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Armchair Guesstimation: What would it take to run an MMO company?

BearKnightBearKnight Member CommonPosts: 461

I've found it fun from time to time to see with numbers, and plan out, what it would take to do A, B, C, D, etc. I've done this with "Best possible computer rig ever" and parting out the best PC i could build on Newegg just for fun. I've also done this with server hardware, code for games/servers etc etc.

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So I was wondering what you thought you could do as an indie developement company, and what you would need to break even each month. There might also be some of you out there with experience on certain topics such as building rent payments, how much internet costs for a company like EvE online etc etc.

So, here's how posts would work:

-You post a hypothetical target for concurrent subscribers (since subscribers are a constant inflow of cash, they can be tracked statistically).

Example: Your target, to be reasonably successful in your own eyes as an Indie developer, is 50,000 concurrent subscribers paying $10 per month to access your product. (note: concurrent users [ccu] is different than concurrent subscribers [ccs]).

This means you have an inflow of $500,000 per month before taxes etc to run your company. 

 

-Next, you lay out what you "expect" your running costs to be in order to maintain your product.

Example: You have 20 employees total, this includes development staff, management staff, HR, etc.

You also have to guestimate how much per month you're spending on internet, building rent, utilities for the building, server hardware costs each month (stuff breaks, or you have a set pool of $$$ set aside each month for new equipment should any become damaged).

You also must guestimate salaries for your staff each month.

Putting this all together means you guestimate your running costs on a monthly basis to get your break-even point.

You will also need to list any licencing fees you'll probably incur such as CryEngine, UDK, Unity4, or some other engine unless you build them yourself.

Don't forget taxes so you get your pre-costs number to work with on a monthly basis. If you don't know this just add another 20% onto your running costs total to get a "near worst case" scenario so you have some breathing room you know about.

Did you factor in costs for support staff as well? These are important as you don't want developers being forced to also be support technicians answering tickets etc! GM's and Guides for your product are also in this "Support" pool.

QA staff?

Facilities staff? (janitors, etc)

 

 

-Lastly, you calculate everything together and get your minimum break-even point, excess, etc.

 

 

 

Conclusions:

+What is your break even for monthly costs for your indie product? Do they come near, exceed, meet, or fall short of your target audience #? (ie: is a required 20,000 to break even each month too close to your target of 50,000 to be considered a personal success?)

+Is your initial estimate on monthly subscription cost (example used was $10/month) high enough to justify running costs?

 

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I find mental exercises like this, well informed or not, can sometimes shed some light on why companies do what they do sometimes, or could help other indie developers trying to get into the market understand the bigger picture of the company needed that will revolve around the game they want to make and support over time :D!

 

 

Sincerely,

Bear

Comments

  • WizardryWizardry Member LegendaryPosts: 19,332

    Far too many factors,i would need 10 paragraphs to outline how each possible scenario would work.

    An example would be if i have say Epic games in collaboration,what type of employees,some are very knowledgeable but require huge salaries.

    Then the type/genre of game can change the overhead/profit/costs by a 1000% and then LUCK is always a factor that cannot be factored in.

    Game development is for big business that already has the money to invest and in many cases to also lose.A perfect example is TESO,Zenimax is NOT making that game without Providence Investments giving them 450 million over two years,no way no how.

    If somebody gave me that kind of cash,i wouldn't even need to look at numbers or worry about time lines or overhead.

    Then we have Bioware,they were funded by EA,they sign a working contract,so again Bioware is not making any MMO without the big money spenders backing them up.

    The business end of game development is left up to the owners and CEO,i would prefer to just be the game designer and told what my budget is,then i would say yes no maybe so.

    Never forget 3 mile Island and never trust a government official or company spokesman.

  • WereLlamaWereLlama Member UncommonPosts: 246

    Indie project without top notch graphics and targeting an initial platform that you can compete in, id say plan for :

    50 - 100k per team member per year.    Indie team of two people that is only 100-200k per year.

    Licensing and server costs are minimal.  Compensation is the lion's share of costs.

    Also, I love the ambition to run one's own company but a good test (not the only one mind you) to see if you make your own online game and manage employees, is first raise the capital yourself doing some sort of management / leadership job.

    I wish you lots of success.

    -WL

     

     

  • sunandshadowsunandshadow Member RarePosts: 1,985

    Slightly confused - I would think a "development" company would have to create a game before getting any monthly income from it?  Are you assuming here that you took over running a game another company created?  In that case you'd probably put down millions of $ in advance and then your monthly profit would partly go to paying off that investment plus interest.  Also, is there an advertising budget in there somewhere??

     

    (I'd never personally try to run a company, but I'd like to work with someone who could.)

    I want to help design and develop a PvE-focused, solo-friendly, sandpark MMO which combines crafting, monster hunting, and story.  So PM me if you are starting one.
  • MMOExposedMMOExposed Member RarePosts: 7,387
    Originally posted by sunandshadow

    Slightly confused - I would think a "development" company would have to create a game before getting any monthly income from it?  Are you assuming here that you took over running a game another company created?  In that case you'd probably put down millions of $ in advance and then your monthly profit would partly go to paying off that investment plus interest.  Also, is there an advertising budget in there somewhere??

     

    (I'd never personally try to run a company, but I'd like to work with someone who could.)

    If that was true, we would almost never get any MMOs.

    Philosophy of MMO Game Design

  • QuizzicalQuizzical Member LegendaryPosts: 25,359
    If you've never run your own business before, you will neglect some important costs.  And even if you have, you will still neglect some important costs in an exercise like this, though possibly fewer of them.
  • IGaveUpIGaveUp Member Posts: 273

    Judging from the releases over the past few years, I don't think even the major players are doing well bringing a game to completion, with quality polish, on time and under budget, and with a sound business plan.

     

    So for the OP's question: If they can't do it well, I doubt anything I say could be remotely meaningful.

     

    Lots of money and damned good management?  That's my estimation.  :-)

     

  • MMOExposedMMOExposed Member RarePosts: 7,387
    Originally posted by RealmLordsKen

    Judging from the releases over the past few years, I don't think even the major players are doing well bringing a game to completion, with quality polish, on time and under budget, and with a sound business plan.

     

    So for the OP's question: If they can't do it well, I doubt anything I say could be remotely meaningful.

     

    Lots of money and damned good management?  That's my estimation.  :-)

     

    thats mainly due to other reasons.

    Philosophy of MMO Game Design

  • DarwaDarwa Member UncommonPosts: 2,181
    You gotta have faith.
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