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Financing “The Last Door” in detail

Honesty and transparency have always been our priority, particularly in regard to our finances, so this message is a long time in coming. But before we get to that, I’d first like to give you an introduction to our vision and culture as I think this is relevant to your understanding why we made the decisions that we have.

Money is not the ends, but the means.

We at The Game Kitchen aren’t businessmen. For us, starting a business wasn’t the objective but just an absolute necessity toward reaching our aim of being able to create video games. In these games we’re committed body and soul to helping make the world a more beautiful, more enjoyable place with our modest creations.

It’s very important to us that our company structure is focused on fostering creative synergy between the various talents of our team members. Toward that end The Game Kitchen was established as a flat structured firm with no bosses, no hierarchy. We’re a group of like minded individuals who are all driven to achieve the same dream.

We’re very proud of what we’ve accomplished so far as a small indie game studio, all without resorting to financing or bank loans. As you may be aware, our home country of Spain has had a difficult time coping with the worldwide economic recession. We’re very happy that our success so far has enabled us to remain independent amidst this crisis.

Funding the First Chapter

It was an easy decision to choose crowdfunding as our funding source for The Last Door. Each of our team members has had some experience working on crowdfunded ventures in the past and we were all very happy with the results. This system appealed to us not just as a means of generating capital but also in enabling us to communicate directly and at an early stage of development with the people who are the most interested in our work. This was very important to us but there were difficulties.

In spite of over two years as a developer, we’d failed to establish a very strong brand in The Game Kitchen. Because most of our effort was in contract work published under the name of another developer, very few people had ever heard of us. That limited our ability to attract media attention and guaranteed that our audience of potential supporters would be small. We were going to have to work hard to build confidence. Consequently, we knew we couldn’t ask for a very large sum of money.

Ultimately we decided on a target amount of £3,852 (4.500€ or $6,240 USD). After an intense month of campaigning, we managed to raise £4,690. Not a very large sum when it comes to game development but we knew it was enough to get us on our way toward getting the pilot chapter of The Last Door made.

And so we spent that money on acquiring the needed licenses and development tools. We paid our composer, Carlos Viola, whose work we knew would play a key role in making The Last Door a memorable experience. We even bought additional instrument libraries to ensure that the soundtrack would be of the highest calibre. After that we focused our budget on marketing activities to help build awareness for The Last Door once it was ready for release. Then we distributed what remained of our budget among the team members for their living expenses.

As a business move, developing The Last Door wasn’t a very profitable enterprise. Each of us received only a symbolic salary for our three months of effort. But we were making the game of our dreams and that was what was important, what we were committed to.

Fortunately, in addition to the generous donations of the 285 backers who chose to support the development of The Last Door, it was the unconditional love of our families that supported us in this period. We don’t have any other job to do, any other source of income. We’re completely focused and invested in seeing The Game Kitchen succeed. That could not have been made possible without them.

Funding the second chapter

With the outpouring of praise we received with the release of Chapter 1 we knew that we had made the right decision. Our risk in developing The Last Door had paid off, morally if not yet financially. In addition to our original 285 backers, the public was starting to show interest and we were encouraged to keep going.

But now that we were working on our second release, it wasn’t enough just to make a game, we had to make the production of that game financially viable. Our families would only support us for so long, it was time for The Game Kitchen to stand on its own two feet. In estimating the funding goal for the second chapter, we tallied our projected development expenses and added to that the cost to hire our team at Spain’s minimum wage law for the duration of the production cycle. Our total came to 7.500€ (about £6500 or $10,000 USD).

Because we had lost our contact in the United Kingdom, we could no longer seek to fund future chapters on Kickstarter. Instead we relied on our own in-house crowdfunding effort over PayPal. Since we had now released a tangible product in Chapter 1, we could offer it for a voluntary “pay what you want” fee rather than ask for donations.

Unfortunately our second crowdfunding effort raised only 3.000€, less than half our goal. It was enough to get Chapter 2 produced but we would have to depend on our families for a little bit longer.

At this point we had to accept that our business model simply wasn’t working. In looking back we recognize a number of areas where we could improve. For one, even though we had released Chapter 1 it was still only available to people to had paid a monetary contribution. We did not yet have a free demo available for people to get a taste of the game we’re developing.

More importantly we understood that while we had created a good system for making games, we had underappreciated the importance of marketing and sales. These were the keys to turning a good game into a profitable one. If we could improve on those aspects of our business then The Last Door would truly be able to shine in the light of its own merit. This epiphany gave us the optimism to forge ahead in developing Chapter 3.

Funding the third chapter

In projecting our costs for the first two chapters we realized that our estimations were based on a two month development cycle. In practice, though, it took three months to produce a chapter from start to finish. Realistically we had to raise our target goal again, this time to €10.000. Another reality we had to face was that we could no longer personally afford to continue living on the amount of money raised if our campaigns continued to finish underfunded. So we set ourselves a milestone. If we were unable to raise €6.000 by July we would be forced to end development.

Aware that marketing was not our strong suit, we searched for outside help in this area. We were fortunate enough to find Mary Kish of IndieViddy.com and she helped us considerably in raising worldwide awareness of The Last Door. This combined with the free release of Chapter 1 really helped catapult our little game into the public eye. In the first week alone nearly a quarter of a million people played The Letter, many giving us positive reviews and an overall rating of four out of five stars.

This attention brought with it unexpected rewards. In addition to hosting the chapter on our website, we also published a “wild release” on many free game sites. The volume of traffic The Last Door saw on these sites helped provide us with a source of extra income that we hadn’t anticipated.

While the funding period for Chapter 3, The Four Witnesses, hasn’t ended yet, the numbers are strong enough to guarantee continued operation of the project. As you examine the details of our budget in the follow section, you will see that the present cycle marks the first time since development of The Last Door has begun that we’ve managed to fully cover our expenses.

Third chapter budget in detail

Income:

 - Donations: 8.800€ (after Paypal commissions)
- Pilot Chapter “Wild Release”: 1.254€
- Other projects:
- Contract work during this period: 2.300€
- Sales on AppStore: 150€
Total Income: 12.504€

Expenses:

 - Development Team:
- 6 people x 600€/month x 3 month, total: 10.800 € (including taxes)
- Other:
- Music: 500 € (per chapter)
- Marketing: 377€
- Office: 1000€
- Other operational costs: 550€
Total Expenses: 13.227€

Time for some analysis

As you can see, each team member is making 600€ per month. After taxes, that comes to about 450€ in spendable income, which comes to about £385 or $620 USD. That’s much less than what could be typically earned by someone in our line of work.

But we’re not complaining. The Last Door is a true labor of love. We’re proud to have made a product relevant to today’s market. Moreover, we’re happy to be employed during such a difficult recession. Though we made a few mistakes along the way, we believe that our decision to pursue The Last Door was the right one, and your support has borne this out.

Nevertheless, we mustn’t become complacent. While we managed to sustain ourselves in this current cycle, our model still depends primarily on the generosity of the people contributing to our crowdfunding effort via PayPal. We need to look at more ways to sustain development of The Last Door and then to grow.

Financing future chapters

So far our supporters have been a great resource for ideas and suggestions in how we might improve the game or our business model. So we’re coming to you with some ideas on how we intend to continue raising money.

– First off, we need to keep doing what we can to grow our user base. We need to continue raising public awareness about our game by trying new and more sophisticated marketing experiments..

– Next, we need to aim for a shorter publishing cycle. Right now we need about three months to build, text, and release a chapter. It we optimized our production pipeline without compromising the quality of the game then we would reduce the cost of labor on a per-chapter basis. Not only that but by releasing more frequently, our fans would be able to enjoy our work that much sooner.

– Raise the funding goal for each chapter: Currently, we’re spending more than 10,000 (the current goal) to develop each chapter. We may need to carefully quantify our other sources of income, and try to set a funding goal that reflects the project budget more accurately.

– We can optimize our “wild release” of chapters on flash game portals. By deploying chapters more strategically we might be able to more effectively use these sites at a source of income.

– Finally, we can start to sell The Last Door as a standalone product. As much as we love building this game for your web browser, spending resources to build and version that users can install and run offline would open up new venues of sales, such as Steam or indie game bundles.

Closing words

We’re very happy to be able to share with you both the story of our journey from a crowdfunding campaign on Kickstarter to the release of our third chapter as well as our vision of what we want to achieve with The Game Kitchen and The Last Door. We hope that you’ve found this post informative in giving you an appreciating the funding goals that we set for ourselves and why they have increased with each passing Chapter.

We would love to hear what you have to say about this so please don’t be shy. We closely follow the forum and will he happy to answer any questions that you may have. We are eager to receive your feedback.

We could never have created The Last Door without the support of our backers. No words of our can adequately express our gratitude to you in allowing us to pursue our dream job of making games. Thank you so very much. We hope to continue meeting, and hopefully exceed, your expectations with each new Chapter.

Mauricio.