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iPhone: Bankrupt?

11-29-2008, 12:09 AM
#1
Joined: Nov 2008
Location: Utah
Posts: 149
Bankrupt?

Is developing games for the iPhone/iPod Touch making some developers go bankrupt?

Is there really that big of a risk in the investment of developing games?

I understand the the argument of Jailbreaking the device to get free apps, but how true is the statement of bankruptcy or is this an exaggerated statement?

Another question how much of an investment is made in making apps?

Just an honest question cause the comment about it makes me wonder?
11-29-2008, 12:19 AM
#2
Joined: Nov 2008
Posts: 451
Quote:
Originally Posted by The Lab View Post
Is developing games for the iPhone/iPod Touch making some developers go bankrupt?

Is there really that big of a risk in the investment of developing games?

I understand the the argument of Jailbreaking the device to get free apps, but how true is the statement of bankruptcy or is this an exaggerated statement?

Another question how much of an investment is made in making apps?

Just an honest question cause the comment about it makes me wonder?
Well basically, if an app isn't generating enough money, neither are the devs. Remember that devs have families and bills like everyone else and, for some, this is where their money is coming from. This is their jobs. Making and distributing apps.

And even if you jailbreak and steal just one app, that could be as much as stealing a bag of groceries from them.

For instance, if one person stole the Beatmaker app which is $20, then that's taking a good chunk of change from the developer's paycheck each month. Now multiply that by dozens, if not hundreds of people stealing that app. Even if 10 people steal a $10 app, that's $100 gone, just like that.

It really is a crappy fact but, yes, it's true.

Last edited by Chase; 11-29-2008 at 12:25 AM.

11-29-2008, 12:27 AM
#3
Joined: Oct 2008
Location: New Orleans, LA
Posts: 893
Quote:
Originally Posted by Chase View Post
Well basically, if an app isn't generating enough money, neither are the devs. Remember that devs have families and bills like everyone else and, for some, this is where their money is coming from. This is their jobs. Making and distributing apps.

And even if you jailbreak and steal just one app, that could be as much as stealing a bag of groceries from them.

For instance, if one person stole the Beatmaker app which is $20, then that's taking a good chunk of change from the developer's paycheck each month. Now multiply that by dozens, if not hundreds of people stealing that app. Even if 10 people steal a $10 app, that's $100 gone, just like that.

It really is a crappy fact but, yes, it's true.
But maybe those people would have never bought the app otherwise, is that stealing $100 from them?
11-29-2008, 12:29 AM
#4
Joined: Nov 2008
Location: Utah
Posts: 149
Taking into consideration that this whole app system is still young is there developers out there just making a living off of developing apps?

Did people just see this as an opportunity to leave their 9 to 5 and just build apps?

Can I hear from some developers on these questions and if they don't mind hear how much they make a month from the app store?
11-29-2008, 12:30 AM
#5
Joined: Nov 2008
Posts: 451
Quote:
Originally Posted by rootbeersoup View Post
But maybe those people would have never bought the app otherwise, is that stealing $100 from them?
Yes. Because you should have bought that app. If it's not yours, you stole it. And by stealing that, you stole money from them that they could have made off that particular app.
11-29-2008, 12:33 AM
#6
Joined: Nov 2008
Posts: 451
Quote:
Originally Posted by The Lab View Post
Taking into consideration that this whole app system is still young is there developers out there just making a living off of developing apps?

Did people just see this as an opportunity to leave their 9 to 5 and just build apps?

Can I hear from some developers on these questions and if they don't mind hear how much they make a month from the app store?
Mmhm. If Frand shows up from Secret Exit games, which he might because he visits these forums, he'll tell you that that's what he does for a living. He's said it back at the Secret Exit forums, actually.

Not all developers are like this, but a lot are.
11-29-2008, 12:35 AM
#7
Joined: Jul 2008
Location: Orlando, FL
Posts: 4,491
Quote:
Originally Posted by rootbeersoup View Post
But maybe those people would have never bought the app otherwise, is that stealing $100 from them?
Also, in order to crack an app you have to BUY it and have it running on your device

So the dev losses potential sales but still make some money

Also, updates for cracked apps only come when a cracker feels like cracking the patched version

If a game is really worth it they end up getting the app so they can keep getting those updates as soon as they come out. Other times people want to see if the app is really worth their money.

So in the same way they may lose potential sales... they also gain sales they might not have had otherwise.
11-29-2008, 12:38 AM
#8
Joined: Oct 2008
Location: London, Ontario, Canada
Posts: 349
Quote:
Originally Posted by The Lab View Post
Did people just see this as an opportunity to leave their 9 to 5 and just build apps?
Oh yeah.

| Mike Kasprzak | Sykhronics Entertainment | Mike @ Twitter |

Smiles HD for Mac and iPad | Smiles for iPhone/iPod touch (Twitter, Website)
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11-29-2008, 12:41 AM
#9
Joined: Nov 2008
Posts: 451
Quote:
Originally Posted by VegantTnT View Post
Also, in order to crack an app you have to BUY it and have it running on your device

So the dev losses potential sales but still make some money
Okay, but for a $5 app, that's +$5, -$100 (or more)

That justification doesn't make sense.

And knowing a lot of people, if they are enough of a jerk to steal that app, they'd go and look for the update or wait for it. They wouldn't pay for the app if they didn't have to in the first place.

I know it's cheesy, but would you take a game off the shelf in the store, take it home without paying for it, and then go back and say "Hey, I liked this. Here, you can have this $5 that you now deserve because I decided that I like this game."

Last edited by Chase; 11-29-2008 at 12:58 AM.
11-29-2008, 12:53 AM
#10
Yes, bankruptcy is a real everyday threat for indies that are in this to make a living. Let's play with numbers:

An indie studio has 3 employees, an artist, an engineer and a game designer. Together they handle marketing, bizdev etc.

Three guys need to pay the rents on their apartments, eat, pay the bills etc. so let's say that they need to be paid roughly $2500 per month each. On top of that the company pays health insurance, office rent and other fixed costs.

So now your company needs $7500 for gross wages + ~20% for health insurance per month. That's ~$9000 for employee costs. Add office rent, electricity, internet... now you're probably at $10000 - $12000 costs per month.

Remember that when you start up, you need computers and software licenses. Those can easily rack up to a $10000+ fixed cost.

If you're only developing for iPhone and you're selling your application at 99 cents, you need to sell ~14000 copies each month (assuming your costs are only $10K, remember Apple takes 30%) just to keep going, much less make profit.

For most, this is not realistic at all. The only apps that might sell those kind of numbers are in the top 50, perhaps at top 25 in the apps list. There is no average case to quote since it all depends on visibility and popularity. If nobody notices your game, it may sell 5-15 copies per day, globally. Note, we haven't had major success with SPiN to put us in the top 10 in any charts (yet?), so I can't speak for the download numbers there. Rumors say that top 10 apps rake thousands of downloads per day.

If the app is priced at $2.99, great, now only 5000 sales each month are needed to survive. In other words, about 170 sales per day.

How much risk can an indie take? Develop an app in one month, three months, six months? That's half a year without revenue coming into the company, so the guys are living off whatever funding they have, be it personal savings, public grants, venture capital etc.

Let's say a game takes six months to develop. That puts the budget of the game at $60000. Just to make that money back, the game needs to sell 30000 copies at $2.99 before the developers would even see profit.

I'm simplifying stuff just to make a point, and there are many ways to start an indie company with less risk. But in a nutshell... yes, this is a tough business and many indies can go bankrupt if the game they've developed with their savings doesn't sell.

Last edited by Frand; 11-29-2008 at 01:01 AM. Reason: Fixed the download number estimates a bit.