Indie Economics – Part 2


This is the second in a series of blog posts exploring the initial findings of an ongoing study of the IndieMEGABOOTH conducted by Dr. Felan Parker (postdoctoral fellow at Concordia University), Dr. Jennifer Whitson (University of Waterloo), and Dr. Bart Simon (Concordia University).

Hi everyone! Dr. Felan Parker here. I’m a postdoctoral fellow at the Technoculture, Art and Games (TAG) Research Centre at Concordia University and I’m working on the IndieMEGABOOTH study introduced by my colleague Jen in the last blog post. This week I’ll be discussing the economics of indie development.

We are living in the end times, if certain indie game bloggers are to be believed. The over-saturation of digital marketplaces like Steam is driving sales down, intensifying competition between indies, and making discoverability impossible, they claim, ushering in an “indiepocalypse” that will make small-scale, full-time indie game development (and overnight millionaire success stories) a thing of the past. Of course, as many people have argued, it’s probably not as bad as all that. That said, there are definitely major changes happening in the indie space, as mid-sized ‘triple-i’ studios occupy an increasingly large segment of the market, reorienting perceptions and expectations for smaller indies.

In this context, organizations like the IndieMEGABOOTH play a key role, putting the most interesting and inventive indie games in front of potential audiences and providing valuable resources and support. As one dev told us, MEGABOOTH provides ‘big opportunities for smaller devs’, and these kinds of opportunities are more important than ever. Many developers we talked to at PAX Prime 2015 expressed awareness or concern about this shifting terrain, and our survey data provides an interesting look into the economics of indie development in the age of indiepocalypse.

Household income

So, how much money do indie developers make in a year? On our anonymous survey, we asked IndieMEGABOOTH exhibitors about their annual household income. This question may seem intrusive, but it provides valuable context for understanding indie sustainability. As Jen’s blog post noted, almost 80% of the devs we surveyed identify as full-time indies, but this only tells part of the story. There’s a big difference, after all, between making games as a supplement to other sources of family income and relying on game sales to keep a roof over your head.

The average annual household income for MEGABOOTH exhibitors is between $72,520 and $78,826 USD (depending on how you factor several responses that inaccurately said ‘zero’). Does that seem high? Well, it is. According to 2012 statistics, the average annual household income in the United States is approximately $50,000, meaning that most of the indie devs we surveyed are well above average when it comes to economic privilege (in the top 34% or so). Keep in mind that this doesn’t mean they’re all releasing financially successful games (see below); in some cases, they are supported by day jobs, spouses, parents, or independent wealth.

Earlier this year, we saw a series of fascinating blog posts from prominent folks in the indie space “owning up” to the fact that they rely on the support of others in order to make games, in the name of greater transparency for aspiring indies. This doesn’t necessarily mean that spouses and family members are contributing directly to game production costs, but not having to worry about making rent and cost of living is a huge advantage. Parallels can also be found in recent studies that show most successful tech startups are operating with a golden safety net of family wealth and privilege: you need money to make money, and it appears that indie games are no different than any other business.

Funding sources

Graph 1

We know that many developers have a household income large enough to justify the economic uncertainties of being a full-time indie. But how do they actually fund their production costs? The most common forms of funding based on our survey are sales profits from previous games, Kickstarter crowdfunding, and personal savings. Given that over two-thirds of MEGABOOTH exhibitors are professional devs with at least one game under their belts, it makes sense that sales profits rank so high (I’ll discuss sales figures in more detail in a moment). By the same token, an established developer has a good chance at leveraging their experience and reputation into a successful crowdfunding campaign, and although it’s more of a gamble for new developers, a well-managed team with realistic expectations can still do well. There’s a bit of a negative stigma attached to risking your personal savings on an indie game passion project (one dev jokingly called it “the bad source”) but with many people listing it as their sole funding source or one of several, it’s obviously still seen as a worthwhile risk. Loans or donations from partners, families, and friends are ranked relatively low, but as indicated above some exhibitors may benefit from these sources in more indirect ways.

Region-specific grants such as the Ontario Media Development Corporation Fund and investment bodies such as IndieFund or private angel investors are also popular sources of outside funding. Somewhat surprisingly, not many devs said that they had applied for publisher funding, which may have to do with the growing gap between publisher-supported ‘triple-i’ studios and small-scale indies. It’s clear from this overview that commercial indie game development remains an exercise in piece-meal funding, varying widely from game to game, and that a large portion of a team’s time is spent hustling for money, rather than working on their current project.



The sales and revenue figures we gathered vary massively, from hundreds of dollars to millions,  reflecting the wide range of different scales at which indie developers operate. This makes our data set messy and pretty unwieldy, especially with one or two large-scale hits skewing the results. However, our questions about developer satisfaction and recouping development costs provide some useful insights into the goals and expectations of Indie MEGABOOTH exhibitors. While not all devs said their last game was profitable, 78% managed to recoup their development costs, which is encouraging to see given the state of the industry and claims of the indiepocalypse (with the caveat that for some devs ‘development costs’ may not include paying themselves, which would skew the data). At the very least, this means the MEGABOOTH is good at identifying commercially viable games to showcase.

Weighing the costs and benefits of showing your game at any given event is difficult. We don’t know what comes first: does exhibiting with the MEGABOOTH directly lead to greater success, or do successful games have a better chance at being selected for exhibition? We’ve discussed this at length with Kelly, Chris, and the MEGABOOTH team, and most likely it’s a bit of both. Looking at the differences between veteran exhibitors and first-timers on our survey, it seems plausible to say that the MEGABOOTH does provide a bump. All except one of 26 repeat exhibitors said that they are satisfied (“Somewhat Satisfied” to “Very Satisfied”) with their most recent game’s sales and/or download numbers, and 70% were able to recoup their costs. First-time exhibitors, on the other hand, report the full range of satisfaction (“Very Unsatisfied” to “Very Satisfied”), and only about half  recouped their costs. This does not mean MEGABOOTH is a guarantee of success, and we’re still investigating whether it’s statistically significant, but I personally think it indicates the value of support organizations and community networks in all aspects of indie development.

The last thing I want to bring up is a quirk in our findings. A full 75% of the devs who said they did not recoup their development costs still said they were satisfied (“Somewhat” to “Very”) with their sales/downloads. What’s that all about? How can you be satisfied with a game that doesn’t make back what it cost to make? Rather than showing bad business sense, the economic stability discussed above is probably a factor here. But more generally, I think it highlights that the developers showing at the MEGABOOTH are not exclusively motivated by money, and that satisfaction in a creative field like indie games can’t be measured in dollars and cents alone. The question remains, is it possible to balance economic sustainability with artistic vision, without relying on external support? It’ll take more than a survey to answer that, but we’re working on it…

In the next post, Jen and our statistician will break down our findings in more detail, as they try to identify some more subtle patterns and correlations across different categories.