* The Business of Software

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Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Biz Software or Games

I've been starting projects off and on now for a few years and most of them have been business software applications that I think would be great but really just have one or two new twists features that would be better than the competition.  So although I'd get excited initially the enthusiasm wears down rapidly after I question the market acceptance of the product.

I've started writing a requirements and issue tracking program modeled after some development processes at my previous and current jobs.  I have a few new ideas/features that would make the current ad-hoc apps we use better, and it would be integrated vs. the disaparate kludgy system we have now duct taped together.  But as I mentioned the excitement is wearing thin and as a result so is my productivity, as I question myself in entering this competitive commodity niche market.  Seems like requirements and issue tracking software are a dime a dozen with tons of open source competition as well.

Lately I've been reading a lot of stories about how people are making money off video games:  a crossword puzzle for the IPhone made by a PhD psychology student avg. $1800 a day (1), and an XBox indie game developer making 825k in a week (2) -- footnote links below.  After reading those articles I've been rethinking whether I should continue with my current biz project despite how boring it is or if I should do what I originally learned coding to do which is to make games instead. 

I've tried before selling biz software a few years ago (contact/help desk management) but only made a few sales off that.  And am afraid this new project will turn out to be a waste of time like that as well.  Perhaps I'd have a better chance at doing a game instead. 

Which one would have a better chance of succeeding?  Originally I would've thought biz software would have a higher probability of success than video games, but now I'm not sure anymore.  Or perhaps those video game success stories are just one off outliers; but successful regular businesses seem to be rare as well.  Maybe you're equally likely to be as successful in either category although the overall success rate would be low.  Any opinions?

1) http://www.macrumors.com/2008/08/01/iphone-app-store-numbers-reveal-large-revenue-opportunities/

2) http://www.alleyinsider.com/2008/8/indie-game-developer-finds-success-on-xbox-360-est-825k-sales-in-first-week
macandcream
Thursday, August 14, 2008
 
 
Bear in mind that many iPhone owners just bought them, and that the AppStore is still a novelty.  I would guess that iPhone app sales volume is currently very high, but I would bet that it won't stay that high for too long.

Thursday, August 14, 2008
 
 
"Or perhaps those video game success stories are just one off outliers; but successful regular businesses seem to be rare as well"

Just to add my thoughts.  Successful businesses in 'boring' niches aren't interesting to news-makers.  Xbox games and iPhone apps are currently news-worthy fodder.  Nobody wants to read about a company selling $500k worth of exchange mail compression software, or $300k worth of insurance claims workflow addons, or even $200k worth of 'grandma friendly' email client with big buttons and few options.

If you've got a successful business, why on earth would you advertise how much money it makes? You'll only invite competitors into your space, attract the attention of tax authorities and inspire people to try and find a way of helping themselves to your money and your market.  I'm guessing this is why there are so many anonymous posters to this board.

I would say that successful games are more like succesful movies : a highly skewed distribution with a few games making big sales, and the rest making a little.  Whereas more regular business software is probably more evenly distributed, much like magazine titles - where lots of small niches bring in a nice little earner for their owners.  I've got absolutely no data to back that up, however, it's all opinion.

My point is this : I bet there are now 50 crossword games for the iPhone because of his success, and don't rely on the news to tell you what is succesful and what is not.
Bruce Chapman Send private email
Thursday, August 14, 2008
 
 
Good points Bruce.  That gives me some hope on being successful with the boring biz software I'm currently building.  Hopefully if it does take off and starts adding coin to my bank account it'll be less boring to me then :)
macandcream
Thursday, August 14, 2008
 
 
Nobody gets in the paper with an article titled "98% of publishers on Big Game Portal make less than $200 per man-month invested in their software", though I rather suspect it is true.  Take a look at GameProducer.net's sales stats for the games which are successful but not uber-successful.
Patrick McKenzie (Bingo Card Creator) Send private email
Thursday, August 14, 2008
 
 
I don't think you can go off isolated success or failure stories to determine your own "odds." I think it depends more on your actual product idea, how well you implement it, etc because you can succeed with either product type.

I'd say though business apps seem more predictable for success, because with games if the gameplay concept sucks, nobody may buy it after playing the demo. And you won't know your concept sucks until you're almost done and it's playable.

But with business apps, you can know there are definitely customers for it because of how well the competitors are doing. If you create the same product, with the same features and price, you're pretty much guaranteed some chunk of the competitor's sales. How much is probably proportional to your marketing effort versus the sum of the competitors'. But at least that's under your control -- you can spend more to make more, then feed that back in to keep leveraging up.

With games, if your game sucks, I don't think any amount of marketing or price drop can profitably overcome that.
Bill
Thursday, August 14, 2008
 
 
"But with business apps, you can know there are definitely customers for it because of how well the competitors are doing. If you create the same product, with the same features and price, you're pretty much guaranteed some chunk of the competitor's sales. How much is probably proportional to your marketing effort versus the sum of the competitors'. But at least that's under your control -- you can spend more to make more, then feed that back in to keep leveraging up."

Bill, coming from anyone else, I would think this is BS. But I know next to nothing about this business.
Gingerbread Man
Thursday, August 14, 2008
 
 
Game industy is a hit or fail business: for indie (mISV kind of game company) 99 of 100 games might fail, maybe more if game is created by inexperienced creator.

I recommend to read this article in Forbes: http://www.forbes.com/2008/08/01/casual-games-money-tech-ebiz-cx_mji_0801games.html
David
Friday, August 15, 2008
 
 
Incidentally, the problem with indie games is quite similar to the problem with doing iPhone apps -- all the customers "belong" to the portal (PopCap/Big Fish/Apple Store/etc) and you're totally hostage to them.  If they give you prominent positioning, you win and you win big.  If they don't, you languish. 

Either way, they take an absolutely stupid percentage of your sales.  (Not necessarily undeservedly.  They do own the customer, after all.  Still, it is HUGE in absolute terms.  It makes the 15% rake for the most expensive payment processor look positively tiny.)

And if after your app gets past its shelf life, boom, stick it in a bag and bury it, its dead.  The portals have conditioned the consumers to go through software like it is disposable, which means both disposable price points and an emphasis in both the portals and the customers minds on The New Shiny.  As a result, you can't really build much value in your back catalog of applications the same way a uISV does. 

(This also sucks with the typical uISV "Learning how to handle marketing" skill curve, because the gradual rampup in your skill can't compensate for the unsaleable nature of your app 8 months down the road.)
Patrick McKenzie (Bingo Card Creator) Send private email
Friday, August 15, 2008
 
 
The thing that strikes me is - why is "business software boring"?  It needn't be.  Perhaps you're looking at the wrong business software for your interest and or skill set?
Scott Kane Send private email
Friday, August 15, 2008
 
 
IMO, B2B products are a safer bet - as long as you can demonstrate a saving or return to the customer exceeding the TCO of your product/service, you'll sell it. Leisure software has not such certainty.
Ron
Friday, August 15, 2008
 
 
I've never done anything else than developing games to make a living. I worked in small companies creating B titles/kids games, I worked in pretty big companies (multimillion $ budgets even back in 1996), I worked at some kind of games middleware company and I've done a fair amount games on my own.

What I can tell you - alomst all companies I worked for, went out of business sooner or later - it's really a very hard market and you really only have one single shot - hit or die (you usually die).
If you think about XBLA or similar channels for distribution - it's even worse, most developers don't even get a chance for this single shot.
And if you aim at games as good as Braid we talk about years you have to invest and if you don't break even in 8 weeks chances are high you'll never make any significant money.

I *really* like what I'm doing but hell as soon as I have an idea to create something with a shelflive of more than 10% of it's development time I for sure switch over within a second.
Michael
Friday, August 15, 2008
 
 
I once had a insightful conversation with a successful software company that had a few games that sold moderately well. Their main income produce was a consumer app.

The challenge with marketing a game is that all you have is a brand. Game features aren't really a selling point. Someone needs to play it in order to be convinced to purchase it. But how do you get their attention so they play it for the first time?

With non-game software you advertise to a segment based on what problem your software solves. I would say this is easier and relies less on the luck of becoming popular.
Peter Gadzinski Send private email
Friday, August 15, 2008
 
 
Making video games is a calling, not a profession.  If you have to ask, you probably wouldn't be any good at it.
Joe Valenzuela Send private email
Saturday, August 16, 2008
 
 
Don't forget that most programmers aren't that great with artwork.  You'll need a fair investment in art most of the time to draw attention to your game.

No matter how fun your game may be, a large amount of gamers will simply ignore it if they don't like the art style.
Luke Send private email
Tuesday, August 19, 2008
 
 
> Making video games is a calling, not a profession.  If you
> have to ask, you probably wouldn't be any good at it.

True for just about anything. If you are in anything for the money, you are in for a rude awakening.
cynic
Tuesday, August 19, 2008
 
 

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