Business and Marketing for Your Indie Game Studio Part 01
Indie game development is fun and exciting. You get to make what you want to make, without any restrictions. But, to be successful, you need to understand the business side of game development.
I know, yuck. You’re saying, “oh, I’ll make my game, it’ll be awesome and everyone will love it.” While your game may be awesome, unless you market your game, no one will even know it exists.
“But, there are so many games that seem to just be successful without any effort.” While that may have been true before the indie game boom (pre-2009) getting discovered by accident just isn’t a good business plan.
The indie game market is flooded. And it’s not a bad thing. It just means that more people are becoming interested in game development and want to create, experiment and enjoy video games. But with a bigger market, there is bigger competition.
There are some basic things that an indie game developer should know before publishing his or her first game and with this article, I will talk be talking about business licensing for an Indie Game Developer.
Licensing for your business is very important. Of all the things, it’s probably the most important thing to do, especially if you plan on selling your game, using in-game currency or in-game ads. Licensing includes registering as a corporation and contracts.
Registering Your Indie Game Studio as a Corporation
“Oh, my gosh. That’s huge! Do I really need to do that?” Well, if you’re just making games for yourself and your friends, just for fun, or for no profit you probably don’t need a license. But I’m guessing, since you’re reading this, you are interested in the possibility of making a little money.
So, yes. Get a business license. They are not expensive, they will protect your personal assets if you get sued or audited, it makes for filing for grants go a little smoother, and you can claim your business expenses on your taxes. There are two main business licenses, and probably the only two types you would need to worry about: Limited Liability License (LLC) and Incorporated (Inc.).
An LLC is the license I got, and probably all you’ll need as an indie game developer. With an LLC, you can get your Tax identification number, or EIN, open a bank account and operate as a business with your business name. With an LLC, the owners, or members, have limited liability, which means, under most circumstances, you are not personally held liable for debts and liabilities of your company. So, say you have to declare your company into bankruptcy; you’ll get to keep your house and other personal belongings. There’s also less requirements than other licensing options, like no required board meetings, lenient tax plans, and no requirement for extensive corporate records.
LLCs are also less expensive to purchase and renew. The prices and requirement vary from state to state and you’ll need to check with your state’s government website for the requirements and costs to become an LLC.
There is also the Incorporation option. Like an LLC, your personal assets are protected under most circumstances. Incorporations also tend to have a lower tax rate. However, the applications to become and renew can be on the more expensive side of things for a small game development studio. There are also more expensive tax and accounting services, and other operational procedures that are required.
If your game studio becomes largely successful and you need to start hiring many employees, already having you Inc. license will be beneficial. Converting from an LLC to an Inc. can be confusing and costly. Truly, you will need to decide which license would serve you best based on how you expect your game studio to grow.
For more information about business licenses you can go to your state’s government website and decide which would serve you best based on how much you can afford and what you need. You could also consult a business professional or a lawyer, but they can be expensive.
Contract, What Do You Need Contracts for?
The “All Rights Reserved” is part of the copyright law. It basically states that everything that is within your website or game/app (text, pictures, downloads, etc.) is yours, you hold the right to use it, and unless otherwise stated, people must ask for your permission to use your stuff. In short term, it means don’t steal my stuff and claim it as your own.
The “Terms of Service” are the rules you declare in order for someone to comment on your website, purchase a product from you, or other services you might offer. If someone were to break your rules, your TOS would come into play and you would handle it accordingly. A good example is when someone creates a bot in an MMO to collect in game currency. Most developers frown on that and have some form of TOS to deal with the situation, including canceling service to the user.
The “User Agreement” is used for software and is a contract between the user and you. It is sometimes called a “software license” or “end user license agreement”. This contract states that the user will agree to the privilege of using or purchasing your software and promise to comply with all of the restrictions stated in the User Agreement.
Those are your most important contracts. You can find links to mine in the footer of my website, eim-games.com for a reference. You can also find them on many other game developers’ websites.
The other important contracts that you should have are a Confidentiality Agreement, an Employee Contract, and a General Contract.
The Confidentiality Agreement is for anyone working with you on your game. This states that anything created for the game is owned by your company, and not the creator. This protects your company from your employees or contract hires from steeling your intellectual property and claiming it as their own, or any information that you don’t want released yet. That’s not to say your employees would do such a thing, but it’s always nice to have the law on your side, just in case someone goes crazy.
The Employee Contract is if you hire any full or part time employees. This can state how the pay schedule will work, when the employee will receive pay, any paid holidays, paid sick days or paid vacation days you might have, and other various things. This contract helps you and your employee fully understand what you are offering him or her. This type of contract should also be used with interns.
The General Contract is basically the same as the employee contract, but can be used for contract hires and freelancers who do work for you.
Contracts are important, and you don’t need a lawyer to write one up. You can Google search for examples and write one up that suits your needs.
In the next blog post, I will be talking about Project Management.
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