While some suggest the shortest distance between two points in forming a business may be a direct path, that isn’t the route taken by budding entrepreneurs Gregory and Melissa Avery-Weir.
The Charlotte couple, each 30, formed Future Proof Games Inc., an independent video game development company, in 2012. Rather than plunge headfirst into the business and abandon other sources of income, they took a learn-as-you-go approach in developing strategy and tactics for success.
Though they’ve enjoyed some recent success landing their conversion-focused adventure game, Ossuary, onto the large online distribution platform Steam, they’ve yet to see a financial payoff that allows them to put full-time efforts into their fledgling business.
“I’m more fiscally conservative than Greg, and up until very recently I had a full-time job with benefits,” said Melissa, game developer and Future Proof’s chief project manager. “Greg is currently working full time as a web developer. When he comes off his project, I’ll likely find full time work. Eventually our hope is to be dedicated solely to Future Proof, but that is a ways off. ”
Large market, complex navigation
One certainty about the computer and video game market: It’s large and getting larger.
U.S. sales for computer and video games were $15.4 billion in 2013 according to market research firm, the NPD group. Additionally, 67 percent of all U.S. households play video games, as reported by the Entertainment Software Association.
While the market represents seemingly endless opportunities for independent developers, its fragmented nature, tightly controlled distribution channels, and lack of easily available sales data for analysis poses challenges for small developers lacking business experience.
“We didn’t start with a business plan, though we did have a strategy of getting into as many distribution channels as we could and building a following,” said Gregory, Future Proof’s game designer and chief architect.
“We had to learn about online storefronts and distribution channels, pricing strategies, how to reach out to the gaming press to promote us,” he said, “and learn the complex navigation of getting our game on Steam, the largest and best marketplace for games. It has been frustrating at times.”
Early on, the Avery-Weir’s primary source of industry data early was from the online community of game developers. They also found a wealth of information and a network of contacts by attending the Game Developers Conference in 2013 in San Francisco.
“It was a large investment,” said Melissa, “But very worthwhile in terms of connections made and learning business pointers from the panels, such as how to better plan and what measurement yardsticks to use in evaluating our progress.”
Capital requirements for Future Proof have been minor. Accounting and incorporation costs and other small administrative expenses provided a low barrier for entry into the gaming arena. Sweat equity, personal time creating and marketing their products, is their largest expenditure.
Their revenue to date has also been small. With only one game on the market currently (two additional products are in development) they’ve sold about 500 units with sales in the low four figures.
Dr. Farhad Javidi is professor of simulation and game development in the Digital Media, Journalism & Communication Division at Central Piedmont Community College. Javidi is an executive board member for the nonprofit International Game Developers Association, an industry support group. He founded the IGDA Charlotte chapter, which he says has more than 150 members.
“Future Proof’s experience forming a business as independent game developers has taken a fairly typical route,” said Javidi, an industry contact and resource to the couple.
“Essentially there are three primary categories of developers. Large fully capitalized companies such as Microsoft. Next are small to medium-sized firms that may have developed a hot product and secured outside financial backing. And finally, small independents who may look to crowd funding vehicles like Kickstarter or Indiegogo for capital needs.”
Education and industrial game markets
Smaller game developers may find better opportunity in exploring go-to-market strategies that place product development second to market exploration and analysis, only then creating products to match identified needs, according to Javidi.
“Many game developers are passionate, creative people who bring fully fleshed out concepts into the entertainment marketplace, which is very competitive and difficult to stand out in,” said Javidi. “The need and applications for gaming in education and industry is taking off and may prove a more lucrative market and one with easier access.”
Healthcare, manufacturing, and education are areas where grant money, sponsored game design competitions, and access to resources represent opportunities for game developers .
“Gaming in these areas is only in its beginning stages,” said Javidi, “The need for talent here will only continue to grow. There are incubators such as American Underground in Raleigh that are becoming hotbeds for growing this type of talent.”
Three years into their business, the Avery-Weirs have developed a revised strategy, using their hard knocks experience in revamping a go-forward business plan.
“Going forward we are focusing on brand development, creating a more prominent name in the market place,” said Melissa.
“Another decision we’ve made is to diversify our revenue stream by building and selling tools to other developers,” “One last shift is to look at revenue in an entirely different way. We’re focusing on sales relative to development costs as opposed to looking at annual sales. We want to achieve revenue that is at least five to ten times greater than our cost to produce.”
Though they’re not getting rich, the Avery-Weirs are fulfilled creatively and feel they have a viable business model that one day will allow them to be fully invested in their business.
“I think we can be full-time with this in less than five years,” said Gregory. “I really do.”
Gregory and Melissa Avery-Weir offer the following advice for small independents starting a business on their own.
▪ “Read as much as you can and stay current on your industry,” said Gregory. “Don’t just read about the successful startups or products, try and gain understanding around all aspects of your industry.”
▪ Be willing to share. Gregory said he’s been very open about his experiences through his blog. Sharing his frustrations about gaining entry to the Steam online store garnered a great deal of feedback and input from other developers that he found helpful.
▪ Have realistic income expectations. “We know this is a high risk business where we won’t get wealthy,” said Melissa. “Our goal is sustainability and to be happy.”