather a community around you, grow gradually, and incrementally increase the scale and complexity of your projects.

This is also not easy, emotionally even harder. But this approach, in theory, will give you the freedom and space for maneuver that the author of the original post complains about.

And what's most amusing is that the team from the original calculations probably does exactly that. And, most likely, they are doing well — steadily growing, gaining more freedom with each step.

Possibly, they should not have aimed so high with the first game, and the calculations would have been more pleasant, or not. They took a risk, aimed high, and won — no one judges the winners :-)

So if you believe in yourself and see yourself as a winner, do what you believe in, what you think is right. But remember, it is your own risk.