Arcen Games: a sobering reminder of the expenses involved in indie game development

Last week I wrote about Recettear’s sales figures, which, on my assumptions, would have pulled in revenue of ~US$500,000. However, expenses would be pure guesswork. Today’s post serves as a sober counterpoint. According to this PC Gamer article, “AI War and the Hidden Cost of Indie Games”, Arcen Games, developer of RTS AI War and puzzler Tidalis, is having difficulty bringing in enough to pay the bills. Here are some highlights, extracted from Chris Park of Arcen’s email to PC Gamer:

2010-thru-April

Total income for Arcen during this period was $101,401.38

Total expense for Arcen during this period was $91,314.76, including paying staff and myself, acquiring new licenses and technologies (Unity 3D, and some sound software, etc), legal fees for contract negotiation, payroll taxes, health insurance, site hosting, all that stuff…

…

• May $19,085.06 income, $12,684.28 expense
• June $17,233.70 income, $26,434.89 expense (a fair chunk of this was taxes)
• July $6,956.48 income, $18,243.52 expense
• August $13,847.02 income, $18,682.68 expense
• September $13,395.42 income, (not full data yet, but expenses looks to be about the same but a little lower than August)

Note the apparent rebound in August is not, in fact, like-for-like: Arcen’s second game, Tidalis, launched in that time, while sales for its first, AI War, softened in July.

However, there is one question lingering in my mind. From the sound of the article, Arcen’s labour costs are highly variable: it pays the staff in royalties rather than wages. So what are the other costs? Arcen mentions a few:

• Taxes;
• Licence fees (“Unity 3D, and sound software”);
• Health insurance;
• Site hosting;
• Legal costs involved in striking publisher deals;
• MacOS machines for development;

I wonder how much these various costs ran to, and what the implications for other indie game developers are. (As a localiser rather than a developer, my first impression is that Carpe Fulgur must have a lower cost base than Arcen, but I could well be wrong.)

In any case, I am downloading the demos for AI War and Tidalis as I write this. Check out the demos if they sound interesting to you!