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What does it cost to start a game

development studio?
 14
 14 August
August 2013
2013  13,579
 13,579 views
views

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I’ve recently bumped into a very interesting and thought-provoking discussion
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in one of my LinkedIn groups. One former military man  asked other group
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members how much it would cost him and his partners to launch app
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development company in the United States including everything from
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employee salaries to paying utility bills. The question caused a heated
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discussion and here’s my round-up of it.
EVENTS
In the United States, rough cost of setting up and running an MMO games dev EXPERT OPINIONS
studio for 12 months is almost $618,000 including federal withholding, social IN THE MEDIA
security, insurance and state tax and excluding variable costs such as Internet, INFOGRAPHICS
electricity, heat, etc. This cost is comprised of the following items: IOT
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8 people (1 front-end and 1 back-end programmers, 1 software engineer, 1 OUR C-SUITE THOUGHTS
2D/3D artist, 1 game designer, 1 PM / team lead, 1 QA engineer, 1 systems PROGRAMMING LANGUAGES
administrator, all middle guys) – on average $73,000 gross per person per SECURITY
year = app. $584,000 SOFTWARE DEVELOPMENT
SOFTWARE TEAMS
Workstations (basic furniture, PCs, monitors) – app. $1,200 per person (*8) =
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$9,600
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Of ce space rent for 12 months (nothing fancy) – app. $24,000 TECH SALARIES
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Don’t forget to include 5% to 10% overhead on top of each person’s salary (this
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overhead includes of ce utilities costs depending on state and location) and
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consider other tiny things that cost money when developing your budget. The
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above costs are still pretty rough, but they do provide you with a general
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picture of how much the endeavor will cost you in the United States.
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Also, according to the discussion, it is critical to keep an eye on the team costs
after the game has been launched. It’s silly to estimate the game project in the
following way: development takes X months, we burn Y per month, so we need ALSO READ
X*Y in total. In reality, you may need twice as much time to promote the game,
create a functional support service and x post-release bugs. Once done, you 9 Reasons Why American Tech
Companies Outsource Software
will need to upgrade your product, add some new features, improve Development To Canada
functionality or design, etc. This should be done on a regular basis. Once you  25 April 2019  71
stop doing it, your game will die. Things such as promotion or support should
How Arti cial Intelligence And Machine
better be outsourced to digital PR agencies and call center providers, but most Learning Will Transform Software Testing
of technical things will have to remain in-house. As you see, starting and  20 April 2019  109
running an own mobile app development company can be very time
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consuming and expensive. And what if the game fails to capture players just
2019
because you’ve initially targeted the wrong audience? There’re lots of risks  10 April 2019  152
related to it, aren’t they?
How To Build A Software Development
Team In Mexico And Reduce Your IT Costs
Some gaming experts agreed in the discussion that the perfect scenario for
 4 April 2019  219
running a software development company would be to keep a small core team
in-house to deal with creative part, app specs and briefs, manage feedback How Your Organization Can Hire & Retain
and oversee the process, while outsourcing development and promotion Talented Software Developers
 26 March 2019  369
assets.
7 Ways To Optimize Your IT Budget In
Setting up a remote Agile team in a lower-cost location can be a very effective 2019
measure to address strategic long-term requirements of your games studio. A  14 February 2019  570
software development team model is able to save you up to 60% of game
development and related costs in a long run. When you choose a Salary Plus
Management Fee pricing, you get a fully transparent IT staf ng venture and a
fully predictable app development budget. You basically pay each member’s Subscribe for updates
salary on your dedicated team and a provider’s management fee that covers
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all of the services provided (e.g., search for candidates, cost of workstation,
overhead, etc). You fully forget about HR, administrative and infrastructure
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bustle and focus 100% of your efforts on project management.
 
Here’s a rough estimate of how much it’ll cost you to run the same 8-persons
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app development team in Ukraine:

8 people (salary + management fee) - on average $20,000 + $22,000 per     

person  = $352,000 per annum (including all taxes and overheads!)

That’s it! The money you save can go to your game promotion budgets or you
can easily add more specialists to your in-house or dedicated development
teams to boost the effort.

Also remember that in countries like Ukraine you’re able to get senior level
professionals to work on your game that you can’t really afford in the United
States or Western Europe, especially if your brand is not yet known to the
broad audience. On average, it takes 2 to 3 years to develop one big name
hardcore title and for this you’ll need 200-300 people on staff. When you use
offsite dedicated teams, you’re able to scale up according to your current
business needs and signi cantly shorten your time to market. Global game
dev giants such as Playtech and Big sh already have fully operational game
development setups in Ukraine counting more than 200 people each. It looks
like proper use of offshore IT staf ng plays a pivotal role in their overall success,
doesn't it?

Vik Bogdanov
Vik is our Brand Journalist and Head of Online
Marketing / PR with 11+ years of international
experience in IT B2B. He's also a guest blog
contributor to Business2community, SitePoint,
Journal of mHealth, Wearable Valley and other
IT portals. You can contact him directly on
LinkedIn.

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