Wednesday, June 03, 2009

A viable business model in the iPhone App Store?

In this little more than a year of iPhone App Store we have some stories of guys that coded a simple game at home and made about or more than half a million dollars, and others about developers that quit everything to work with iPhone programming and didn't make even a $1000 from their effort.

Yesterday the great developers at NimbleBit software released some of their sales numbers. That's very nice because, as they define themselves, they are somewhere between rags and riches.

What caught my attention is that they seem to be close to something that could be called a viable business model, some of the numbers:

Now what do I define as a viable or supportable business model? At least in indie game development, I'd say it would be a business model where the business owners would be financially compensated at least close to what they could make working as employees in the game industry, but doing what they love, having better chances of expressing themselves creatively and having no boss.

According to these criteria, I think NimbleBit might be getting close. If we account for all of their 5 games (Hanoi Plus, Scoops, Textropolis, Kryper and Sky Burger), they took 8.75 developer-months, bringing in US$ 189880 of revenue. Counting only the declared development time for each game, each man-month (I know, I know...) brought in a revenue of US$21097.00, which is great.

If we assume that all three members of NimbleBit have been at it full-time for about a year (probably doing marketing, systems and business administration and other activities that surely consume their time), the revenue (not net profit) for each one is US$63,293.33. Update: See NimbleBit's Ian Marsh's comment below.

Taking into account that an average professional working for the game industry in the U.S. earns about $79000, but if you count just programmers the average salary is $85,000, we'd say the folks at NimbleBit are doing worse financially than working as employees, but are at least close, which hints that they might keep doing it sustainably (income data according to Game Developer 2008 Game Industry salary survey, which I don't know if is after or before income tax).

Scoops, the game that made US$ 140,000 so far

NimbleBit games are very polished, though simple, and this is a nice part of their strategy. Since nobody knows which game will be a hit, they release a new game about every month. That's also what big game companies do - churn out a lot of games in the hope that one of them will pay off and turn a profit.

The caveats in this story are that Scoops was about 10x more successful than the other titles, and it is not going be a sustainable endeavour if once in a while they don't turn out a hit (albeit a mild one), and that we are looking just at revenue, we don't really know how much they spent so really it's best to avoid jumping at conclusions.

Still, it's a very nice story. They are putting in some hard work, keeping their eggs in many baskets and getting results that I hope allow them to get by and grow.

I compiled a ton of stories about failures and successes and business strategies at the Apple Store or other mobile stores, you can find them at this Diigo list. Update June 17: this Google Notebook Page also contains the same clippings that are in the Diigo list.