If you’re looking for guidance on how to start a video game company, you’re in the right place. The gaming industry is exploding. More people are relying on video games for entertainment, and as a result of the growing demand, there are many opportunities to make money in the industry.
If you have a passion for gaming, developing games, or entertaining people with games, then starting a video game business could be a great career option for you. In this article, we’ll be discussing what a video games company does, how much it costs to get started, and how to get started step-by-step.
What is a Video Game Company?
A video game company is a business that supports the gaming community by creating gaming technology, improving gaming technology, educating people about gaming, entertaining people with games, hosting gaming events, or marketing and selling games. You may not realize there are many types of video game companies. The video game industry is split into many parts. There are:
- The people who develop the games: coders and technically skilled game developers
- The people who design the games to improve the user experience and entertainment value
- The streamers and gamers who play competitively (usually connected to video game marketing and sales)
- The people who plan and host gaming events
- and, The people who market and sell the games (which usually are a combination of salespeople, streamers, competitive gamers, development companies, etc.)
Types of Video Game Companies
When you consider starting a video game company, there are options of different types of companies you can start within the industry including:
- Video Game Consulting
- E-Sports Coaching
- E-Sports Competitive Gaming (usually connected to marketing and sales)
- Video Game Development
- Video Game Design
- Video Game Marketing
- Video Game Retail
- Or, a combination
What does a Video Game Company do?
Depending on what type of video game company you decide to start, the core tasks you do too satisfy your customers may be different. For example, a video game development company has to code games and distribute them as their core tasks. Whereas, a video game media company has to entertain people with the games, so their core tasks might be streaming, hosting events, or shooting and editing videos for Youtube.
How Much Does it Cost to Start a Video Game Company?
The startup costs for a video company can range. The typical startup costs include: education, tools and equipment, marketing, advertising, product development, service design, legal and incorporation, and accounting and bookkeeping.
Education costs to develop the skills
Development and design companies need coding and game design skills. Video game streamers and entertainers have to learn market research to evaluate what people want to see, and they have to have the skills to entertain and captivate an audience. Video game sales and marketing has to understand buyer psychology, what makes gamers buy, how to find prospective customers, social media marketing, search engine marketing, how to follow up with customers, and how to close sales.
The education costs can be spread over time. Once you choose what type of game company you want to start, then you can decide what core skills you need most to get started. For all types of video game companies, marketing and sales skills are vital, so regardless of what type of video game company you decide to start, the marketing and sales skills are paramount.
- Wealthy Affiliate – Learn how to market and sell online. Learn how to set up a website, market with social media and search engines, and how to use paid ads.
- Udemy – Get Access to 1000’s of courses. Learn video game coding, design, and sales.
Tools and Equipment
Some common tools video game companies need to get started are:
- Game coding software
- Video editing software
- Social media management software
- Website hosting
- Market research tools
- Video games
- Gaming consoles
- Gaming accessories
- Home office equipment (printer, desk, work chair, computer, desk organization supplies, etc.)
- Video equipment (cameras, lighting, backdrop, microphones, etc.)
Marketing and Advertising
Once you start a business, you have to get people to know you started the business, and this is where marketing and advertising comes into play. As an entrepreneur, you have to intentionally grow your social circle and get more people to be aware of your brand.
There are some low cost marketing options that you can use to build brand awareness like organic social media marketing, organic search engine marketing, live networking, and word of mouth marketing, but in order to really scale your reach, you want to pay for marketing consulting for direction and clarity, and you want to pay for advertising like Google ads, Facebook ads, paid networking groups, and more.
If you are in the video game development business, the time you take to develop the games and the equipment you use is unique to your situation. You also have to factor in the time you’re investing into product development because labor costs are connected to product development as well (even if you’re not paying yourself at this point). Eventually, you want the business to be profitable enough that it can repay you for the effort you invested in the startup phase (even while you weren’t being paid).
If you plan to offer services (like consulting, influencer marketing, review writing, etc.), then you may need software like Zoom or Google meet for interactive virtual meetings. You may also need invoicing software, file storage software, and other things.
Legal and Incorporation
Once your business has property and your liability increases, then you want to incorporate to lower your tax burden and the legal liability you have (in case of a lawsuit). Incorporation is the way to inform the government of your operations, become considered a legal entity, and to lower your personal liability. You can learn more about the benefits of incorporation and how to incorporate by visiting Incfile.
Accounting and Bookkeeping
Once you become a business, then the way you do taxes, track your income and expenses, and report your finance information changes. You have to follow the rules that apply to your local government or you can experience major penalties. It’s important to seek accounting and bookkeeping advice to ensure you’re managing everything properly.
You can get started with managing your business accounting with Quickbooks. They also offer virtual consultations, so if you’re uncertain about what to do, or how to manage your business finances, you can get advice from Quickbooks.
What if I’m Starting My Video Game Business with a Limited Budget?
If you’re starting your business with a limited budget, then it’s best to prioritize the startup costs: buy the most important things first and buy more of the supplies over time. You don’t have to buy everything at once. You can also buy some things used instead of buying new, and you can find deals where it’s possible.
I recommend starting your business by building the audience first, and monetizing more afterwards to minimize the risk of investing in things upfront that won’t be valuable to the audience that’s attracted to you. I’ll be explaining this method more later in this post.
Are Video Game Companies Profitable?
The video game industry undoubtedly has a demand, but that doesn’t necessarily mean that starting a video game company will be profitable. Instead, you have to make good choice with the business finances.
You have to make sure the sales volume and price are high enough to pay all of the expenses and leave money left over afterwards–that’s profit.
The Traditional Way of Starting a Video Game Company vs. The Modern Way
As a result of the internet growing, the risk of business startup can be drastically minimized.
The Traditional Way
Prior to the internet, you would be more likely to start a business by renting a storefront for video game retail, buying inventory, developing video games, copyrighting your creative work, or investing in product development and distribution more.
The Modern Way
With the internet, you can now set up a website, start to create engaging content, and learn more about what potential customers are interested in buying first. When you get into product development and distribution, you can already have a list of buyers, so you’re not investing in products or inventory without the assurance that people will buy–this is game-changing.
Approaching a video game business startup the modern way can prevent you from investing as much in the startup phase and losing money.
Self-Made Successful Video Game Company Examples
As an example, these video game businesses started the modern way by:
- Building websites
- Raising funds on their websites
- Raising funds thru Kickstarter or Indiegogo campaigns
- Investing money from their jobs
- and, Getting money from the support of family and friends
Example 1: Ninja (a Top Twitch Streamer) – $5.5 Million/Yr.
Ninja is one of the top Twitch streamers and marketing/sales people in the video game industry. He earns $5.5 million in annual revenue in his company, and the breakdown of how he earns his money is:
- Subscriptions – $3,955,571
- Ad Revenue – $509,521
- Bit Donations – $316,354.92
- Average Sponsorship – $600,000
- Average Estimated YouTube Compensation – $36,000
He earns nearly $4 million from the Twitch Partner program: an invite-only program where Twitch will share between 50-100% of the payment amount when customers decide to pay for the Twitch membership.
Example 2: PewdiePie (a Top Youtube Streamer) – $12 Million+/Yr
PewdiePie held the record for most subscribed and watched channels on all of Youtube! His channel was subscribed to more than celebrities like Beyonce, Oprah, and Major atheles, which is crazy. He makes his income from:
- Affiliate marketing
- Ad revenue
- Merch sales
- His own products and services
- and, Book sales
How to Start a Video Game Company – Step-by-Step
If you want to start a video game company, these are the steps to get started the “modern way”…
1. Choose a Niche
First, you’ll want to choose a niche or decide what audience you plan to serve. There are so many different audiences within the gaming industry, and it’s possible to build out into a more eclectic brand over time, but in the beginning, it’s really important to choose a group of people you plan to serve and thoroughly support them.
Video Game Niche Ideas
- Virtual Reality Headset reviews
- Gaming console reviews
- Playstation accessories
- Playstation games
- X-Box games
- Teen gamers
- Adult gamers
- Gaming for kids
- Gaming for Seniors
- Mobile gaming
- Console gaming
- and many more
2. Build a Website
Once you’ve decided on your niche, then it’s important to build a website that will serve as your digital storefront. I recommend using the SiteRubix website builder. You can try it out for free below by entering the domain name you want and your website will be created in seconds.
3. Decide How You’ll Monetize
When you’re niche is chosen and your website is set up, then it’s time to decide how you’ll make money. You have to choose:
- Will you make money from selling games you make?
- Will you make money from selling games that other people made?
- Will you make money from advertising for gaming companies?
- Will you offer services to the gaming community?
- Or, what value will you offer to the gaming community?
It’s possible to make money by creating digital products that are valuable to the gaming community. You could create:
- Online courses
- Video games
- Gaming webinars or virtual events
- Gaming PDFs or downloads
- Or, Audio clips
Considering that the gaming community is so passionate, they’re also buyers of cool merch, which means you could make money selling t-shirts, hats, and other merchandise for gamers. You could also create proprietary products like gaming chairs, equipment, and accessories.
Affiliate Marketing (#1 Recommended for Video Gaming Companies of All Types)
You could participate in revenue sharing deals where you get paid a percentage of sales when you recommend gaming products and services–this is very common for gaming blogs, Youtube channels, and other gaming businesses. Affiliate marketing can be a great stream of income to include in any type of gaming business. It’s low startup costs, low overhead, and requires very little (aside from a website and knowledge) to get started.
Once you build an audience and brands can sense that working with you can offer them a commercial benefit (ie: leads, sales, brand awareness, traffic), then you’ll be able to apply for sponsorship opportunities and even have brands asking to work with you!
Similar to sponsorship, as your audience grows, you’ll have more watch time, subscribers, and followers of your content, and you can monetize that with ads. Youtube has the Youtube Partner Program that you can join once you have 1000+ subscribers and 4000 watch hours. Twitch also has a partner program that’s by invitation only, but thru it, you can earn from Twitch subscribers and # of views. On your website, you can partner with companies like Google Adsense, MediaVine, and AdThrive to get paid from the number of views to your website.
If you’re highly skills in any area of gaming (game development, game design, game review, esports, game sales, game marketing, etc.), then you can offer consulting to show others how to build the skill. You can also offer skills like game modification, game review, or influencer marketing.
Gamers love getting together and competing. E-Sports seems to be going in the same direction as offline sports with tournaments, teams, coaching, and other types of events and services. You can host events and make money like that.
4. Get the Attention of Potential Customers with Content Marketing
After you have your monetization plan down, it’s time to get the attention of potential customers. Content marketing is the modern way of getting attention and it’s low cost. You can create articles, post on social media, create graphics, shoot videos, and record audios that would attract and educate your target audience.
5. Build an Audience
As a result of your content marketing efforts, you should begin having a regular flow of visitors to your content. You want to build relationships with the visitors, and building an email list is a great way to deepen the relationship to take a person: from stranger to potential customer to buyer.
When you’ve invested in education, tools and equipment, marketing and advertising, you have intellectual property (from content marketing), and your getting consistent sales, then the value of your company will start to go up. The value of your company will also bring more tax liability and legal liability ( in case of lawsuits), so it’s important to incorporate to separate your personal property from your business property.
7. Make Money
When you have a specified audience, a website with relevant information and offers, your target audience consistently visiting, and sales being made, you’re making money!
If you’re passionate about gaming, starting a gaming company could be a very fulfilling career option. There are so many ways you can participate in the hugely growing industry, and hopefully, this article made that more obvious to you. To get started building your video game company, I recommend you join me here for free training, a website, and networking with a community of like-minded entrepreneurs.