How to not fail as an Indie Studio

So, here I was minding my own business, rollerskating on a Tuesday night here in Austin, when suddenly from the darkness I am approached by a young man. We briefly exchanged greetings and he launched into the most amazing and convoluted story about how he met a guy in San Antonio at a roller rink who was wearing a Unity t-shirt, and started chatting him up about game development. And before he got very far into the story, I knew he was talking about my friend Mark... or as his students know him, The Dark Lord of GPA Destruction in the CS department at Trinity University. Apparently, the conversation went something like:

Mark: "Go find the guy who dances on skates in Austin, and go talk to him"
Youngster: "You mean Alberto, on rollerblades?"
Mark: "No, Jason. He dances with his lady. On quads."

Small world. So, here he is in front of me, asking for advice about game development, specifically about being an indie studio owner, as he already has worked in the industry for a couple of years in a startup and is thinking about doing his own thing. Ordinarily, people ask me about what it's like to make games. It's a job. Ordinarily, people ask me about what recognizable games I've worked on. Too many to count.

Nobody has ever asked me about what the best advice I could give about starting or running a studio. It was startling. But it also clarified something that I'd thought about many times in passing, but had never crystalized into a single statement until that very moment. The most important factor is this:

Use OPM (other people's money), but not for the obvious reasons.

Game developers love games, or we wouldn't be in this business. Every last one of us join the industry to create something, and we all have an itch to scratch, a pet project we want to bring to life, some concept that we think can be the next mega hit... if only we can get a chance to make it. Very few of us ever get a professional chance. That's the dirty secret of the games industry. We work for years hoping there's an opportunity to pitch our fantastic idea, and the truth is, we all have ideas and there's almost never room for your ideas in someone else's pitch session.

So, the way most people make their own games is by starting an independent studio. Assuming you have the chops, the time or money, and a network of skilled developers who will work for cheap or free, it's possible. In fact, it's the way most small games are made.

Ok, got it, you say. But why use other people's money?

Business folks will say that's a savvy play, to make sure you aren't going into debt and you end up risking someone else's capital to do something risky like make a game. Look up any article on indie game development sales, and it's abysmal. Some will make money, but it's around 1% that are profitable. Using OPM, you aren't the one losing out if you fail. Sure, but that's not the reason to do it.

The reason to use OPM is two-fold:

If you can't convince someone else so completely that your idea is awesome and can make money, it probably isn't awesome, and won't make money. You're emotional about it, and may be unable to think about games as a business, which it is.
At some point, you will reach the point in development when you should decide whether this product is worth spending more money, more time, more sleepless nights pursuing, or if you should pull the plug. Throwing good money after bad is called the Sunk Cost Fallacy. It assumes you have reason to continue investing because you are already heavily invested. You need someone else making that decision as an indie because it is nearly impossible to be objective in this situation, when your entire life savings and months to years of your life have been poured into something. Somebody else needs to be the one to help you pull the plug when you can't.

And before you flood my inbox with emails telling me how many indie games would never be made, or how many successes there are despite not following this advice... that's all true. But for every 1 that are successes, there are 99 that you will not hear about, and those folks are equally important.

If someone tells you they plan to mortgage their house and buy lottery tickets with all their savings, what would you tell them? You'd flatly say you're an idiot, and you'll lose your shirt. Game development is very much a lottery at the entry level. The better business sense you can collect about you, the higher your chances of success. Using OPM requires a business partner, and consequently, dramatically increases your chances of success.

For all you lovely developers out there, best of luck to you whatever your situation. It's a tough industry, and we can all use help now and then. Find mentors in the industry, get to know studio heads in your town, and meet people outside the games industry who know how "Real Businesses" work. Ask questions. Listen. You may not succeed, but you won't fail with your eyes closed either.