Behind the Scenes #1: Funding Your VN (Patreon)

Ah, ah, hello everyone, this is Samu-kun... The nice people over at our patreon funded us at over $1400 per month, unlocking this blog series about VN development. I'll be talking about the operations of my company and the visual novel industry in this blog series... I thank you for having me. I'll be talking today about one of the most important aspects of running a visual novel company: Funding. Ah yes, the almighty greenback truly controls our lives. Countless normals slave away at mundane jobs all for an envelope filled with Andrew Jacksons every month, so there's no way that a VN company can escape its power either... Today, I'll be delivering a general overview of the cash flow of an entire game. There's a lot of details I'll be skipping, but I'll save that for another day. 1. Acquiring Funding Let's say you have an idea for a game. For it to come to fruition, you need money. You might need to buy songs and sound effects, hire help, buy equipment, and most importantly, you need to feed yourself and pay your bills while you make the game. Let's assume you're just a normal person and are few tens of k's in the red to start off with because of educational loans. (It's amazing how older people completely cannot wrap their heads around the concept of starting in the red... Beh, scumbag boomers...) In the past, you got the money off of someone richer than you after you promise to repay them + more once the game is finished. This is still an option and quite a number of VN companies actually do this. This wasn't what I did though, so I couldn't help you here. Another option is crowdfunding off Kickstarter. Running a KS is a long topic, so I'll save that for another day. Or you could get a job and fund the game off your real job. The benefit here is that your risks are reduced because you're still a normal with a steady income, but your payoff is reduced as well, because you have less hours to allocate to your game. This is a better option if you're more conservative and don't like risks. Of course, there are less impressive ways to fund your game. Like your parents are rich and can support you, or you are married and have a spouse with a high paying job. But those routes are only for the 1%... Anyways, let's say you've done that and now have money... Let's say $40 000 off Kickstarter! Whooo you're so rich! 2. Allocating Funding You now have $40 000! Wow! More money that you've ever seen before in your life! You can almost shed tears of joy man... It's such a beautiful pile of money. T_T A-ahem, anyways, now you have to allocate where to spend that money. Off the bat, Kickstarter will take 10%. And kuma shocku, Uncle Sam will want a piece of that Kickstarter pie too. You can generally expect about 10-30% to be taken away by taxes, depending on how much money you made. $40k doesn't put you very high on the tax bracket though, so let's say you only lose 10% to taxes. (Ahem, hire an account, I'm shooting from the hips here...) After that, you likely have to spend money manufacturing and shipping whatever physical goods you promised during the KS. Let's say you allocate 15% to physical fulfillment. Also, you might need to upgrade your equipment. You need a top of the line computer for 3D modeling, less so for 2D illustrations, but still a decent rig in the $1000 range. You also need a tablet. Eh, let's say you don't upgrade that much though, and you only lose 2% of the money on equipment. So you lose 37% of the money out of the gate. Out of the $40 000 you raised, you actually keep just $25 200 to make your game. Quite a bit less impressive eh... :/ After that, you have to hire staff members. Let's say that you spend $5200 on hiring staff, leaving you with $20 000. It's actually much more complicated than that, but I'll punt that for another day... Ah yes, and now this is the pivotal part. First, you need to figure out your wage! You are da boss now! You set your own wage! Yay! But you better put your party hat away, because your wage is gonna be lame and your hours even worse. For your first game, your monthly wage is basically the lowest amount of money you can survive on. Now, this varies quite a bit where you live. I live in San Diego, which has pristine beaches I never visit, year round sunshine which I block out with my curtains, and rent which is too damned high! Let's... uhh... just say you need $3000 a month to survive in this paradise. Hopefully you live in Iowa with mosquitoes the size of your head and 2 weeks of good weather in a year. Then maybe you can survive on just $1500 a month. Let's just go with something in between and assume you can survive on $2200 a month. For your hours, just assume you're gonna abandon everything and work all day every day. Now, you divide the amount of money you have left by your monthly wage to get the amount of months you have to complete your game! So divide $20 000 by $2200 per month. Congratulations, we just found out the release date of your game! You have 9 months and 2 days to finish your game, or else you're going to be bankrupt, out of business, and maybe dead. But at least people will say you died for our waifus right? Yeah right! They'll probably just laugh about you on random internet message boards and game journalists will draft articles about how another Kickstarter project crashed and burned. A-ahem, I'm going off topic, I'm sorry... But yes, make sure you finish your game in 9 months or very bad things will happen... It doesn't matter if it's the worst game in the universe, you need to get the game out by then! Your life might depend on it! 3. Make VN. Profit! And now we'll skip absolutely everything and just go to release day! The developmental stuff will be covered later, this is just about the cashflow. Congratulations, your game is out!!! It was a long journey, filled with tears, frustrations, friends and family calling you a fool, but hey, it had some fun parts too! I personally liked the parts when my waifus appeared on my screen the best. =w= Ah yes, this is the happy part. If you worked hard, did your research, and met deadlines, there's no reason why your game shouldn't at least recoup its developmental costs. Now, all that stuff will have to be covered later, but I'd say if you're even a half decent VN tycoon (like you score a 6/10), you should definitely make back the $40 000 if you've managed to survive this far. And now you can begin the entire process again, but smarter, more experienced, with a bigger fanbase, and with a better reputation. So it was filled with much work, and much more work remains, but at least you came out all right! Now, if you're a good VN tycoon (score 7/10), you should make two to four times your developmental costs as profit. That's an average of $120 000 profit! Whoo good job! You definitely earned all that money. Now you can hire more staff members and make an even better game than before! Maybe you can even buy games on Steam again and take weekends off! Wow! If you're truly great at this, you can make five++++ times what you invested. Developers who are talented, shrewd, genius, all at the same time, can even pull 10-50 times their developmental costs! Yup, imagine your little game making you $1 million! Quite a dream, eh... Maybe not this time, but next time for sure! 4. Conclusion And now you sink all that money back into your company and make a VN truly for the ages! Just remember, you have to go back to step one, and you will once again lose a chunk of the money you just made out of the opening gate again, but hey, you already knew that by now, right? Basically, the cash flow of a VN company is just the above three steps repeating over and over again... The take away here is that developing VNs are a high risk venture and a lot of work, but the payout can justify the risks if you have the makings of a true VN Tycoon. \^_^ Whew, what a long post, I was hoping to keep these short... I'm sorry everyone, I'll try to make things more concise next time... I... should go back to work now...