Did you miss a session from GamesBeat Summit Next 2022? All sessions are now available for viewing in our on-demand library. Click here to start watching.
By this point, hopefully we’ve all laughed and moved past the idea that “just make a good game” is good business advice. However, it’s a little-discussed truth that there are smart, savvy indies that do indeed follow this advice, and indeed knowingly risk the closure of their studios. And even if those studios close, both leaders and employees can potentially come out the better for it.
Most people shouldn’t follow it, but “make the best game you can, no matter what the cost” can actually be a strategy for growth, in certain contexts. I have many disclaimers, and this argument requires a bit of nuance, so hear me out.
Consider if you were to start a studio today. Would you rather lead:
- Studio A, which creates a series of profitable but otherwise unremarkable games under budget, then closes.
- Studio B, which creates one masterwork, which doesn’t earn back its investment, then closes.
There isn’t a right answer here, but knowing what your answer is, and committing to it, is essential.
Pros and cons
Having led Studio A positions you to have learned quite a bit about business development, production, and leadership, and the fact that your studio existed for awhile is an interesting fact. It seems like you’re rather responsible and resourceful, probably. You could be considered by studios as trustworthy with similar amounts of cash and scope, as your studio closing was just a bit of bad luck.
Meanwhile, having led Studio B positions you to be considered a creative genius. The fact that your studio closed is a tragedy and might be mourned by your fans for years or decades, as everyone wonders what might have happened if the market had been “ready” for your brilliance.
To put it another way, as a studio head, would you rather definitely still have this job for another year, but compromise on the game’s vision, or would you rather make your game just a little bit better and maybe not have this job anymore next year?
Obviously, this is a bit of a manufactured binary, since you can make brilliant games within a budget (at least, with contingency), and many studios do — but when push comes to shove and money gets tight, something has to give.
When I started Kitfox in 2013, I chose A without even considering B as an option. And honestly, with my skills and experience at the time, maybe B wasn’t an option for me anyway. I probably couldn’t have executed on a grand vision.
Starting Kitfox with what I know today, maybe B would be more tempting. I’m a game designer primarily, and many of my design heroes are B-leaders all the way. Creative risk-taking is a big reason why we tend to admire game designers in the first place. I have no idea how Kojima Productions runs; they might be an A-type studio. But if they were B-type, and even if Death Stranding flopped and then Kojima Productions closed, it would still probably be a beautiful, unique game. So Hideo Kojima’s fans wouldn’t hold it against him, or if anything, they might double-down on their adoration of him.
We will survive
To be fair, most studio heads prioritize their studio’s survival highly, and for good reason. We need to pay rent and the future is uncertain and precarious, so we hustle for money in various ways, and that takes precedence over everything else. Ideally, our games sell well enough to finance our dreams, but work-for-hire, investment, Kickstarter, exclusivity deals, and other funding sources also help extend our runway. When a studio closes, (and if Kitfox ever closes), it’s generally because studio leaders tried to scrape together the cash, and various backup plans didn’t come through.
However, some studio heads have other top priorities, and when their studio closes, it was something they decided they could tolerate. Obviously, nobody goes to bed praying their studio closes, but it also doesn’t bother some people. If you have enough clout, network, skill, or personal wealth or privilege, there is not much reason to make studio survival a higher priority than, say, the quality of the game. If you know you’ll land on your feet, and can execute on a brilliant vision, why not keep putting everything in until you can’t anymore? After all, as long as the game is excellent, there will be more jobs and opportunities waiting for you later. For these people, it’s a big, but calculated, risk. We all want to make better and better games, and big bets sometimes pay off.
It’s also common for venture capitalists to hunt for (and, indeed, encourage) studios that are taking a huge but potentially hugely profitable risk. “Fail early,” they say, because they want you to shoot for the moon, and for one in their 10 investments to pay back all the others. But that isn’t exactly what I’m talking about. There are commonalities here, but the difference is that the moonshot of some game developers isn’t profit-driven — money is usually a potential side-effect, not the goal. These indies usually aren’t risking everything in order to get rich. They’re risking everything to make what they really want to make, and trusting that the results of that striving will lead to stability later.
Learning the right lessons
But there are problems with prioritizing “game quality” over survival, even if all goes well:
- It contributes to survivorship bias, which leads to
- Up-and-coming studio heads often taking the wrong lessons, and no matter what,
- Ethically, our employees and partners have to be onboard
Survivorship bias is when we look at all of the surviving indie studios and draw conclusions about why they succeeded (or why others failed). When you’re a Studio B-type, and your game actually succeeds, you’re the most delicious kind of Cinderella story in the spirit of Indie Game: the Movie, another Minecraft or Stardew Valley. You put in the effort, you committed to quality, and with a little fairy dust, kapow, you’re an inspiration and you’re financially secure.
What this perceived pattern ignores is that for many other B-type studios, they make the same kinds of decisions, they commit to quality, sometimes even win dozens of awards, and when their game underperforms commercially, the press doesn’t know what to say. It’s not a good story. Sometimes the developers can personally leverage a career move out of it, but the studio is out in the cold.
Even worse, many up-and-coming studios learn the wrong lessons and follow in the footsteps of these studios that don’t prioritize survival, without even realizing it. They unknowingly take huge risks, committing 100 percent of their resources into their first game to make it “the best game it can be,” thinking that that’s just how games are made, because that’s the success story that gets the most coverage. Even if an up-and-comer has neither the skills to pull off a remarkable vision, nor the fame or connections necessary to leverage their commercially-disappointing game into a career upgrade, still they put it all on the line.
Finally, as a studio head, taking these kinds of risks requires the full, informed consent of all of your employees. What kind of evil capitalist deliberately chooses to risk laying off their staff, in exchange for potential personal gain, without them knowing? (Answer: Many, probably, maybe even most, but we won’t get into that here.) Yet if I had to limit my hiring only to people who wouldn’t mind my studio closing, I would be very limited indeed. It’s rare to find an experienced programmer who agrees to maybe be laid off after the game ships, if/when it turns out those extra weeks spent improving the framerate were indeed as pointless as she said they would be.
How do you resolve that? Cofounders and entrepreneurs might take the risk in exchange for part ownership, but usually not a salaried employee. If you do however manage to find like-minded folks, this is a huge benefit of a co-op, offering fairer, more equal and transparent risk for everyone. Co-ops are still relatively rare, but hopefully becoming more common, alongside unions and other tools to prevent exploitation. For example, Dead Cells’ studio Motion Twin is famously a co-op, with no bosses and equal pay for all employees; Scott Benson and Bethany Hockenberry of Night in the Woods fame recently declared their studio would be a co-op. GDC recently had a panel on the subject from KO_OP, and I’ll be mentoring a panel there this year.
Because of these complications, most studios who practice B-style studio leadership are usually relatively quiet about it (though, as I mentioned, hopefully transparent about it internally). Unless they disguise their artistic risks as high-profit-potential, it can scare off investors, who may have thought they were betting on a market moonshot instead of a creative journey.
Some studios say they’re “putting everything” into the game as a tactic to appeal to fans as an underdog, and a way to motivate their employees to work harder, but actually have a fat cushion to lean on. But when a studio does actually put every last dollar into a game and runs on fumes, burning out the team along the way, it’s most often because someone at the top has decided that long-term studio health is secondary to some other motive. (Then again, it’s not like blockbuster games from giant corporations built for profit first don’t burn out their workers.)
The choices to make
Nobody should feel ashamed of making the choice to risk their studio’s closure in exchange for making a game they’re more likely to be proud of, assuming their employees and investors feel the same way. But if you’re less experienced, keep your eyes open to all the motivations your peers might have in choosing different business strategies and trade-offs. Don’t emulate your heroes without a thorough analysis of benefits they might have that you don’t. Most studios’ debut games aren’t profitable, yet many studios survive unprofitable first games. Choose your strategy wisely.
Right now, I primarily want Kitfox to survive, so I follow strategies for that.
If I wanted Kitfox to satisfy me creatively above all else, I’d follow strategies for that.
If I wanted Kitfox to be extremely profitable above all else, I’d follow strategies for that.
In short, I hope every indie knows which strategy they’ve picked, and what their priorities as a company really are, ideally before the money gets tight. I hope every indie who risks studio closure does so consciously, with open eyes, because it’s the right choice for them and their team.
Best of luck out there, no matter what your priorities are for your studio, in the short-, medium- and long-term. I hope all your investments (emotional and otherwise) are repaid tenfold.
GamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.