This is not strictly work-related but I was intrigued by Brian Green's challenge to come up with a business plan for an indie game. I am posting it here rather than in his comment section because of the length.

Lets start in reverse: How much money do we need to make this project worthwhile? We have 2 people working for equity. I'm going to assume they are working for the chance at a not-extravagant-but-comfortable salary for an educated knowledge worker. $30k per year is what I would consider the minimum to entertain an employment offer as a 24 year old engineer with no responsibilities, so lets use that as the baseline. 18 month development cycle * 2 employees = 3 man-years of labor. Plus we need to recoup our $50k initial investment. This means we'll need $140,000 in net sales. I'm going to assume we lose 50% of every sale to the download partner, that means we need gross sales of $280,000. (This will depend on what price point and contract terms you pick, but for ballparking lets run with 50%)


Lets consider $280,000 at various price points:
$10: 28k units
$20: 14k units
$25: 11.2k units

I'm not going to consider any price point above $25. Its not feasible given our budget.

So, what game can I sell to 11.2k people. I'm thinking there are two ways to do this: you either go into a big market (downloadable match-three for casuals) and try to get a sliver of the pie, or you find a niche and target it with laser focus. I say go for number two. We have three qualifications for a niche: it needs to be big enough to support 11k sales, it needs to have no significant competition, and it needs to be monetizable (will people pay $25 for a product in this niche?). Ideally our target customer will have a credit card and no compunctions about using it online, and has a decent degree of computer aptitude (can browse, install software, and navigate through our payment form without a problem).

I'm thinking if we target college students we get technological aptitude and "has a credit card" as givens nowadays. Yay. Now what can I sell 11k college students on. How about something in edutainment — they spend several hundred dollars a semester on books, whats an extra $25 for a program to help them study. Plus if I do edutainment I can skimp a little bit on the art budget, as nobody will be looking for 3D everything in this space.

Well, might as well play close to home: I've got one degree in Computer Science and one degree in East Asian Studies. Boom, languages. Very little educational software out there for languages and what there is is mostly garbage shovelware — a poor textbook with added voice samples put on a CD and stuffed onto the shelves at Best Buy. We can certainly beat the heck out of this with a game. Lets pick Japanese, since thats a language I actually know. Its anecdotally a pretty popular language to be studying at the moment, we can rope in the hobbyist/anime crowd who might not be majoring in the subject but already spend hundreds on it every year (boom: there's our art direction: an anime aesthetic — and we can farm that aesthetic out to Korea for CHEAP, just like the Japanese do), the only question is can we support 11k sales. Well, done right, this game has the potential of being a perinneal (it will never get old, and there will be a new freshman class studying Japanese every year until the sun goes nova), but lets consider our sales in the first year because I intend to eat at some point during that year. The Department of Education reports there are roughly 15k degrees in foreign languages and literatures per year in the US. I happen to know that 10% of those are to non-European languages. My ballpark estimate for the number of those awarded in Japanese, based on my knowledge of the profession, is about 40% (the other major non-European languages being Chinese and Arabic at the moment). That suggests about 600 degrees awarded per year in Japanese as a ballpark estimate. Now, from my experience roughly 25% of people who graduate with a Japan-related degree actually graduate with a degree that says Japanese on it (mine is "East Asian Studies", many are International Relations, Linguistics, International Business, etc), so thats about 2.5k people graduating with a "Japanese major" every year. We'll quadruple that number again to account for folks who are not majored in the field, but rather minored or studying out of personal interest (this is a lowball estimate, especially at the earlier levels in the language before serious winnowing down takes place). And we'll quadruple it again to represent all four years of study (another lowball estimate, since most foreign language students quit after 1-2 years in the language, meaning the ones actually making it to the degree represent a tiny fraction of the ones who started as a cohort 4 years previous). So there we have our core market: 40,000 users, with an expected growth in the market of 10,000 users every year.

Now, it should be pretty obvious that a market of 40,000 users isn't going to support 11k sales. And, frankly, in retrospect some of the above assumptions look pretty silly with an edutainment game. Do we really need 18 months? No, I believe it can be done in twelve. Do we really need a $50,000 development budget plus additional marketing? No, I think we can comfortably bring this project to market at $20,000. Recalculating based on the above formula, we now need 6.5k sales to declare the game a success. 6.5k sales is a number I can embrace, by aggressively targetting my core market (Japanese language students in secondary education) and moving into secondary markets (Japanese hobbyists/anime fans/etc).

Now, lets talk budget:

$5,000: art budget. We're going for a low-key anime aesthetic to make the game seem maximally user friendly (while still being professional enough to pitch to a college teacher without causing embarassment — no outrageously disproportionate women on the front cover, etc) and to get our hobbyist sales in. The entire art budget is getting outsourced to Korea. We'll budget $500 of the art budget to finding a decent contract service. Probably half of the budget will be spent on calligraphy but, hey, we'll leave that to our service to worry about. (Most characters in the actual game will just be rendered in our usual font. I think we'll pick an off-the-shelf one, but there is money in the tools section to pay for a licensing fee for a calligraphy-styled font if we so choose).

$1,000: market survey. Buy one of every book on Border's shelves about "Teach yourself Japanese" and one of every Japanese-language software, for comparison and integration purposes. $2,500: budgeted license fee for "handwritten" Japanese character recognition algorithm. We'll approach an academic for this — the software already exists and its making them nothing currently. Its possible we'll be able to wring it out of them for free, if not oh well, its money well spent because this will be a major selling point.
$1,000: professionally designed web site. Not my core competency, not worth my time doing myself. We'll have one of our programmers write any backend software required, but the CSS/HTML layout gets done by a pro. Ideally we'll get two versions: one austere and professional looking with a classical Japanese theme (for academic users), and one which resembles a casual gaming portal with anime stylings (for everybody else). Think the difference between CSS Zen Garden and Kotaku in terms of style.
$1,000: operational budget for website for two years. Includes hosting, domain name registration, misc.
$1,000: development tools. My first choice would be Java + NetBeans or Eclipse so the IDE is free, but we'll need an installer and probably a DRM solution. Might roll the DRM on my own to support our unique licensing model, see below. DRM is a necessity because this program is going to be viral and it is unacceptable to have 300 copies go around a university Japanese department and only receive money for 2 of them — we don't have market size to waste. Assuming startup costs for each of these is roughly $300 each for a commercial license for a small publisher.
$1,000: legal. ~$200 to incorporate by yourself in my home state (limited liability corporation, naturally), $800 for contract review with anybody we sign with.
$500: business insurance on both partners for two years. This is likely a huge overstatement of costs, given that two twenty-somethings have a risk rapidly approaching zero. That being said, I'm loathe to have a year of my life go up in smoke if my partner gets hit crossing the street, and want him similarly protected.
Subtotal: $13k+

Marketing: $7k

Pricing Strategy:
Our pricing strategy is based on the assumption that we lose $12.50 of every sale that is made through a portal.

1) Affiliate program: Earn $5 for every consumated sale made coming from a link you pass around to your department, friends, anime geek message board, whatever. We'll send out payments through paypal once a month. Cost of customer aquisition: $5 each, not bad. Note that this will require download through OUR website (goodbye, 50% portal rake!)
2) Academic/non-profit pricing: $5 to your department/organization plus $5 off the price of the program (price to student: $20) if your school sets up an arrangement with us, which we will make as stupidly easy as possible. The main idea here is to get teachers to evangelize our product to students. We'll write paper checks for these folks. Cost of customer aquisition: $10 for each customer plus what we spend on marketing to the departments.

3) Site licenses: $20 for the first 10, $15 for the next 40, "Call us for a quote" on any sale over 50 orders. I will gladly chat with you for an hour if your sale is going to be worth in excess of a thousand dollars.

We will accept checks and *gulp* purchase orders for these customers. Its a hassle but the relative number is going to be small and getting our toe in this market is worth the minor headaches and cash-flow hassles purchase orders entail. Besides, hopefully it will drive customers to our much more lucrative (from our perspective) credit-card based ordering.

4) Portals: hey, its a niche product. We understand that. If your portal understands that too, and doesn't have an up-front cost for placing it, we'll be happy to let you carry it any whatever terms you want. We assume we'll lose 50% of every sale.

5) (Our biggie) Direct sales through website. $25 each, of which we clear in excess of $20. Need to investigate whether to go through a credit card merchant account or a software registration service, and how this will work with our DRM.

Marketing:

1) Google AdWords in English and Japanese (very minor investment in Japanese). We'll spend a week working up which words to target, but I'm guessing its going to involve Japanese study related keywords and particularly anything asking for "flash cards" or "game". We'd be morons not to do this. Try working with a small subset of anime keywords, although the PPC of those will be much higher and the rate of sales is probably going to be lower.

2) Above mentioned affiliate campaign. I anticipate word of mouth is going to be our major marketting success story and this is a way to jumpstart it in a grass-roots way.

3) We promote the product on large special interest sites (BigDaikon, major anime boards, Japanese language study sites). We'll also spend a little bit of money on some of these sites for actual online ads — put $500 of the marketing budget in this kitty and see what the click-through rates are like versus our other efforts. Also throw some money at facebook for some major universities — their ad rates are extremely (absurdly) low and getting an evangelist or two in a department with 50 students is worth a $15 a school ad campaign near the start of classes.

4) Time to actually spend some money: We put together (by ourselves) a "press kit" for the software — 5 CDs for trials, 10 full color brochures, and a cover letter. Cost of a press kit: about $2.50. Grab two temp workers for a week at $10 an hour ($800). One assembles kits, the other prepares a mailing list of 500 American universities with contact information for an instructor in their Japanese department. We hit them all with a press kit. I'm not sure that we're looking to get actually used in the curriculum, but just them passing out the material to students or casually mentioning "If you want to study at home, try X" would be great. This could quite possibly be a big waste of money, but hey, nobody ever hit a home run while bunting. For $2,000, this pays itself back if the entire campaign generates 100 sales at our website — thats possible with our program taking root at any five mid-sized Japanese programs (a 1% success rate). If 5-10 of these lead to actual inclusion in the curriculum thats just extra paydirt. Incidentally, we'll gladly mail a press kit to anyone who asks for one — if some teacher stumbles across our site and writes us an encouraging letter they get a handwritten thank you note, a free license, and a press kit.

Packages:

1) Time & feature limited trial version. We'll give people one hour with whatever modes/difficulty levels they want with approximately 20% of the content unlocked — enough so that they can whet their appetite for the proficiency and grade gains they'll see if they buy the full game, but not enough to actually substitute for the game. This is our default download option. Ideally our DRM will be registration key-based so that our downloadable version IS our registered version.

2) Trial CD version. Very similar to downloaded version, but obviously needs to be able to install self from a CD. Can we customize for each department in an economical manner, for example by branding the splash screen? That would be a neat sales driver and also allow us to track what schools are ordering our product. Let each CD spawn an unlimited number of copies on whatever computers they have, and figure out a way for this to work seemlessly with volume licensing and students buying their own copies.

3) Portal versions. Tertiary priority, but we'll spend a little time jumping through whatever hoops they put up for us.

4) Volume licensing versions: Probably same as trial version with a special set of unlock keys. Personally, I'm inclined to trust anybody that bothers getting volume licensing that the number of computers they are using it on corresponds to the number of licenses bought. Maybe include a phone home while checking for updates to make sure a number doesn't migrate onto the Internets.

Alright, enough talk about business. Lets get to the game. We'll break the game up into several distinct gameplay modes, with as much overlap as possible. We'll try to focus on skills which beginning and intermediate Japanese students are weak on, which translate well into game format, and which leverage our technology across several minigames. At least one of the modes will be a story mode, featuring a plucky cartoon heroine completing a variety of language tasks, the reward for successful completion being a bit more story and then on to the next level. We'll target one level as being a 15-30 minute study session.

Spoken proficiency cannot be improved, in my personal opinion, by using a computer program. We could do listening comprehension but the existing shovelware paid a lot of money for their speech samples and probably does it better than we do. So we'll focus on reading and writing, which is happily an area where many students have lots of problems.

Kana blaster mode: for rank beginners. Similar to the old "Typing Tutor" games except the challenge for our target user isn't hitting the keys in time but rather accurately reading the kanji before they fall into {whatever destructible object we use}.

Particle recognition: speed based game featuring Japanese sentences where you have to insert an appropriate particle. Something absolutely frantic like, if you've played it, DS training: this is something that has to happen automatically in actual speech. Several difficulty levels available. We'll use a couple hundred sample sentences and algorithmically group them by theme (ha vs ga, etc).

Complete the sentence: several sub-modes. We offer a sentence and a kana completion for the sentence and have the student write the kanji (thank you, handwriting recognition software). This is hands-down the hardest skill for many students and the screen shots of this mode will move more units than any other single feature (there is a reason its featured prominently on the new DS training box, and thats for Japanese speakers!). This would be a great place to incorporate the story mode. Also, multiple-choice style: we give several possible fill-in-the-blanks, you pick the one that makes contextual sense for the story.
Kanji blaster: Like kana blaster, for people who read kanji. Use the entire zyouyou kanji set (thats everything you need to read a newspaper, handily published as a list by the Japanese government and widely available for free). We'll break it down into difficulty modes based on the 4 levels of the JLPT exam (also handily freely available). Probably incorporate another mode or two to test the same skill — read this kanji in context, etc.
Drill mode: Seperate from the story mode, all gameplay excercises should have a three-click (Drills from main menu, drill type, difficulty level) "get straight in and practice" mode available. Additionally, I'd hope our main menu had a Quick Start (use the student information saved up, immediately start them on something appropriate to them) one click button.

Timeline:

1 month: Research other Japanese edu-ware. Read lots of elementary Japanese textbooks to get feel for working vocabulary set for rank beginners/hobbyists.

1 month: Design game modes. Do it professionally — design docs, interface markups, etc. Keep eye towards functional reusability but no coding anything yet.

1 month: Interface design. Should cover main menu, introduction to each game mode, in-program buying link, splash screen on game load and game exit for non-registered copies. Use placeholder for graphics.

2 months: Prototypes of game modes. Use placeholder graphics and the bare minimum of "content" (sentences, kanji, etc).

2 months: Art and content development. Send out specifications and prototypes to our art team in Korea. Meanwhile, get to work writing sample sentences, dividing kanji lists into levels, etc etc etc.

2 months: Integration of assets, finalizing game modes. Begin work on wrapping with DRM solution, preparing multiple distributions, etc.

2 months: Testing. Meanwhile, launch website and solicit beta testers (free licenses for testers? Probably not necessary), make sure ordering systems are good to go, hammer out deals with portals.

1 month: Pre-rollout. Hire 2 temp workers for press kit campaign, start developing (but do not yet deploy) Google ad campaign, identify sites to buy ads on, make sure website/ordering solution/DRM are ready to release.

D-Day and beyond: Release, start collecting money and supporting. Adjust ad campaign on weekly basis to continue targetting any advertising sources which give good cost-per-customer returns.

Six months down road: New And Improved Version. The same as V1.0, but with double the words, double the sentences, and an entirely new story mode. Available to registered V1.0 users for half price. Its an expansion pack to a downloadable game, basically. If you don't own V1.0 well no problem we'll sell you V1.0 for $20 or both for $30, a $10 savings!
Sales projection (year one):

Sales from website (referrals from Google, ad campaigns, word of mouth): 5k

Sales from affiliate program: 500

Sales from press kit campaign: 500

Volume licensing: 250

Portals: ???

Estimated revenue (subtracting out payment processing) : ~$120,000 + anything received from portals.

Additional ideas for marketing: sponsor a scholarship contest (5x $500 scholarships for users of software, "no purchase necessary" entry a requirement by law, probably want to involve your lawyer for this one), visit your favorite anime convention, flyer local college campuses and/or get people to do it for you (hey, what do you think the affiliate campaign is for?), etc etc.

Alright, thats about what I could come up with in three hours. Let me know what you think: patrick_in_gifu@everyone_hates_spam_so_take_this_out.ybb.ne.jp .

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