Cash-flow management is a critical aspect of 2D game development, spanning from the initial investment phase to the eventual release of the final product. In this journey, understanding the inflows and outflows of funds is paramount to ensuring the project’s stability and success. Let’s delve into the intricacies of cash-flow in 2D game development: from investment to final product.
Understanding cash-flow in 2D game development
Cash-flow in 2D game development is an essential aspect of building and completing a game project. It involves the flow of income and expenses related to the development project. Below are some detailed aspects of cash-flow in 2D game development:
- Income: Revenue and investment sources into the project from investment to final product.
- Expenses: Various costs that game developers have to incur during the game development and business maintenance period.
Understanding cash-flow in 2D game development
To effectively manage cash-flow in 2D game development, you can implement the following measures:
- Financial planning: Establish detailed financial plans including income and expense forecasts throughout the game development process. This allows you to have an overview of the funding and shape your working plan.
- Cost management: Monitor and control game development costs. Ensure that spending is monitored and adheres to available funding. Consider unnecessary expenditures and find ways to cut or optimize them.
- Revenue tracking: Track and analyze revenue from different sources such as sales, in-game purchases, advertising, and sponsorship deals. This helps you understand revenue sources, evaluate the effectiveness of marketing campaigns, and find ways to enhance revenue.
- Financial reserves: Create financial reserves to cope with fluctuations and uncertainties in the game development process. These reserves ensure that you have enough resources to meet unexpected demands or difficulties during development.
- Tracking and reporting: Implement regular tracking and reporting of cash-flow throughout the game development process. Use financial management tools to track income and expenses, analyze data, and make decisions based on specific information.
Overall, managing cash-flow in 2D game development is an important process to ensure the stability and success of the project. To have an effective cash-flow management plan, 2D game developers need to understand the overview of cash-flow in 2D game development: From investment to final product. All information is in the following section!
Cash-flow in 2D game development: From investment to final product
Here, we will provide suggestions on cash-flow in 2D game development: from investment to final product. Please note that these are just basic and general summaries, and cash-flow may vary depending on the project scale and game genre.
Investment stage in 2D game
Investment stage in 2D game
During this stage, the main goal of 2D game developers is to ensure sufficient funding according to the plan to initiate and proceed with the project. Cash-flow inflow may come from various investment sources. Below are details about the main funding sources:
- Personal financial resources: Utilizing personal savings or assets to finance the development process. The amount may vary depending on each developer’s conditions. If you have enough personal financial resources to execute the project, there may be no need to seek additional funding sources.
- External investors: The second approach is to seek investors from game development companies, individual investors or investment funds. This typically involves pitching the game idea, demonstrating the project’s potential and negotiating investment terms. These investors often provide larger capital and may also serve as advisors or provide connections for your project.
- Loans: Another option to fund 2D game development projects is to borrow capital from external financial sources, which could be from banks, financial institutions or investment groups. This loan should be carefully evaluated to ensure that the business can repay the debt and avoid financial difficulties during the project development process.
For more information, refer to “5 ways to fund your game“.
Regarding expenses, the investment stage doesn’t incur many operational costs. It typically includes expenses incurred during fundraising, such as consulting fees, legal fees, and other related costs. Generally, investment is about preparing the cash-flow for the later stages of game development. Ensure that the project has an appropriate budget aligned with the development plan to avoid difficulties in the subsequent stages.
Pre-production stage of 2D game development
Pre-production stage of 2D game development
Once sufficient funding is secured to start the game, developers begin the project with the pre-production stage. In this phase, expenses such as market research costs, planning costs, and costs associated with creating preliminary assets like concept art or prototypes become prominent. You can refer to the full breakdown of expenses for the pre-production stage below:
- Market research costs: Expenses related to accessing information sources, hiring market research services or purchasing market data from research companies.
- Consultation and planning costs: These are expenses associated with hiring experts or consultants to assist 2D game developers in financial planning, development planning, marketing planning and costs for other planning documents.
- Meeting and communication costs: During the planning process, you’ll need to organize meetings, meet-ups and communicate with stakeholders such as investors, partners, outsourced services or staff. This cost includes renting meeting rooms, transportation and communication tools such as phones, emails or online meeting software.
- Art and design costs: These are expenses related to hiring or collaborating with artists and designers to create preliminary assets such as concept art, 2D models or prototypes. This cost may include salaries, outsourcing fees or project-based fees for artists and designers (depending on the project).
- Software and technology development costs: If you need to develop software or use complex technology to develop the game, there will be expenses related to hiring software developers, purchasing software licenses, or acquiring technology from external sources.
- Personnel costs
Here, if there are not enough funds to sustain production, producers may seek cash-flow through various means during the fundraising stage.
Cash-flow in 2D game development: production
Cash-flow in 2D game development: production
In production, cash-flow is focused on completing the game and preparing for its release. Here are the essential expenditures and associated activities:
- Content development costs: Tracking and managing expenses related to content development according to the plan established in stage 2. Ensuring that these costs are controlled and aligned with the projected financial resources.
- Game completion costs: Including expenses associated with finalizing the game, such as optimizing performance, debugging, balancing gameplay and implementing last-minute enhancements.
- Administrative expenses: Managing overhead costs such as office rent, server rentals, software licenses, project management and other operational expenses.
- In-house personnel expenses.
- Outsourcing expenses (if applicable).
At this time, many developers seek additional funding to sustain the project. Some avenues include seeking investments similar to those pursued in step 1. Additionally, revenue can be generated from selling trial versions, demos or pre-paid packages to fund the development phase until the game is completed.
Cash-flow in 2D game development: Game Release (Final Product)
Cash-flow in 2D game development: Final product
If the game is successfully released and receives positive feedback from the community, developers will have certain sources of revenue. Depending on the 2D game’s monetization model, revenue sources will vary.
- Regarding the expenses during this stage, they will include:
- Distribution costs: When preparing for game release, you need to consider expenses related to distributing the game and legal procedures. Cash-flow includes costs associated with releasing the game on platforms such as Google Play, the App Store, and legal processing fees.
- Operational costs: These encompass business operation expenses and maintenance costs after the game is released.
- Marketing and advertising costs: Expenses for marketing and advertising activities remain necessary to maintain and enhance sales figures.
- Customer support costs: Expenses related to providing support and maintenance for players after they have purchased the game.
- In-house personnel expenses.
- Outsourcing expenses (if applicable).
- Game upgrade and improvement costs: This is an essential part of the process of developing and maintaining a 2D game after its release. The goal is to innovate and maintain player engagement.
In Conclusion
In summary, we have presented in detail about cash-flow in 2D game development: from investment to final product. We hope game developers have an overall perspective on cash flow in game development projects. From this, they can plan an appropriate budget.
