8 Questions to Ask Yourself When Starting a Games Studio
A practical guide to the basics of studio leadership.
This is part of a series on indie studio management, written by the Captain of Kitfox Games, Tanya X. Short. Follow the Kitfox Medium publication to read all the entries so far. See the first one here.
For the purposes of this article, whether you’re a traditional for-profit corporation, a non-profit, a partnership, or a worker’s co-op, I’m going to assume that the primary goal of your studio is to survive to make the next game, and hopefully the game after that.
If that’s the case, these questions will help protect your bottom line — the money you need to keep paying salaries.
1. Why does your studio exist?
Most studio management resources focus on the what and how of survival, not the why. Why should your studio exist at all, when there are already so many out there?
If you are seriously considering “going indie”, you could probably go get a job at someone else’s studio. Instead of taking a paycheck, you’re choosing to engage in an uphill battle, probably losing lots of nights of sleep, and for what?
Why are you doing this at all?
When we started Kitfox, we were initially just focused on figuring out how to create games together, as a team. And in defining what our second project should be, which would become Moon Hunters, the question was asked: why this game? Why not any other game? And beyond profitability or feasibility, it was difficult to answer.
If all you want to do is make one specific game, that’s okay too. Maybe after you make that one game, you actually someday want to get acquired rather than nurture your studio to become sustainable long-term.
But I suspect most readers, like me, want to start a studio because it’d be personally fulfilling to:
- have creative freedom to choose what projects you work on
- have financial freedom to choose how long you work on a project
- create a workplace that suits you
Jumping indie from ‘normal’ game dev life is increasingly appealing. It’s easier to get started than ever, since game technology is increasingly available and powerful. Meanwhile, most studios can offer very little big-picture creative freedom, and many companies are famous for workplace conditions that verge on human rights abuses.
However, I recommend you take a moment and consider what aspect of independence matters most to you. By starting a studio, you have an opportunity to decide to create more than just entertainment products — a workplace is somewhere people spend the majority of their waking hours, for years of their lives. Consider why this studio is worth their time, or yours.
Even if you’re a studio of 2, is there a certain way you want (or don’t want) to work? Is there an ideal you hold about what your work achieves in the long-term, or how you want your audience to feel when they play your games? Are there examples of similar studios or developers or games you don’t want to emulate? Would you rather be more financially comfortable, or more creatively satisfied?
It might take a few years to figure out what you feel strongly about, but over time, putting it into words can act as a touchpoint for you to evaluate your decisions, whether your team is 2 or 200. When you had to make a tough call, did your choice match what you believe in? Why or why not? Have your beliefs or priorities changed over time?
It initially feels weird and awkward to try to put into words what you believe in, and what motivates you as a studio leader… and at this point you might realise that what you’re actually making are company values, which at first feels like overkill for an indie studio, at least to me. But it can be uniquely useful, in the long-term.
Company values give your teammates and collaborators an idea of where your vision and priorities are, and act accordingly. “Company culture” can happen by accident, or you can deliberately create the kind of place you (and, hopefully, others) both like to be and can do good work in.
Personally, I found it easier to answer “Why Kitfox?” when I focused on what I didn’t want to make, and what workplace practices I didn’t want to allow.
For example, no matter what we made, I knew I didn’t want me or my teammates to get jaded and stop trying to improve. The bitter, resentful, closed-mindedness of some experienced game devs worried me. If anything, I wanted people to get more ambitious and excitable in their work, and challenge themselves with creative risks, while allowing themselves to fail. After some time, I boiled this down into a value we call “always learning”.
Our other values are similarly patterned after my optimistic hopes for our studio culture, or fears of their inverse: “professionally respectful”, “creatively courageous”, and “committed to quality”. We don’t always successfully achieve our ideals, but by agreeing on what they are, we can strive more purposefully and joyfully.
Once you do have some kind of way of communicating your values and priorities, I recommend also thinking of ways to help remind yourself of them, even if it’s just a sticky note on your monitor. At Kitfox we’ve integrated them into our tools and morning meetings as daily reminders. But every six to twelve months I look at them again and make sure I feel they reflect what I want us to achieve, so they might be a bit different even before the year is out.
My point isn’t that you should have certain values, or enshrine them in any particular way. But no matter what else you do to survive for now, if you don’t think about where you want to go, you’re leaving it up to chance whether or not you (your projects, your company culture) end up somewhere you feel good about.
2. What is your burn rate?
“Burn rate” just means how much money you’re spending, usually within some sort of unit of time (typically, a month or a year). This is also therefore exactly how much money you need to make, in order to be sustainable.
In most game companies, the majority of their expenses are payroll or payroll-related taxes and insurance payments. Other costs can include office rent, equipment, travel, software, royalties, license fees, training, etc.
company savings
+
(expected revenue * X months)
-
(burn rate * X months)
= how long your company can survive
Your time-until-bankruptcy is also known as your ‘runway’.
Since it usually takes 3–6 months to land a deal of any reasonable size with a business partner, a runway of less than 6 months is the “last minute” to prioritise immediately finding revenue above all other work. Hopefully after a few game launches and/or revenue streams, you’ll be able to look further into the future than 6 months. The longer your runway, the more comfortable you can be and the more risks you can afford.
The amount of ‘cushion’ you choose to keep in your coffers to extend your runway is up to your comfort level. Large companies often operate in thin margins, but then also have large layoffs after a disappointing launch or a drop in the stock market. I’ve heard of indie companies keeping up to five or ten years worth of runway in the bank, just to ride out turbulent markets.
Tangent: Financial Transparency
As a side-note, I highly recommend being as transparent with your people about your runway as their stress level can stand. They probably don’t need to know exactly how much money you spend every month; it took me years to adjust to a reality in which I could possibly be responsible for that much money being spent.
But if your studio only has 3 months of money left in the bank, they should know that, and know what you’re doing to address it. And if the company has 3 years of money left in the bank, they should know that too, and why you’re choosing not to spend it, say, on bonuses or raises or extending a project’s timeline. It can also help put your company’s (hopefully transparent) payscale into perspective.
Financial transparency can be inconvenient, since it can alarm folks and can provoke awkward conversations, but it has several purposes:
- It helps educate people on the reality of studio survival, which in turn
- Helps them understand the logic behind your decisions, and
- Prevents you from exploiting them, even if you’re legally allowed to.
It can be awkward to talk bluntly about money, especially in North America. Of course, if you’re running a worker’s co-op, you’ll likely be required to keep up financial transparency anyway. But perhaps especially for those of us running a corporation, I believe practices that lead to more fairness and less discrimination are worth enduring a bit of awkwardness and cross-examination.
3. Who makes your studio’s decisions? Why?
My questions up until this point have been about making decisions and taking action — from your legal resources to your big-picture creative direction. But none of those are meaningful if it’s unclear who answers the questions. Who actually has the power to actually take action on these items?
For many studios, even those with fairly strong leadership, high-level responsibilities are split up among several people. At Kitfox, for example, as captain I make most of the high-level decisions (business strategy, product design, etc) but our bookkeeping and financial resources are mostly handled by Xin, our artist co-founder, and major technology questions like engine choice and security measures are the realm of Marcelo, our CTO and first employee.
So ask yourself:
Who decides what engine to develop your games in?
Who decides which office to work from?
Who decides when or whether to hire someone and their salary?
Who decides when the game is ready to launch or needs to be delayed?
Who should be reported to, if a leader violates company policy?
Who has veto powers, if two decision-makers disagree?
Beware answers of, “We all do! Together!” or “It depends,” unless it’s followed by very specific set of criteria.
I respect flat hierarchies, and I think they can be very effective, especially in making games. But it’s risky to use group consensus to make big decisions. Some great studios do so, and like any risk, it can be overcome, but I would caution against rushing into it, even though it feels more fair.
Decision-by-committee functions especially well in the short-term among a very like-minded group, such as during a game jam. But eventually there will come a time when consensus is extremely difficult, either due to fundamental incompatibilities between member goals/values, or due to the amount of time and energy it would take for every member to understand all the context of a decision. And when that happens, it might become unclear who actually made the decision at all, or who should. Whether your hierarchy is flat or not, of course the people who suffer the consequences of the decision might be different from the people who made it — but I’d argue in a stronger hierarchy, at least that disparity is more transparent.
But maybe most worrying, by making decisions as a group, nobody can take personal responsibility for the results of that decision… which is essential, when things go wrong.
During and after a crisis, the important thing is that you survive it, change course, and learn from the mistakes. However, group consensus is well-suited to neither dramatic course changes nor individuals taking responsibility for their mistakes.
Of course, consult with your team before making big decisions, be as transparent as possible in your process, and take the group’s preferences into account. Some of my worst decisions were because I failed to properly check in with my team before making up my mind, or because I failed to communicate with them well, while doing so.
But some unfortunate-yet-necessary decisions will be unpopular (for example, changing a game’s premise to be more marketable); conversely, sometimes the least-hated option (for example, shipping the game sooner) is actually the riskiest.
So it can also be tempting to tell the team (and yourself) that you don’t actually have the power you do, that there was no other choice or just it happened that way. So if it goes wrong, it’s not your fault, right? Ugh. This is a way to make sure you definitely don’t learn from mistakes, and even if nobody says anything, everyone will know when it happens. All this opacity of decision-making does is erode trust. Plus, disavowal of the power you have is a low-key poisonous cultural trait that can uphold white supremacy, so beware unclear power structures for various reasons.
Ultimately, whether the power is spread vaguely throughout your studio or disavowed entirely, lack of clear responsibility can be as lethal to a studio’s survival as a terrible CEO, but at least a bad leader tends to be noticed and can be addressed. A complete lack of leadership can slip by undetected, while meandering down an unclear path of detail-oriented risk aversion. See also: bike-shedding.
Decisiveness is also a giant advantage that indie studios can have over AAA. Megacorps have so many layers of management approvals to get through that even a relatively minor decision about game content or production can take weeks and involve dozens of people. Then when it goes wrong, those dozens of people each get to blame someone else. Meanwhile, a four-person team has the option of making the same decision in just a few hours, and someone can learn from the outcome and not make that mistake again. If decisiveness isn’t one of your strengths as a leader, consider working on it, and/or examining the other strengths of your leadership style. Why not take advantage of every edge you can get?
Whoever is/are the decision-maker(s) in your studio, please pause and take three actions:
- ask yourself why this is the case, and whether it should continue this way. Is it fair? Is it equitable? Is it the best configuration of your team’s abilities?
- make sure everyone on your team knows. Tell everyone explicitly who is responsible for what kinds of decisions — and if it’s them, make sure they agree and are comfortable with that responsibility.
- schedule check-ins to revisit the results of big decisions. This can be a post-mortem after a big milestone or big event, and/or it can be monthly 1-on-1 interviews, but the important thing is to make sure decision-makers reflect on what they did, and whether they learned anything from the outcomes.
Until the question of authority and responsibility is settled and agreed-upon by all parties, the rest of the questions on this list are just mental exercises.
4. How do your games (current and future) fit into your long-term strategy?
I actually realised this question is much more complex and involved than the others, so I spun it out into its own article.
Here’s the thing: most studios don’t survive to ship a 2nd game. And contrary to popular belief, it’s not because their first game doesn’t sell well — plenty of surviving studios had disappointing sales for their first game. It’s because they didn’t plan for it and strategise around how to survive.
Although it may be stressful to think a game ahead, your next game is important to consider, in how to progress towards your goals as a studio. Kitfox wants to make better and better games, so we choose our challenges (and our shortcuts) appropriately.
Most people want to sell enough copies of their game to get by, but what else are you trying to do? What does success look like, to you? Is it moving players to cry? Winning awards? High reviews? Providing comfort in a dark time?
Any of these goals needs a strategy.
You might not follow the plan. You might need to throw it out the window. No plan survives contact with the enemy, your first game probably won’t sell much, etcetera. Even so, forming a long-term strategy helps prepare you for the opportunities that best suit your studio’s strengths… or at the very least, survive a disappointing launch.
When times get tough, you’ll have to flex, so the next question is…
5. What are your studio strengths and weaknesses?
Rather than daydream about what strengths you wish you had, turn the lights on bright and really look at what or who your studio has, right now, in terms of people, skills, resources, assets, and finances. Those are your strengths. What or who do you not have? Those are your weaknesses, or blind spots. You could go all-out and do a SWOT analysis, but it doesn’t have to be so formal.
Kitfox started in Montreal, Canada with the following:
- a senior game designer co-founder, with writing & public speaking experience (me)
- a relatively new concept/2d artist co-founder
- two mid-level gameplay programmer co-founders, both with interest in game design
- an enthusiastic investor/mentor, Execution Labs, dedicated to teaching us the business development, sales, and marketing side of game development
This means our strengths from the outset were relatively strong game design chops, experienced business mentors, and the benefits of Montreal: a wide network of game developers, local tax credits, and a bilingual community.
However, like everyone, we also had weaknesses. A few examples:
- with only contracted occasional audio designers, we struggled figuring out how best to develop and integrate audio into our games
- we had no real experience with 3D art or animation, so we avoided it entirely for 5 years
- with no prior business or marketing experience, we had to depend on instruction and mentorship
- with our only programmers primarily interested in gameplay, other more specialist forms of programming were out of the question (network multiplayer, console development, graphics programming, etc)
- we had no money. None of us had enough savings to go more than a few months without salary. We could not ‘bootstrap’.
No matter what strengths you have, you will also have a weakness of some kind. You can overcome them, either through investing resources (hiring, training, etc) or adjusting your strategy to work around them. Just don’t undermine your strengths in doing so.
In fact, instead of worrying too much about improving your weaknesses, you may find it’s more effective to put more energy into doubling down on your strengths, since those are your unique advantages in the fight for survival.
For example, if your primary studio strength is efficiency as a two-person studio, it probably doesn’t make sense to find a third member just to improve your studio’s art — you might lose your efficiency. On the other hand, if that new member could let you become more efficient* in doing the tasks you’re uniquely skilled at, it could be an attractive potential strategy, as it both improves your strength and addresses a weakness.
*Though it’s easy to overestimate how much time you’ll save by hiring, due to time spent communicating, aligning vision, etc.
6. How are you protecting your game’s files, designs, and code?
You should probably make sure you don’t lose years and years of work to hackers, thieves, or even (gods forbid) a fire or flood. Some people will roll their eyes, but someone out there needs to hear it.
This is basic, but essential:
- Use version control.
- Include your documentation and source art files.
- Back your game & documents up regularly.
- Invest in basic security, for your physical and digital workspace.
None of this has to be fancy or expensive. It just has to be reliable and used regularly, by all team members.
At Kitfox we used GitHub (with SourceTree) for our first year, then switched to the even simpler, good old TortoiseSVN, with our servers hosted on CloudForge, files on Google Drive, and documents in Notion.so. But tech becomes fragile or bloated quickly and some of these might not even be available in 3 to 10 years, so the important thing is that you do what’s most comfortable for your team, including those who aren’t as technical.
If you’re not into documentation in the first place, you could also consider communication software (Slack or Discord, for example) to be part of your version controlled documentation, since information from those conversations should also be protected from hackers, fire, etc.
7. Who is your accountant?
You will almost certainly need an accountant sooner or later, especially in North America. Filing taxes as a corporation or other organisation can be a large amount of work, and although you can technically do most of it yourself, the penalties for a mistake (or late/incomplete filing) can be so high, you could be risking the survival of your studio every year by trying to save a tiny amount of money.
Although it’s nice when your accountant has experience in the video game industry, and is based in your region/state/province, it’s less essential than for your lawyer. Local industry-specialised accountant benefits are primarily useful if your region offers tax incentives, large grants, or other financial programs. Generally, competence and experience with your organisation type (for-profit corporation, worker’s co-op, etc) are higher priority.
For those who aren’t certain (like me, when I started), a bookkeeper is not the same as an accountant! A bookkeeper makes sure your revenue, spending, and ledgers are all in order before being used for filing taxes or other official purposes. If/when you’re audited, you’ll wish you have both of these people not only on your side, but familiar with your financial situation.
Even if you have a very affordable accountant and/or bookkeeper, unless you have dozens of employees, it is usually most efficient and effective for someone in the studio to keep track of your “inflow” and “outflow” in an easily accessed and readable document. This just means centralizing and categorizing your bank account ins and outs every month or so and making sure you have documents for each. The bookkeeper can then regularly review and eventually translate that document into accountant- or government-facing jargon.
This is what the internal Kitfox ins-and-outs sheet looks like (with sensitive details redacted):
Updating that document is a day or two of work every month, but putting it off or trying to have someone external to the studio do it is too big a risk to take. And you can streamline it even more by using dedicated software, like QuickBooks, Zero, etc, if you’re feeling fancy.
If your accountant and/or bookkeeper aren’t actually making your life easier, maybe you need to find a new one! As soon as you start working together the utility should be obvious.
However, I should note here that if you hope your accountant, bookkeeper, or lawyer will help you make business decisions, you are going to be disappointed. Taxes, IP, contracts, sure. But not run your studio. As put by a friend and colleague, Lars Doucet, “they’re specialists to help with specific things. If you’re looking for a mentor to hold your hand, this isn’t where to look.”
Of course, mentorship and support networks are invaluable resources, but addressing a lack thereof as a studio weakness is a different point entirely (see #5).
8. Who is your lawyer?
Even if you never need to use it, it’s essential to your company’s survival to have the phone number for your lawyer close at hand at all times. Just in case. Ask them to glance over your contract drafts. Just in case. Many of the more well-known indie implosions wouldn’t have been nearly as spectacular if a lawyer had peeked at their agreements, assuming they had any written down.. (I’m looking at you, Indie Game: The Movie).
Your lawyer must be formally engaged to operate on behalf of your organisation. Otherwise, no matter how knowledgeable and competent, they’re not really your lawyer — they are simply an advisor.
In an ideal world, your lawyer should also:
- be based in the same region/province/state as your corporate headquarters, or at least in the same region as most contracts you’ll sign.
- have prior experience in the video game industry, so they’re familiar with your studio’s potential risks and possible contract loopholes with your business partners. However, a digital entertainment industry lawyer (say, with experience in music or film) can also do in a pinch.
- be part of your support network even before you found your company, and maybe they’ll have a helpful template for all the best practice documents you might want in place for you and your co-founders.
- be available for calls with random questions, and/or asking them to look over contracts if need be. More than one game studio has been bankrupted from not noticing a particularly vicious clause in a publishing contract.
However, I wouldn’t do everything your lawyer advises you to do — in order to decide which advice to follow, try to understand what the worst case scenario is that they’re trying to steer you away from. Trademarking, for example, is often advised for security purposes, but may not make sense in your particular situation.
Having a designated lawyer is like having a first aid kit in your cabinet… you always hope you never need it. But you will, sooner or later.
Summary
Answered all the questions?
Congrats!
You’re ready to start the hard part: actually making games.
Just kidding. Nobody’s ever truly ready until they’re in the thick of it. So wade in and get your hands dirty. It might be helpful to come back and re-read these questions in six months from now, to revisit best practices you might have forgotten in the chaos.
I hope they can help make your impossible, hopefully permanent, challenge of studio leadership just a little bit easier.
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Did I forget something? Did I make a mistake? Let us know.
