One Way To Divide Your Company Equity At Start Up

While I have always advocated offensive goals such as getting better at your craft, finding a team of like minded people, shipping a portfolio of innovative games, and not worrying too much about defensive details such as contracts, NDA’s, company structure, etc. many people are still concerned with these issues. Since Push Button Labs recently went through getting our company set up, I thought I would give you just one example of how to get through some of these issues and explain how we did it.

Dividing Company Equity Is Not As Easy As Cutting Pizza

Dividing Company Equity Is Not As Easy As Cutting Pizza


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Motivation

I stumbled across this YouTube video of Gary Vaynerchuck of Wine Library TV giving a presentation at Web 2.0 Expo. At first I just thought the guy was a dick, and he even calls himself that at one point in the presentation, but it turned out to be a fascinating 15 minutes of video. Gary essentially says what I have been saying, i.e. make sure you love what you do, work hard, and things will work out, but he says it in a much more succinct, hard edged way than I do. Check it out, and I think you will see what I mean:

-Jeff Tunnell, Game Maker
Make It Big In Games
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How Much Work Does It Take To Become A Great Game Developer?

Malcolm Gladwell, the author of best selling books such as Blink and The Tipping Point, recently released a book entitled Outliers. Gladwell’s books sell incredibly well, and I own two of them, but I have found that the premise and promise of his books is always better than the writing and delivery, which I find kind of dry and long winded. My personal opinion aside, a meme that came out of the Outliers book is the proposition that to get truly great at something takes 10,000 hours of hard work and practice, which at the full time rate of 2,080 working hours per year is five years.

I agree with Gladwell’s take on this. What? You mean it is going to take me FIVE YEARS to get good at making games? No, I’m saying it is going to take you five years to get good at what you do, but it may take much longer to really make it.

Of course, you can point to some products like iShoot, where the developer had never made a game before and is now quitting his day job due to his game’s success on the iPhone. Sure, there will be some lucky developers that break out and get a hit before they have put in their time, but those will not be the norm. Seth Godin has a good take on this, and argues that the 10,000 hours can vary depending upon the market, and smaller, newer markets are more likely to have lucky break out hits. He puts it really well with this statement:
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What Is My Game’s Sales Potential?

Make It Big In Games community member, JefferE, posted the following question in the MBG forums:

What I’ve always struggled with that I’d like to hear your slant on is how to judge if a game is worth producing. That is, you’ve got an idea, you think its a good one, but how do you go about judging the sales potential? There are very few resources that I’ve found that publish stats on game sales. For a very simple example, you’ve got a Match 3 or Hidden Object game (ala Big Fish Games style). How do you find out how much potential that has? What’s the ‘average” return on a game like that if it sells bad, good, or is a hit? Is it $1K – obviously no one would produce them, is it $10k, $50K, $100K? Basically, how do you go about figuring out if its worth even starting a project – beyond dreaming, right sizing, and just going for it?

How Much Money Your Successful Game Makes

How Much Money Your Successful Game Makes

This is a great and basic question that all Indie game developers struggle with. If you are a “professional” game developer working at a big publisher and thinking of making the leap to Indie or a student trying to decide whether to hire on at a publisher or try it on your own, this is a nagging question. Well, I’ll get it over with an tell you right now, there is no simple answer to this question. I have tackled this question before in a 2006 MBG post entitled How Much Money Can Indie Games Make, and even thought the market has changed a lot in the last three years the answer is basically the same. So, click back, brush up on that article, then read the rest of this post. Continue reading

Hard To Believe: Three Years Of Blogging

Wow, where did the time go? On January 11, 2006, I started this Make It Big In Games blog. In case you can’t tell, the title is a tongue in cheek reference to the cheesy real estate and self help ads that try to sell you on getting rich by following their methods. In contrast, just making a living in the games business is anything but easy, and I have done my best to get that point across in this blog.

Sim City As Blog Metaphor

Sim City As Blog Metaphor

In spite of my focus on the difficulties of making a living making games, my most popular posts have been related to how much money you can make by making games. In fact, my most popular post, How Much Money Can Your XBox 360 Game Make, was one of my first posts, getting picked up by Major Nelson’s, Kotaku, etc. It was one of my first posts causing my traffic to go through the roof. I thought this blogging thing was gong to be easy.

Well, blogging is not easy. Even with a small blog like this, thinking of article ideas is always in the back of your mind, and getting around to writing the articles is hard work. Because of that, I have had long periods where I didn’t write articles, and my Alexa traffic rating went down to around 800,000. However, since the middle of 2008, I have tried to write at least one article per week, and my Alexa rating has dropped (which is good) to 282,050. In addition my Feedburner stats say that over 1,200 people read my articles through an RSS reader.

While it sometimes seems kind of like a waste of time, I always like to think what it would be like if all of those readers were in a room at one time. I’m not a great public speaker, and crowds make me nervous, so I know that I would be absolutely nervous speaking in front of the MBG crowd. That is very cool.

Having a blog reminds me a little bit of playing Sim City, i.e. you write a post, which is like zoning land, and see if you get comments and good feedback which is like the Sims moving in. Just like Sim City, when it works, it makes you feel good. For 2009 and beyond, I’ll continue “zoning and building” with new articles, additional features like my newly added community forums, hopefully bringing back the MBG Wiki, etc.

Lastly, make sure to visit the new forum section of MBG and let me know what you would like me to blog about in the future. Having the forum section is going to be a great community builder.

-Jeff Tunnell, Game Maker
Make It Big In Games
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Odds and Ends

Before getting down to business here in 2009, I have a few small items to catch up on.

Congratulations to GarageGames’ Torque Game Engine Advanced for winning the 2008 Game Developer Magazine Frontline Award for Best Engine. Matt, JoshE, Ken, Deborah, et.al. in the TnT group have been working their butts off bringing Torque to a new level of professionalism, and it is great to see their efforts recognized.

Ryan Wiancko over at Industry Broadcast has been taking blog post from developers like myself, Dan Cook, and Troy Gilbert and turning them into podcasts. So, load up your iPod for your next road trip and catch up on your neglected reading. Maybe now that I have mentioned Ryan, he will spell my name right on my articles. :D

Jeremy Alessi, of Alessi Games, just put up a nice article on Gamasutra about his experiences creating a game for the iPhone. I have worked with Jeremy since the early days of GarageGames where I encouraged him to finish Aerial Antics so we could publish it. Nobody works harder at game development, and it is nice to see him getting some recognition and success.

-Jeff Tunnell, Game Maker
Make It Big In Games

Grand Theft Share Price, Corporate Doublespeak, pt. 2

As further evidence of my MBG post Why I Don’t Own Stock In Game Publishers, I present Take Two.

Where Your Investment Is Going

Where Your Investment Is Going


After fending off Electronic Arts’ hostile take over bid earlier this year, Take Two just announced a fourth quarter loss of $15MM, and their projected 2009 estimates have gone from a profit of $1.21 per share to $0 per share. Remember, 2008 was a GTA year, and they still lost money. What was Strauss Zelnick’s take?

“The Take-Two Chairman expressed marked concern about the economic climate, but urged investors that the company is well-positioned”

Sound familiar?

As an exercise in futility I did a few calculations to see if Zelnick was right in fending off EA’s hostile bid. Let’s see, EA offered $2 Billion in cash in March of 2008. Take Two’s ($ttwo) stock was roughly $15.85 per share before the bid, and the day of the bid, the stock shot up to $26.89, roughly the value of the offer. Zelnick, in classic Jerry Yang of Yahoo’s amazingly greedy style, said the company was worth much more. After several months of haggling, EA pulled out. Today $ttwos share price was $8.43 for a market cap of $654MM, which, for those without a calculator, is over $1.3 Billion less than the earlier ALL CASH offer.

There is no GTA coming out next year, and probably not the year after. If the $ttwo share price is worth a couple of Starbuck cappuccinos at the end of a GTA year, what will it be worth next year? Not $2BB. Good job, guys.

On the other hand, I bet EA is happy they didn’t shell out the $2BB in cash. They just announced more layoffs of up to 1,000 people and the closure of Black Box studio (plus seven others). They are going to need the money to get things turned around.

-Jeff Tunnell, Game Maker
Make It Big In Games
Photo by Jarlhelm.

Fishing Girl Is Fun

Normally I don’t refer to specific games on this blog, but I can’t help it on this one because it is fun and it is a great example of how to make money on Flash games. A few months ago Dan Cook, of Lost Garden blog fame, created all of the art and a loose design frame work for the game, and is holding a contest to see what the development community can do with the assets and idea.

Well, Andre, from developer Luna Drift, took up Dan’s challenge and made a fun game that I have spent a lot of time on. I first ran into the game on the Flash Game License site (also a 2008 Biggie Award winner for Best New Business Idea), and watched the sponsorship bids go up to $4,000. Between Mochi Ads, site ads, and sponsorships, a real Flash game monetization process is starting to emerge.

Click on the icon below to go to the Jay Is games review and play the game.
Click to play Fishing Girl

Update: I wrote this post on Friday, and now it is early Sunday morning. Dan posted the contest results last night, and Andre won the Gold Medal! Congratulations!

-Jeff Tunnell, Game Maker
Make It Big In Games

Instant Action Reaches 1MM Players

Winner of my 2008 Biggie Award for Best Future Way To Play Games, Instant Action is really starting to take off.
InstantAction
Check out the story here on Techcrunch: Gaming Site InstantAction On A Roll.

“For instance, InstantAction, a gaming site from IAC-owned GarageGames, has managed to cross the 1 million members mark only 9 months after we covered their launch.”

That is great news! Congratulations to the InstantAction team. Of course I have inside information that I can’t disclose, but 2009 will be a big year for this service. IA will increasingly become a great place for Indies to make money.

-Jeff Tunnell, Game Maker
Make It Big In Games