Making Money from Mobile Games is Hard Work
Starting a new development studio is hard. Making it sustainable is even harder. As I’ve blogged about before, most mobile games don’t make much money at all. Certainly not enough to live off. There is a great article about how it is a hard slog to make the money come in and pay back development costs:
“Money does not grow on trees when it comes to smartphone game development,” said Ben Moore from Mighty Rabbit Studios. “Too often, people hear the success stories and imagine that any somewhat visible game on market is generating great amounts of cash flow. This simply is not the case. Roughly one out of eight games make it into any kind of a feature spot long enough to generate the coverage needed to sell enough copies to make money. That’s why publishers have been stepping into the arena to formalize a process to getting into that coveted feature spot. If you have a publisher, they typically take between 20-50 percent of revenue after Apple takes 30 percent. So even with a big, successful title, a lot of developers only see 35-50 percent of what the game actually earns.”
More important are the steps the designer must take to remain financially stable.
“Bankroll is the biggest problem a young and inexperienced studio will encounter,” said The Game Bakers’ Emeric Thoa. “For most games, there is a long time between launch and profitability, during which you still have to pay the team. If you have $50k budget for a game, you break even at around 70k sales. If you manage to reach this milestone in three months, you need three months of bankroll ahead of you, plus a bonus month because Apple pays every two months. If you bet on being profitable during your launch month, that’s risky.”
To that end, Thoa advises developers to beware of assumptions.
“The biggest mistake a developer can make when starting iOS development is to expect he or she will reach a hundred thousand users just because there are millions of iPhone users. Reaching the 100k milestone is hard as hell.”