Hello, my name is Dmitry Filatov. I am an avid gamer and the Director of Products Funding at Xsolla. I interact daily with developers, publishers, and investors, which gives me a good idea of trends, expectations, and systematic reasons for successes and failures.

In this article, I will explore some popular topics that have been discussed in the "indie scene" over the past 6-12 months and share my opinion on them. I hope this will help you make the right choices and avoid mistakes.

I have been working in the games industry for around 12 years, creating PC and mobile games, both B2P (buy-to-play) and F2P (free-to-play). I started at a small garage outsourcing studio, doing tasks like fetching coffee, and then moved on to larger companies such as Wargaming, MY.GAMES, and Owlcat Games. I have climbed every step in my career. I also have two years of experience working in a gaming investment fund. Additionally, I am a member of the InvestGame analytics platform team, focusing on gaming investments.

By "Indie," I refer to small PC/console studios that operate outside of major publishing companies. They may self-publish or have a small publisher/investor, but they always have the creative and artistic freedom to make decisions independently.

As of 2022, the total market volume of the gaming industry reached $182.9 billion. This is a 5.1% decrease compared to 2021.

Source: NewZoo

I purposely placed this news article first. You will often come across news about the games industry growing by a few percent, declining, or adjusting. News websites love these headlines because they grab your attention.

Don't pay too much attention to them. Video games and the gaming industry will never disappear. People have been playing games and will continue to do so. Games have already surpassed movies and music in popularity. Some genres will become more popular, some platforms will remain niche, and new ones will emerge and attract audiences. Overall, I would say games are only at the beginning of their journey. If you look at the charts in 10-20 years, the growth continues. Moreover, games have proven themselves during times of crisis.

In any case, regardless of positive or negative trends, making games will always be exciting and enjoyable. And the most important rule remains unchanged: the core of any success will always be making a "game that is fun to play."

By the way, there is also good news. Games are already showing growth this year.

Only a small percentage of the first-ever games for any studio become a big thing. Most studios may become successful (with gross revenue of at least $1 million) only after a few published games. To become the next Naughty Dog, it will take approximately 10-15 years.

Source: InvestGame.net and Game Developer

To achieve success, you have to release many games. Yes, there are studios that succeed on their first attempt. But they are exceptions to the rule that only confirms the rule itself.

Knowing this, it is essential to shift your focus and plans from "releasing a million-dollar game right away" to "building a studio and business." Start thinking ahead for several years. The path to a "million-dollar game" lies through 3-4 "just good" games and 10 prototypes.

Never get disappointed or give up if your first game is not successful. It happens to everyone. Even if your game has the worst reviews on Steam, you still belong to the elite game development community. You had an idea, went through a lot with your team, and, most importantly, people were able to play your game. Only a few reach this stage. It will become easier from here. Now you have a game in your portfolio and a wealth of experience. Finding investors or publishers becomes significantly easier.

The number of games released is increasing every year.

Source: WePC

This fact makes it more and more challenging to find your player. The role of marketing becomes critical. I would say that half or even more of today's success depends on marketing.

Usually, developers excel in making games and focus solely on that aspect. This is the most common mistake I encounter. And when I say marketing, I mean not only the Steam page design or game trailers. You should start thinking about marketing even at the game concept stage. Who is your target audience? What do they want? What do they like? Which social media platforms do they use? In which countries are they located?

But that's not all. You should also start paying attention not only to your game but to your competitors as well. Why did they succeed? What do reviews say? How and where did they promote themselves?

My favorite example of a mistake is when "average" games chose the same release date as Half-Life 2 and World of Warcraft. And my favorite example is the announcement and release on the same day as Apex Legends. It made them stand out brightly among competitors.

By the way, colleagues who gave feedback on the initial versions of this article recommended checking out the 'How To Market A Game' website for a basic understanding of game marketing.

It takes less time to make indie games now. Currently, it takes approximately 12-18 months. Please note investors and publishers will expect a similar timeframe.

Source: Unity report and Fungies.

I understand that the average is always misleading. And it is necessary to dig deeper, to see what factors have contributed to this change in the average, in which genres, on which platforms, and so on. But my empirical experience of communicating with developers and publishers says the same thing.

Today, it is expected that a team can be small and fast. There are obvious things that enable this, including the ability to use ready assets, reuse work from previous games, utilize AI, and so on.

But in my opinion, the main way to achieve high development speed is the ability to "avoid doing unnecessary things." Teams have learned to plan, accurately define goals for each stage of development, to prototype and test hypotheses quickly, avoid unnecessary meetings, build fast content production pipelines that seamlessly connect with each other, and apply best practices from big studios. In short, they have learned to approach development as manufacturing, rather than just following intuition.

You should learn that too. After all, you cannot compete head-on with big companies, for example, in terms of content quantity. They have budgets on their side. On your side, you have the flexibility and the ability to change quickly, to iterate mechanics rapidly, and to seek out new things. Just know that it takes a big company 10 meetings and 2 months to change a character's name, while you need only 1 minute.

Another important aspect will be choosing only one platform for the game release. Only in the case of success should you consider porting the game to other platforms. Most often, PC/Steam is chosen as the first platform. This approach also helps to reduce the timeline and, therefore, the budget.

When we were developing our mobile MOBA Planet of Heroes we transferred the hero production pipeline to a Gantt chart. This allowed us to discover a way to change the sequence of certain operations, which allowed us to reduce the timeline from 12 weeks to 10. For 10 heroes, the timeline was reduced by 5 months.

However, all of the above does not mean that players will forgive you for anything just because you are a small studio. Today, quality must be top-notch.

Some of the highest-earning indie games right now are games with co-op (2-4 players) and/or multiplayer features.

Source: How To Market A Game

Think about how you can successfully implement co-op or replayability in your game. Almost always, this can be done. As I mentioned earlier, marketing is one of the key elements of success today. And there is no better advertisement for a game than friends inviting you to play in the evening.

You know, there is no specific methodology or framework where you input numbers and get a recipe for a successful game. We simply see this trend. And even if you are convinced that co-op and replayability don't fit your game at all, don't dismiss the idea right away. Try to find solutions, look at similar games. Both players and publishers now expect these features in games.

On average, you can allocate 20% of the game's budget to co-op.

The average budget for indie buy-to-play games today is $400k.

Source: Xsolla Funding Club game database

Rule number 1: investors will invest in your game to make money, not to save money. Your financial plan should allow you and your team to focus on game development and make a few mistakes. Many times we have encountered teams that refuse to pay themselves, saying they will "live off outsourcing." We've also seen teams that believe they won't have any milestone deadline shifts. And they all see this as their competitive advantage. It's not an advantage, as investors and publishers will see it as a risk.

Plan your salaries and have strong justifications, calculations, and plans to prove that "this is exactly how much it should cost." How much? Take the market salary or slightly below it. Add 20% to the deadlines. Enthusiasm and hunger won't get you far.

Expenses for producing game assets, animations, modeling, and other graphical elements usually account for more than 50% of the budget.

When it comes to the investments in indie games over the past 3 years, North America takes the lead. it is better to focus on that particular region.

Source: InvestGame data

If you need to choose a region to specifically search for investments, North America is the best option. Yes, you should search everywhere but try to focus on this region first. However, other regions of the world are still active – Europe, Turkey, and the United Arab Emirates. Games, as a business, are now of interest to almost everyone.

Think from the start, maybe you should immediately be a "convenient partner" for an investor from North America. For example, you can open a legal entity in Delaware. It's not expensive or complicated, but most importantly, it is familiar and comfortable for local investors. There are many services that know how VCs work, and that can provide you with a ready-made legal entity and bank account.

Wrapup

The gaming industry continues to grow and evolve.
To achieve success, it is important to have long-term plans and not give up after failures.
It is best to focus on North America when looking for investments.
Marketing plays a critical role in attracting players, so it is necessary to give it attention starting from the concept stage.
Indie studios usually find success only after releasing several games, so it is worth shifting the focus immediately to long-term studio and business development.
Development times are decreasing, and it is important to learn how to effectively manage time and resources.
Carefully study trends and player preferences, and don't forget about the quality of the game.
Play other games more often and enjoy your work. Making games is cool.

In the photo, I am holding a freshly purchased Steam Deck and I am very happy.

If you have any questions, or suggestions, or just want to stay in touch, you can find my contacts here.

Make sure to check out Xsolla Funding Club. It is a platform where you can get assistance and resources for creating your game and launching your studio. Most importantly, it will help you find investors and publishers. Additionally, we have our own Acceleration Program where we provide financing. It is also a collection of useful materials and knowledge.

Dmitry Filatov, the Director of Products Funding at Xsolla

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