This series of blog posts is part of the post-mortem on Path of Kami Journey Begins. Here is a link to the first part.
Making games as a business
One of the first things to think about is why you want to set up your own game studio and keep in mind going in that it's a business. Whether your bootstrapping or planning to work with publishers or investors, going solo, or building a team, you’ll have to start thinking about making games as a business.
Coming up with a business plan is essential, looking into how your studio can make money and fund current and future games. You’ll have to account for recruiting, payroll, legal, financials, marketing, and more. Luckily there are people out there that can help! But all of these have to be thought about when founding your game studio.
Legally setting up your game studio
Disclaimer: I am not a lawyer and everything I’m sharing here is based on my own personal experience, I recommend consulting with a lawyer for setting up your game studio.
After getting an initial idea of the game we wanted to make, I worked early on with our friend John from Laster Law to get things set up properly. I recommend getting an attorney early on and ensuring they specialize and have experience in the gaming industry.
Some things to think about:
Company structure and entity (corp, LLC, etc). Entity types can vary per country, I recommend researching what’s in your country and consulting with a lawyer on what would fit best for you. For Captilight we ended up filing as an LLC and I’ve seen a lot of other game studios do that as well.
In the U.S. once you file your business you’re provided with an EIN number (Employee Identification Number) this might take up to a week to get and is very important so keep this in your records! You’ll need this to set up a bank account for your studio. I’ll talk more about this later.
If you're founding the company with multiple people, deciding ownership percentages and roles, etc.
Get the following paperwork on hand: Contributer/independent contractor agreements, Intellectual Property Assignment, NDAs
If you plan on offering services along with working on internal projects the following are good to have as well: Master Services Agreement (MSA) and Statement of Work (SOW).
Some firms offer discounted startup packages that come with the above documents, so shop around and see what's available! The firm we worked with had a package that helped set up our LLC and offered the above documents.
Once you have an EIN number, an employee identification number, you’ll be able to set up a business bank account and credit card. I highly recommend keeping bank accounts separate (personal and studio), even if you're not spending a lot of money. Similar to personal credit cards, you’ll have to build your business credit. Once you start paying for services and growing a team I also recommend working with a bookkeeper to help keep your financials organized and ready for tax season.
Company logo and branding
What is ‘Branding?’ This is how people talk about your company when you're not in the room! Your company’s identity. This is different than marketing. Marketing involves the tactics and strategies to communicate the brand vision, I’ll share a specific post later on talking specifically about the marketing side of things and what we did for Path of Kami.
Branding is the visuals in how your company is represented, how someone should feel when approaching your company, its games, website, etc., and what your company stands for. The company ‘vibes.’
By this point you should have a company name, next will be getting a branding kit set up along with your company logo and website! Remember to also set up popular social media such as Discord, Twitter, TikTok, Facebook, etc. You don’t have to use all of these but it's good to grab the username/handle in case you’d like to in the future or to make sure no one is posting weird stuff with your company name. As you start marketing your game and doing market research you can pinpoint what your target audience uses the most and use those platforms moving forward.
Building your team
Depending if you’re offering rev share, stipends, or hourly pay/salary you may go about looking for team members in different ways. I recommend starting small and building out your core members first.
If you’re looking for contributors and offering rev share I recommend putting a call out for team members on Reddit, social media, game dev discords, or ask around your friend group.
If your offering hourly or salary pay I recommend posting job ads in game dev discords and job sites such as:
Compensating Your Team
There are many ways to compensate your team, if your financially able always go with outright paying your team! I know it's not always financially possible to do this though so here are a few options depending on the financial situation. Whatever situation you're in, I recommend being completely transparent with your team and while your vetting/hiring members so they have a clear picture of what they are going into.
Rev Share
Rev share is providing team members who contributed to the project a percentage of game sales. This can be tricky because some team members may contribute more than others and some members may leave before a product is released, so setting rules beforehand is recommended! Be transparent with the rules and have them always available to the team to avoid miscommunication and confusion.
Slice of Pie
You can also share equity for the company using Slice of Pie. Slice of Pie is using a formula based on the principle that a person's % share of the equity should always be equal to that person's share of the at-risk contributions. At-risk contributions meaning a person’s time working on the project, money put in, ideas, supplies, etc. This can be great for founding members!
You can also use the slice of pie formula to calculate rev share percentages to keep contributions dynamic to the amount of work people put in on the project as a whole. Check out the resources section at the bottom of this blog for resources on slice of pie along with a worksheet.
Contract Work
You can also offer services based on your team’s expertise, this can help pay your team and for future work on your game. Something to keep in mind is to not get too lost in the contract work and to make sure to balance this with the game development to make sure your game and internal projects are still moving forward.
Have a backup plan
Making money in games is hard! It’s rare to make money on your first couple of games so I recommend not putting all your eggs in one basket and have a plan for keeping your studio running so you AND your team are still in a good spot.
Tools
Below are some tools that have been helpful to use, I also posted a helpful video here as well going over a few of them.
Documentation (Confluence Alternatives): Nuclino, Notion, Hack N Plan, Tettra, Google Docs
Time Tracking/Reporting: Clockify, Function Fox
Project Management: Notion, Hack N Plan, Clickup, Asana
Communication: Discord, Slack
Resources
Founder's Kit by Hey Glitch with Pitch Deck Examples, Business Structure Info, Legal Documents, and more you can use to start out and reference!
Learn more about Slice of Pie
Slice of Pie Worksheet for calculating percentages
Hope this blog has been helpful, thanks for reading!