The Business Side Of Game Development

Caveats and Credibility

Tim opens with three honest disclaimers about why he hesitated to make this video:

• He only ran one company (Troika Games), and it started 25 years ago
• He doesn't think he necessarily ran it well
• He didn't take many notes on the business side — his records are full of game design meetings and dev discussions, with almost nothing about business operations

Despite this, he decided to share because he has actual experience — unlike many people who give business advice without ever having done the thing. He's been both an employee (for most of his 43-year career) and an employer (the ~6-7 years at Troika, about one sixth of his career).

The Importance of Sharon Shellman

At the very beginning of Troika, Jason Anderson's spouse Sharon Shellman handled the administrative side of things. She had experience at the administrative level in companies and vetted insurance agents, real estate agents, office leasing options, and more. Tim, Jason, and Leonard would make final decisions and sign documents, but Sharon did the crucial legwork of narrowing 20 insurance policies down to the three best options with clear trade-offs. Tim says you "can't imagine how amazing it was" having someone handle that.

Incorporate Your Company

The very first piece of advice — which the questioner didn't even ask about — is to incorporate. Don't run a game studio as a sole proprietorship. At minimum, form a partnership; Troika was an LLC (Limited Liability Company), which offers partnership flexibility with some corporate protections. Alternatively, incorporate as an S-Corp.

The reason: lawsuits. Without incorporation, a lawsuit against your game company can come after your personal assets — your car, house, computer. Troika was threatened with lawsuits three times:

• Twice by people who were angry that they had started Troika (likely former Interplay associates)
• Once by their own landlord who was upset about a broken lease — but forgot to tell their lawyer they'd already re-rented the space, so there were no actual damages

The "corporate veil" protects you from these threats reaching your personal life.

Hiring People

Troika had a huge advantage: when Tim, Leonard Boyarsky, and Jason Anderson left their previous company (Interplay), it was widely reported in gaming magazines, websites, and forums. People they knew immediately wanted to join, resumes arrived unsolicited, and people at local companies expressed interest in joining a startup.

After Arcanum shipped (about 3 years into Troika), even more resumes poured in. That's when they rapidly staffed up from 14 to about 35 people in a few months for Temple of Elemental Evil and Vampire: The Masquerade – Bloodlines.

Tim's takeaway: once you ship a game, you'll probably start receiving resumes organically.

Approaching Publishers

Troika was lucky to be based in Los Angeles — within an hour's drive of Activision, EA, Sony, and other major publishers. They could call, email, and make appointments easily.

Having Fallout on their resumes "opened doors" — but "didn't necessarily open wallets." It got them meetings but didn't guarantee funding.

Funding and Budgeting

Troika was never indie, never self-funded, and never used venture capital. All funding came through publisher deals. The budget was established during publisher negotiations.

Tim emphasizes that budgets must include far more than direct development costs. You need to add overhead of 10-30% on top of each employee's base salary to cover:

• Medical, dental, and vision insurance
• Their share of office space and utilities
• Payroll taxes (in the US, split between employer and employee)
• Hardware and software
• Shared spaces — conference rooms, kitchen, kitchen supplies
• Non-dev staff — receptionist, HR, admin

Errors & Omissions Insurance

When making Temple of Elemental Evil, Troika was told they needed E&O (Errors and Omissions) insurance — a special policy covering lawsuits over things left out of or wrongly included in a product (copyright infringement, using unlicensed software, etc.). In the early 2000s, E&O insurance cost nearly a million dollars — over a third of what they were being paid for the entire game. Tim insisted the publisher pay for it since they required it; eventually the requirement was dropped.

Office Space Realities

Tim dives deep into the overlooked complexities of office space:

Utilities

• Some offices include utilities, some don't, some partially (water but not electricity)
• Troika's electric bill was far higher than estimated because game studios have many more computers than typical offices, many employees had two computers (for compiling/rendering on the side), and machines were often left running overnight
• Air conditioning costs were astronomical because all those extra computers generated significant heat

Parking

• Office buildings allocate parking spaces based on their estimate of occupancy — typically too few for a game studio
• Troika regularly had more employees than parking spots (e.g., 15 people for 10 spots), requiring extra paid parking
• Late-arriving employees (common in game dev) often couldn't find spots

Building Access and Hours

• Office buildings with lobbies and elevators require key cards, security guard lists, and advance notice for employees working nights or weekends
• Game developers often work outside core hours or need to accommodate people in different time zones
• Cleaning services were scheduled for after normal business hours, but game developers were often still there, making cleaning difficult

Standalone vs. Building Offices

• Troika often chose industrial area offices with direct outside access to their own reception area, avoiding building-imposed restrictions
• High-rise offices included cleaning but with rigid scheduling constraints

What the Publisher Handled

Because Troika was publisher-funded (not indie or VC-backed), several major business functions were handled by the publisher rather than the studio:

• PR and advertising
• Localization
• Distribution

In exchange, Troika received a small royalty percentage that usually didn't kick in until high sales numbers were reached — a trade-off Tim covered in a separate video about publisher contracts.

Key Takeaways

1. Incorporate immediately — lawsuits can and will happen
2. Hire an admin person early — someone who can handle insurance, real estate, HR logistics
3. Budget for massive overhead — salaries are just the beginning
4. Having a shipped title opens doors — reputation matters for publisher meetings
5. Office logistics are a hidden time sink — parking, utilities, access, cleaning all add up
6. Know what you don't know — Tim is refreshingly honest about the limits of his experience

References

• Tim Cain. YouTube video. https://www.youtube.com/watch?v=YMvl3t0u9WU