NGS Financials & Postmortem
3 months ago
– Wed, Apr 18, 2018 at 11:53:59 PM
Hello again my fellow Nectarines,
Rob here. In this update you’ll find:
All expenses breakdown
Development costs breakdown
How’s it going guys? It’s been awhile. Since our last update, most of the team has successfully found new jobs and gotten back to a mostly normal state. Several people have even moved on to focus on their own personal passion projects. We continue to keep in touch, and there’s been some discussion and ideas for new projects related to Resurgence but nothing solid yet. I hope you’ve all been well too!
Today, I wanted to take some time to give more details on Nectar’s financials as well as the lessons learned from this whole endeavor.
So easily the most common request we’ve had recently was for a more detailed account of how the Kickstarter funds were actually spent. This is a totally fair request, and also in line with Kickstarter’s creator requirements, so I’m happy to dig in deeper to demonstrate that the funds were used appropriately. Nothing speaks louder than data, so let’s start talking hard numbers.
In preparation for Nectar’s final business tax return, I’ve been going over all our expenses since the Kickstarter campaign and compiled the following data below. It is split into two spreadsheets, one for just development labor (74% of our total costs) and the other for all expenses by category.
My hope is that this will both provide clarity to our backers, as well as insight to other indie devs and Kickstarter creators out there. I know from experience how hard it can be to find references and best practices for planning your project budgets, so I sincerely hope our data will useful and help others succeed in the future.
All Expenses Breakdown
This sheet represents everything we spent business funds on, broken down by category. I was extremely miserly in this respect, making use of all free resources at our disposal (Unreal Engine, Perforce, Hack-N-Plan, Google Docs, Slack, and Trello are all awesome!), so we would have as much money as possible allocated to actually working on the game. The percentages represent that item’s cost out of the total spent. These will also likely be the most helpful to other devs in the planning stages.
There are a few high-level things I’d like to point out here. First, after Kickstarter and Stripe took their cut of the campaign funds (about 9%), we were left with $168K to put in the bank. As you can see, we spent more than that on development alone. Once that money ran out, we kept going with $40K of Cohh’s own money (as he promised before the Kickstarter launched, if needed) and roughly another $20K from our friends and family. So the Kickstarter funds were gone long before the coffers went totally dry, and we continued operating on our own funds after that.
I always encourage indies not to skimp on accounting and legal, but in retrospect we likely overspent in that regard. I went with larger companies that were very well respected and recommended in my community, and the service was outstanding, but we could have saved some money going with smaller/newer companies with cheaper rates. Of course you want to make sure your business is protected, and skimping on those services could backfire in a huge way if you find yourself in trouble, so it is a balancing act on finding the perfect fit for your needs.
Also, a note on taxes. If you raise money through crowdfunding, any funds left at the end of that fiscal year will be taxed as income! So if you try to stretch the money longer, it may inadvertently increase your tax burden. Depending on how you organize your company, it could also put you in a high tax bracket and eat up a big chunk of your budget. You may get some of that money back the following year, but your company of course has to survive that long. Find a good accountant, and plan accordingly!
Development Costs Breakdown
This sheet takes the Development section from the previous one and gets even more granular (since it was by far our largest area of expense). Each person who was paid to work on Resurgence is listed, along with their role, invoicing type, average hours per week, expected weekly/monthly pay, and totals per year. The full spreadsheet also lists each person’s wages month by month if you’re curious (cropped out of the image below). Almost everyone was paid $9.50 per hour (including me) for the duration, but as you can see the hours they each worked month to month did vary.
Branden (Director of Operations) and Xander (UI Artist) were both paid at a higher rate due to their experience and our great need of their skills at the time. The rest of the Other Contractors were paid on a per task basis, with payment negotiated based on the particular task, and they contributed much less frequently. JC and Chris also quit the project early, due to unexpected circumstances in their personal lives.
Since this was where the majority of the money went, I assume it will also be the most hotly debated. I don’t doubt that we had the right team for the job though. This was the same core team that worked on it for 3 years as an unpaid hobby project, infusing every aspect with their creativity and passion. I couldn’t have in good conscious ditched them for more experienced folks, nor could we have afforded them. For reference, most professional experienced game developers expect salaries of $30-100K a year (and the linked report is several years old). Though in retrospect, we likely didn’t need all of them working from day one. It would have been more practical to scale down to just the essential design team to finish pre-production, and then add additional code, art, and audio support as needed. This of course would have risked our core people having to find other jobs, and possibly not be available later. I wasn’t willing to take that risk, for better or worse.
Above you’ll find a postmortem presentation I gave to my local IGDA chapter, and again at the most recent GDEX convention in Columbus. It is based heavily on our team discussion of what went right, what went wrong, and lessons learned. Sorry, the lighting on me isn’t great. It’s about an hour long. I could also be persuaded to write up those thoughts in article form if there’s enough interest.
To wrap up, I know it sucks whenever a Kickstarter project fails to deliver on its promises. Your money is gone and you’re left with nothing but disappointment. I know, I’ve been there too. I’ve personally been let down by some projects that never delivered or became something unrecognizable. So again, I want to give a special thanks to everyone who’s been so supportive of us as we dealt with this failure and get our lives back together. We really gave it our all, and we are so sorry that wasn’t enough to deliver on our promises. At the very least, it was an amazing experience and we learned so so much. My hope is that these lessons learned will be helpful to others and that we find another chance to finish what we started someday.
For everyone who has been waiting for this financial information, thank you for your patience. I hope this breakdown and postmortem gives you more insight into what we learned and will be of use in your own endeavors. If so, we’d love to hear about it! And if you have additional questions, just ask.
I’m unsure if or when I’ll write to you all again. But in the meantime, I’ll leave you with a quote from my favorite author. I wish you all the absolute best! Until next time, Rob out.
NGS Dissolved & Future of Resurgence
12 months ago
– Thu, Aug 03, 2017 at 10:20:43 PM
Hello again my fellow Nectarines,
Rob here, with a heavy heart and somber news. In this update you’ll find:
Why Nectar has been dissolved
What’s next for the team
Future of Resurgence
Why no refunds
Core demo links
It has been extremely difficult for me to write this update. I’ve tried, and I just couldn’t get the words to come out. Emotionally, I’ve fallen into one of the darkest places in my life, and I’m just now digging myself out and starting to feel ok again. As the title states, we’ve run out of money and been forced to dissolve Nectar and put Resurgence on indefinite hiatus.
I apologize if this comes as a shock to you. It certainly was a shock to us. But I will try to explain the situation as best I can, and what that means for all of you and our beloved game.
What the Hell Happened?!
When you gave us your money and your faith a year and a half ago, we were convinced we had a solid plan and team to get the job done. But as development progressed, and the schedule started to slip, we found out how far off the mark we truly were. I’m not going to call it “indie-itis” because I find that to be a flippant and condescending term for small plucky teams taking a shot, and falling short of the mark. If you’ve never developed a game, it’s easy to discount the thousands of man-hours, physical and mental energy, personal sacrifice, and plain luck it takes to succeed. And always remember Murphy’s Law. Things go wrong, bugs happen, features need to be redesigned or cut, and teammates’ life circumstances change. I’m going to go more in-depth with a full postmortem in a later update, covering what exactly went right and wrong, but in a nutshell, we discovered that we were easily making a half-million dollar game on less than half of that budget.
When the Kickstarter closed, we knew that money was only going to be enough to keep the core team going for a year of full-time paid development. That meant scaling down our 50 some volunteers to just 15 people, all getting paid a meager $9.50 per hour (the highest minimum wage in America at the time) to cover our basic living expenses and let us focus on development. We still managed to stretch the funds an extra six months, but as our original release date of January 2017 was looming we knew we had to make some tough decisions. If you’re familiar with the Project Management Triangle, we chose to stick with Quality and Low Cost, which also meant abandoning Speed. So our path became clear. To continue development we didn’t need to raise an insane amount of money, but we still needed more. And the best option there was to find a publisher.
We began the search for a publisher back in January. Any startup will tell you fundraising generally takes about 3-6 months with the CEO totally focused on that. I tried my best, but unfortunately, I wasn’t able to dedicate all my time to that effort. As a small team, I still had to juggle my Creative Director responsibilities to keep the rest of the team moving forward. I’m not an experienced business guy, I’m a designer and producer, so I’ve had to learn to be an entrepreneur as I went. I needed help, and I asked Cohh to step up as my co-founder, but he just couldn’t find the time with his streaming schedule. In March, I brought on an entrepreneur friend and game developer, Branden Middendorf, to help with the fundraising effort. Together, we contacted over 50 publishers, knowing they were our best shot for a “lead investor.” In order to deliver on the vision of Resurgence we promised, we set out to raise a $500K seed round from a combination of publishers, angel investors, incubators, and venture capitalists. While a huge number (more than double our Kickstarter goal), that’s pretty much the minimum to be taken seriously in the startup investment world. That amount would let us expand the team (finally hiring more programmers and artists), and fund another year of development. Getting a publisher deal was the first step that would have allowed all the other pieces to start falling into place, and we were so close.
Of the publishers we contacted, we had the best luck with the small indie ones. We had several rounds of interviews with Devolver Digital, Raw Fury, Versus Evil, Humble, and Team 17, but ultimately they all passed. Those interviews seemed to go so well, and we were so hopeful that we’d get an offer from at least one of them. Just $100K from a respected publisher would have given us our “lead investor” (the hardest part of fundraising), plus all the benefits a good publisher offers to developers and started the snowball of other investment deals. It’s a lot like Kickstarter actually, no one wants to be attached to a project with no momentum, but people come out of the woodwork for one that looks like a sure thing.
Anyway, by June we had just enough money left in the bank for that month of payroll, and remaining bills. We had just released the new Explore demo and were hopeful that would convince the last couple publishers he hadn’t heard from yet that we were worth a shot. But soon enough, they too said no. When the final rejection email came in, that was a crushing blow. I spiraled, as I saw the finality of my dream crumbling around me. We were out of time, money, and options. There was no other choice but to close up shop.
That’s when I had an emergency meeting with Cohh, and he made an announcement on Twitch a few days later.
Future of Nectar
With no more runway, we came to the harsh realization that, like many other startups, our first venture had failed. I am deeply sorry it took so long to write this update (since many of you only follow us through these backer updates), but it was just too fresh of a wound. It felt like a death in the family, and I had to process my grief first. Then came the task of finalizing the paperwork, paying off our debts, and any other lingering issues. And since Nectar was the main source of income for most of us, we had to immediately set to finding new jobs. Many of us have had to take temporary work to keep the bills paid, but we are still looking for work in games. If you hear about any opportunities for passionate and dedicated cRPG enthusiasts (especially remote), we’d be most appreciative.
Despite the dissolving of Nectar Game Studios as a legal entity, the team itself still wants to keep working together in some way. We’ve all bonded a lot over the last 5 years working on this project, so there’s a good chance we’ll keep working together on something in our spare time once again. As soon as we figure out what that is, we’ll start looking for volunteers again to join the team. This new phoenix team, rising from the ashes, will no longer be Nectar but we’re going to keep the branding we’ve established for the short term. So anything new going on with the team will still go out on our existing social media platforms and website.
Refunds - One of the big questions we’ve seen so far is regarding refunds. As much as we’d love to refund all the backer pledges, that’s simply just not possible. All that money has been spent on development, to get us this far. It’s all gone. The only thing we can do is cancel all the pending add-ons and pre-orders in BackerKit. No one has been charged in BackerKit yet (unless you opted for Paypal), so we will still cancel those payments. Perhaps you’ve received a refund from a failed project in the past, but there’s really no way to do that without someone else footing the bill. The only way I can see that happening is if another studio wanted to purchase the IP, assets, and codebase (a long shot to say the least). And to avoid any confusion, Kickstarter is not a store and pledges are not pre-orders (Kickstarter FAQ: Accountability). Pledges are legally considered donations or gifts so backing a project is essentially taking a gamble on something you’d like to see happen, but there are no guarantees. I’m just sorry we couldn’t be one of those projects that are able to deliver.
Future of Resurgence
Nectar may be dead, but that doesn’t mean Resurgence is canceled and gone for good. We had to dissolve the company for legal reasons, but the whole team is still passionate about this game and wants to see it completed someday. After five years though, we all feel like we need a brief change of pace. We all still love the idea, but we clearly made some mistakes and could have done some things better. Right now the team wants to work on a much smaller project just to show we can finish something. We haven’t decided what that next project will be, but there’s a good chance it will be related to Resurgence and the world of Lumen in some way. When we dissolved the company, we decided that it would be best for me personally to continue being the steward of the Resurgence intellectual property (IP). Which means the team and I are still free to continue development of Resurgence as a volunteer hobby project once again and complete it someday.
One of the biggest problems we faced though was I took on too much responsibility myself. I continuously felt torn between working on the design of the game (which I love) and working on the business side (which I find really stressful and taxing). So I forced myself into a position I didn’t even like out of necessity, and it made the work more and more draining over time. I think one of the best ways for Resurgence to move forward is for me to really dig back into the design of Resurgence and finalize a super detailed game design doc (GDD). Once we got into real production, we realized how disjointed and vague some of our design docs were, and we never recovered from that. By starting off with a concrete plan, our ability to estimate and plan would be much more reliable and accurate.
Core System Demo links
I know there’s little consolation we can offer now, other than our desire to still finish what we started. We made a promise that we would do our best to deliver the game you all want, and despite everything that’s happened, we still want to honor that. If we can finish Resurgence in some form, someday, you will receive that game. No additional charge, no strings attached.
In the meantime, we would like to make the two Core demos we completed publically available. We would still love to hear what you like and how we can make them better. Our forums will remain up and are still a great place to continue that conversation.
Well, that’s it for today. Working on Resurgence has been the hardest and most rewarding endeavor of my life, so I hope I’ve offered you all some hope despite all the suck. Nectar may be dead, but Resurgence will live on. You have my word on that.
Now we’d like to hear from you. As a backer, how would you like to see Resurgence live on? Books, comics, or other media? Board game or pen and paper RPG? Should we regroup and try crowdfunding again? Go totally open source? Sell the IP to the highest bidder?
I can’t fully express the regret and guilt I feel for letting you all down. But I thank you all from the bottom of my heart for believing in this team and this game and helping us get this far. I will never forget it.
Rob Buchheit Project Lead, Creative Director
Playable Backer Demo Download - CST2 Exploration
12 months ago
– Sat, Jul 29, 2017 at 10:57:55 PM
This post is for backers only. Please visit Kickstarter.com and log in to read.
Core (Exploration) Continues! Release Date & GDC
over 1 year ago
– Wed, Mar 01, 2017 at 07:45:12 PM
Greetings from GDC, Nectarines!
Rob here. Sorry it’s been a bit since our last written update, but we wanted to fire off a quick update as I gear up for convention time.
In this update you’ll find:
Cohh Carnage - PR Dialogue Demo livestream
Cohh Carnage - PR Update #8
Release Date update
Shout Out - Pillars of Eternity 2: Deadfire
Cohh Carnage - PR Updates
First up, if you missed our first Core System Test (CST) demo of the dialogue system, you’ll find a download link here (backers only). If you prefer to watch, check out the video above for a full playthrough from Cohh (~30 min). There’s plenty of other ways the demo can play out, too! One course of action can even cause a companion to permanently leave your group!
If you caught our last few Twitch video updates, you already know development is taking longer than expected. We have slipped past the original release date of late January, but we knew that was an ambitious goal from the start. Game development is hard, and we have a small team. Bugs happen, things go wrong, and everything is always in a constant state of experimenting, testing, and iterating. The bottom line is: we are committed to quality and that takes time.
So when is Episode One actually going to be done? We’ve been working hard to answer that question, and based on our current speed we think the end of this year is now the most realistic goal. The good news is that we’ve been getting great feedback on the Dialog Demo CST, and people seem to really like the writing, mechanics, and level of choice! That’s super encouraging for us—knowing that we’re making good decisions and working towards that high quality benchmark we want.
We know it’s always a bummer when your most anticipated games are delayed, but those games also typically come out much better in the end from that extra time and attention. And with that in mind, we just want to say thank you so much for your continued patience and support.
As I mentioned briefly, I’m at the Game Developer's Conference this week! I wasn’t actually planning to go because of the cost and time commitment, but a mentor convinced me that I would be missing an amazing opportunity. So I found a way to make it work, and I’m here through Thursday! If you see the bearded face below, definitely say hi! I’d love to meet you!
Also, as a repeat volunteer at GDC, I want to give a special shout out to the guys that help the event run so smoothly. They’re called CAs (Conference Associates), they’re in purple (?) shirts, and their whole job is to help you have the best experience possible. They are all amazing, so show them some love and they’ll take great care of you.
Shout Out - Pillars of Eternity 2: Deadfire
In case you missed it, Obsidian just wrapped up their Fig campaign for the sequel to Pillars of Eternity, raising over $4.4 million available to it from over 33,000 backers. That makes it the highest crowdfunded videogame in years (since Shenmue 3 and Bloodstained in 2015), and certainly the highest RPG. The sequel boasts new features including: new and old companions, a living world, enhanced reactivity, dynamic weather, and more! We’re not shy about our love for these guys, so if you enjoyed the first Pillars and Tyranny you owe yourself to check this out. They are continuing to take pledges through their website. Honestly, they had as at more Eder. :D
Playable Backer Demo Download - CST1 Dialogue
over 1 year ago
– Thu, Jan 19, 2017 at 04:11:00 PM
This post is for backers only. Please visit Kickstarter.com and log in to read.