Selling consumer products is hard. Selling video games is, arguably, even harder. The market is huge but it’s also very crowded. There’s so much noise on Steam (21 new games/day in 2017 ) and other distribution platforms that it’s insanely tough for new game developers to figure out how to sell games and what metrics to watch. This article will go over, what I think is, the most important metric for any game launching on Steam, namely the number of wishlists.
Full disclosure: I’m fairly new to commercial game development. I did, however, build and sell software products—including some games—before. After deciding to dive into gamedev head-first, I went on a pretty involved spree of learning about how to sell games. The following is an attempt to aggregate some correlated metrics and stats that emerged from me talking to indie developers and researching content from several fine individuals including Jake Birkett, Nikolay Bondarenko, and Mike Rose.
I got into game development because I love this expressive art form and it’s very exciting for me to be able to contribute to it. I also like (very much!) not being poor, that’s why I take the business side of game development seriously.
Let’s be like this guy but with morals. Credit: Paramount.
I figured, for an indie game developer in the US decent revenue per person on their first game is around $100,000 as long as the game takes a year to develop and operating costs are somewhat low. Some may say that it’s an ambitious number but, you know what, life is short, so why not be ambitious?
Is it possible to know if this number is realistic before and after the game launches? It turns out that the answer is “yes,” but it depends on the context.
First of all, there are many different factors that can affect game sales. I’m not going to go into any of them but just consider the following list:
- Time of year affects how many people are playing games on any given day.
- Big industry events before and after launch affect exposure both negatively and positively.
- Big sales on Steam can easily screw up wishlist conversions.
All these factors can affect your first week sales, which is when most developers make a good chunk of their annual sales. Sometimes you can plan for such events. For example, you probably don’t want to launch your game one week before the GDC.
Keeping this in mind, there still seems to be a relationship between sales during the first week, the first month, and the first year. This relationship, covered in more detail by Jake Birkett , follows the following pattern:
Where SW is the number of sales during the first week, SM during the first month, and SY during the first year. The 2.5 and 5 multipliers are based on median sales numbers across a sample of about 50 games (it includes my and Jake Birkett’s numbers). The 1st year multiplier could be as small as 2 and as big as 10.
Of course this relationship can be different for different genres, types of games, countries, etc. You’ll need to do a little bit of your own research based on what you are selling. A mobile battle royale about plumbers will likely have a different sales pattern when you compare it to a soccer simulator launched right before the World Cup.
Collecting sample data for your type of game could be beneficial. I would also recommend to always err on the side of caution and undercall the 1st year multiplier.
Now, to the more exciting stuff. Wishlists!
Before starting to work with Steam I had no idea how important wishlists were. They are basically a way to directly address your target demographic. People that wishlist your game are one click away from purchasing it once it launches. Of course it doesn’t mean that they will and it seems like most, actually, don’t. Nonetheless, wishlists is a great metric to use in your sales projections.
It’s important to note that the number of wishlists before launch for an indie game is meant to gauge public interest during a measurable span of time. For example, a game that was announced 10 years ago and now has 10,000 wishlists is not the same as a game that was announced 6 months ago and has 5,000 wishlists.
Based on some sources , it seems like it’s a good idea to announce your game 4-6 months before launch. Hence, all other things considered, when I say “the number of wishlists” I’m going to refer to the number of wishlists per half a year.
Again, based on my own research and the research from Jake Birkett  and Nikolay Bondarenko , it seems like there is a relationship describing the number of wishlists at launch and the number of sales during the first week after launch. This relationship can be described with the following equation:
Where SW is the number of sales during the first week and W is the number of wishlists at launch. The 0.4 multiplier is based on the median value of several aggregated data samples. The low value can be as low as 0.1 and the high value can be as high as 2. It depends on a lot of things that are specific to your game and context. But for a “typical” game the median value should be more or less representative.
Bringing It All Together
Before making any conclusions, I urge you to study materials in the references section at the bottom of this article as they give you more insight into context-specific things about your game sales.
The final equation describing the number of pre-launch wishlists and sales in the first year is:
I put together a Google Spreadsheet that gives you a better breakdown of all the aforementioned numbers. You can also play with ratios by modifying the top row and the expenses row.
This spreadsheet calculates the revenue after you consider an average price drop over the first year (hello, summer sale!), Steam’s cut, and the sales tax.
So, what’s the answer to the question in the title of the article? For a typical $14.99 game, after including the price drop, Steam’s cut, and the sales tax you’ll need about 7,500 wishlists at launch to make $100,000 during the first year.
Have fun making money and let me know what you think and whether you have any other insights or useful links!
- 7,672 games hit Steam in 2017 alone, says Steam Spy
- Steam Week 1 vs Year 1 Revenue
- Making the World Give a Damn About Your Game in 2018
- How many wishlists should you have when launching on Steam?
- Where’s my money, dude: what Steam is silent about