Dysfunctional Systems cancelled! Wait, what?

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Applegate
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Dysfunctional Systems cancelled! Wait, what?

#1 Post by Applegate » Sat Jan 03, 2015 1:48 pm

Link: https://dischan.co/blog/2015/01/the-end ... l-systems/

(note: all values in CAD, not USD)

So Dysfunctional Systems has become truly dysfunctional, and after a pretty good Kickstarter ($67,000!), the end result was never to be. Dischan cites poor management and lack of foresight for the way things have gone down, and offer (partial) refunds to people who donated more than $5.

I'm worried about the way this may affect other Visual Novel Kickstarters. After all, the VN niche isn't exactly grand, and twice bitten once shy is still a thing. I'm also curious what went wrong so grand that they projected $45,000 to produce Episodes 2 and 3, and ended up using $67,000 to produce Episode 0; an episode which they apparently refuse to release because it doesn't meet their standards of quality? I'm confused and bummed, because I had actually been looking forward to this but put serious question marks at the financial management.

How do you feel about this?

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Re: Dysfunctional Systems cancelled! Wait, what?

#2 Post by netravelr » Sat Jan 03, 2015 5:25 pm

Really sad. I posted my thoughts on the Kickstarter page already though so I won't rehash here. Hopefully they'll release what they completed though.
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Re: Dysfunctional Systems cancelled! Wait, what?

#3 Post by Hazel-Bun » Sat Jan 03, 2015 5:26 pm

I didn't give any money to them (was not a huge fan though I appreciated both of their VNs) so, I'm not worried about getting the product, more so on how it reflects on the community. They were a powerhouse for this scene so it's scary to think about the ramifications...
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Re: Dysfunctional Systems cancelled! Wait, what?

#4 Post by Kinjo » Sat Jan 03, 2015 5:29 pm

Honestly I'm not surprised at all. This is exactly why I chose not to use Kickstarter for Detective Butler. Trying to do an episodic VN series is extremely difficult and requires a lot of pre-planning and organization. If even one thing changes, the rest all very easily falls apart.

I can sympathize with them not knowing how to manage a large scale project, but they made some very amateur mistakes and it cost them greatly (specifically, $67,000). I'll also commend them for coming out and saying they dislike what they have, because that kind of honesty is important when you're dealing with people who gave you their money. However, they really should have done it a long time ago, and probably shouldn't have just said "we can't do this so we're cancelling it!" without at least some more discussion from their fans. It seems very suspicious for everything to be, on the surface, going just smoothly and then suddenly turn around and say that the game will never see the light of day.

I'm not sure how this might affect other Kickstarters (hopefully not much) but in my opinion a Kickstarter isn't necessary for most VNs. If you want to use it, cool, but be aware of all the risks you're entailing when you sign up for it. I think this is just a case where they didn't fully understand those risks.

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Re: Dysfunctional Systems cancelled! Wait, what?

#5 Post by Morhighan » Sat Jan 03, 2015 5:32 pm

This actually ties in with an issue I noticed lately with many indie game devs--a lack of bookkeeping and accounting and poor money management.
Many game devs (mostly fledgling ones) either don't keep good enough records, or try to manage all aspects of the business while also making their game.
I think after a while it gets hard to balance all the tasks needed, and that's where some developers get bitten. It's too hard to juggle everything between running a business and making a game.

I recently read this (horror) story:
I am 17 years old and currently develop applications/games for Android and iPhone as well as develop internet websites and code a variety of my own projects. I have been very fortunate and have made a large amount of money and continue to make money online to the point where I do not need a stable job, though I'd like to get one after college.

I've never held a job anywhere, and have never had to pay taxes. I'm coming into a lot of issues and I am quite confused. I get money from MANY sources- 15 different advertisement networks(!), 4 different payment processors, 5 different affiliate networks and a variety of other sources. All of them pay to different places and at different times (checking account, PayPal, reloadable debit card, ect.)

I essentially have a list in a Notepad with names and login information for each source. I have also created a PHP script that uses cURL to grab all the revenue from each service, add it all up, then text me every few hours so I can keep track. It's a mess, but it's working OK, and I can create custom reports (for IRS?).

But enough of that, my questions are about taxes in the US, and how indie developers handle it all. I'm at slightly over $250k so far this year, with negligible earnings last year. I have it all stockpiled in a bank account and haven't touched it, I'm a bit scared to.
Everyone's response to this thread was "get an accountant." After all, with the money they claim to be making, they can certainly afford one. However, despite extensive searches, I've only been able to find one accounting firm that focuses solely on game developers--but they haven't been active since 2009.

It's because of this that I've decided to become a bookkeeper specifically to help indie devs, because I don't want to see this happen to other game developers. I'm also doing extensive research on crowdfunding so I can offer my services there as well. That's my contribution, but I'm don't think I'm going to change things on my own.

The dischan blog reveals exactly where it went wrong for them, and I'm glad for their transparency. It confirmed my suspicions--their heart was in the right place, but it wasn't a place of business. Unfortunately for them, the efforts to keep the individual team members financially afloat backfired on the company.

I believe the minimum cost to make a game is the following formula:
Cost of Living x Time x Team Members = Minimum $ to make a game. AKA a good sum of money.
It looks like dischan might have been following a similar train of thought, but with a team of more than one, it's really difficult to keep up with those costs on a monthly basis. When working with others, especially on a project that is crowdfunded, it is better to go with task-by-task commissions than paying the living wage for an entire team, unless your company is very fortunate and well-off already, which most indie devs are not.

It is definitely a warning to all of us, and many are now discouraged about using crowdfunding platforms. What we have to do is "prove" ourselves as a genre of game by increasing the quality standards of our creations and staying good to our promises. We have to up the ante and our integrity.

This interview by the team working on Backstage Pass covered some similar points:
“Visual novels are such a small niche that it would be nearly impossible to make back the money put into it,” explains Sakata. “MangaGamer has released sales data in the past, and everyone’s been shocked at how few copies actually sell. Add to that the fact that Japanese companies are used to selling VNs at significantly higher prices than most Westerners want to spend, and you find that negotiating a license becomes very difficult. In the end, we vote with our money. The surprising success of localizations like 999 and Dangan Ronpa have proven that there IS an audience for these things, and companies have definitely shown themselves more willing to take risks on VNs in recent years.”
Guo adds, “Not a lot of people know about this genre, and it’s going to take a lot of time for the market to expand. Because the market here is small, there’s not much profit from it, which is why big companies are reluctant to import these types of games (especially when considering the cost of localization).”
Here's the point that really hit home with me:
It doesn’t help, she says, that many EVNs that do get released are low-quality due to budgetary and time constraints. It’s a vicious cycle, and the only way to break it is to up the ante. “In my personal (and quite brutal) opinion, VN developers need to start treating the game development like an actual business instead of a hobby. One has to really push the quality and really be willing to take high risks to produce something that’d be on-par or surpass the Japanese VN standards. I think sakevisual is taking the lead in this – at least, I know the budget that went into [Backstage Pass] is probably higher than any other EVN ever made. It’s a high risk we are taking, but I think the idea behind this is to show the community that English visual novels are just as good and well worth the money.
In the end, dischan has my condolences. The upkeep of a business as well as the cost of producing a game come together to form hefty fees as well as a large investment of time and effort. We can learn from the past, it hopefully keep us from making the same mistakes in the future.

As a side note:
If you are an indie dev, even just starting out, consider talking to a business advisor or accountant and bookkeeper. Many don't charge consulting fees, and even if they do, it's usually hourly and within a reasonable price. (Unless of course they are full of themselves.) Also keep in mind that the average salary for bookkeepers is about $16/hour (USD) and most freelance amateurs (like myself) usually only charge $10/hour and are desperate for the work experience. I believe accountants are about the same. Honestly, I'd get a bookkeeper for monthly record keeping and take it to an accountant or tax advisor at the end of the year. Keep records of everything and be sure to back them up digitally. Having an actual business and/or financial professional deal with your bookkeeping/accounting/taxes can and will save you a lot of effort, time, money, and heartache. Try to find one who has experience with game developers, though they are few and far between.
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Re: Dysfunctional Systems cancelled! Wait, what?

#6 Post by SundownKid » Sat Jan 03, 2015 5:49 pm

I think the biggest issue they mentioned in the post-mortem is treating the money like a full salary. While the "actual business" idea is a salient point, treating it as such before there was a steady stream of income may have been too much, too fast. It probably would have worked out better if it was treated as a hobby, and the money was not used as the primary support for the game devs but simply as funding for freelancers to work on the game.

The idea of loss of motivation is one that is incredibly common to all game developers, though. The vast majority of developers find their motivation flagging after the initial idea and development, because it becomes a chore to do all the dirty work involved in making the game. It's simply a matter of pushing through the drudgery and seeing the big picture.

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Re: Dysfunctional Systems cancelled! Wait, what?

#7 Post by trooper6 » Sat Jan 03, 2015 5:55 pm

Let me point out that sakevisual did not use crowdfunding for their projects.
Neither did Moa Cube.
Or Christine Love.
Or Winter Wolves.
Or Cyanide-Tea.
Or Hanako Games.

Most of the bigger name EVN people haven't. So high quality EVNs are possible without crowdfunding. What crowdfunding does is displaces the "high risk" that is mentioned in the article from the Artist to the consumer. I don't feel completely comfortable with that.

Also, I think it is also important to expand what people think of as Visual Novels away from the anime-stylings. Cause of Death and Surviving High School were EVNs that were very successful putting out weekly content for years. EA finally shut them down, but they did very well indeed. And were financially successful...and had high quality...and were not crowdfunded. They alway were originally done by indies until EA saw the chance for profit and bought them up.

Can you use crowdfunding? Yeah...but it isn't *necessary*

And as I pointed out in a separate thread, I think counting crowdfunded money as personal income is a no-no.
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Re: Dysfunctional Systems cancelled! Wait, what?

#8 Post by SundownKid » Sat Jan 03, 2015 7:12 pm

trooper6 wrote:And as I pointed out in a separate thread, I think counting crowdfunded money as personal income is a no-no.
I definitely agree that crowdfunded money shouldn't count as personal income. In my opinion, if you can't afford to live somewhere for the length of the development time then you shouldn't count crowdfunded money as living expenses. It's best if it's simply a supplement, something that will let you make a bigger and better game instead of settling for low quality assets or production values. Because if it's a do or die project, and you lose the money without anything to show for it then it will just leave you more in the hole.

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Re: Dysfunctional Systems cancelled! Wait, what?

#9 Post by Morhighan » Sat Jan 03, 2015 7:14 pm

trooper6 wrote: And as I pointed out in a separate thread, I think counting crowdfunded money as personal income is a no-no.
SundownKid wrote: I definitely agree that crowdfunded money shouldn't count as personal income. In my opinion, if you can't afford to live somewhere for the length of the development time then you shouldn't count crowdfunded money as living expenses. It's best if it's simply a supplement, something that will let you make a bigger and better game instead of settling for low quality assets or production values. Because if it's a do or die project, and you lose the money without anything to show for it then it will just leave you more in the hole.
I cannot agree more. Emphasis on these.
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Re: Dysfunctional Systems cancelled! Wait, what?

#10 Post by Haze » Sat Jan 03, 2015 9:06 pm

I've only played a little bit of Dysfunctional Systems episode 1, but I remember playing Juniper's Knot a while back and liking it; I know a bit about Dischan, and would be happy to hear about their success. So, when I heard this news a couple hours before this thread came up, I was really sad. I am quite disappointed that Episode 0 won't be released, not because I'm a hyperactive fan who was really looking forward to it(like I said, I've only played a couple minutes of Dysfunctional Systems episode 1, and I would probably want to finish that first before purchasing and playing Episode 0), but because of the claim that the quality isn't good enough for a release, due to elements of the game that had to be cut out when deadlines come up.

Forgive me, but don't large game companies(i.e not indie) have to do this quite often? If you have deadlines, some things are going to get cut, and maybe the quality you get is slightly lower than the quality you want. And trust me, when you look at your own game, there's definitely the possibility of seeing it as mediocre simply because it's your game. Sometimes, you'll play test your game, and instead of smiling because of the game you created, you'll sigh and see all of it's flaws. This is something you have to work past as a developer, and, because of this, it's possible that Episode 0 isn't all that bad.

Of course, I've never worked for Dischan, nor have I ever talked with any members of Dischan, so it's possible that I'm completely off base here. Please do not take my opinion as the absolute truth.
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Re: Dysfunctional Systems cancelled! Wait, what?

#11 Post by Donmai » Sat Jan 03, 2015 11:12 pm

Jeremy said something that I found very important to notice
"We’re most likely going to start working on small projects on a volunteer basis. Things we can finish without relying on the support of any third party or requiring months of development time".
Yes, I believe that's the best thing to do now. To me, it's very ironic that the best work of Dischan is a small kinetic novel they did in a hurry for NaNoRenO. Previously, they had started an ambitious project with "Craddle Song", only to stop it after some time in favor of another ambitious project they are now cancelling one more time. Sleek presentation, outstanding coding and stunning art aren't enough, it seems. Until they can find the group member that is missing (someone who can manage all these things) I hope they will be amazing us with more jewels like Juniper's Knot. They will not be running, but they will be still walking, and with less risk to stumble and fall.
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Re: Dysfunctional Systems cancelled! Wait, what?

#12 Post by Laniessa » Sun Jan 04, 2015 12:10 am

...Wow, that's actually really surprising. I thought they were one of the teams that had it together, but then again, the major changes in the team should have been a warning.

I wish them luck in the future, at least.

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Re: Dysfunctional Systems cancelled! Wait, what?

#13 Post by papillon » Sun Jan 04, 2015 9:11 am

Morhighan wrote: Here's the point that really hit home with me:
It doesn’t help, she says, that many EVNs that do get released are low-quality due to budgetary and time constraints. It’s a vicious cycle, and the only way to break it is to up the ante. “In my personal (and quite brutal) opinion, VN developers need to start treating the game development like an actual business instead of a hobby. One has to really push the quality and really be willing to take high risks to produce something that’d be on-par or surpass the Japanese VN standards. I think sakevisual is taking the lead in this – at least, I know the budget that went into [Backstage Pass] is probably higher than any other EVN ever made. It’s a high risk we are taking, but I think the idea behind this is to show the community that English visual novels are just as good and well worth the money.
I'd like to counterpoint this with the exact opposite advice.

Worshipping the cult of "professionalism" is the fatal flaw of far too many indie developers. They form a huge team, they hire out for the best, shiniest website, they plan out all the expansions and wishlist features and merchandise and adaptations, they send the whole team to conferences to schmooze it up and tell everyone else how successful they are, they put elbow grease into making their game slick and pretty, and they expect that at the end of this process millions of people will buy their game.

Too late, they find out that making yourself look like bigwigs does not magically attract bigwig-level money. And they go bankrupt.

(... Of course, if you're wasting money that you got from crowdfunding rather than your own pocket, there's very little stopping you from trying to raise it all again and blow it all again, having learned nothing.)

That's at the high end, when people have the money to burn and not enough sense to conserve it. At the low end, it gets people confused about which parts of the business matter.

Back when I used to hang around with the GameMaker crowd, the word "professional" was batted around constantly by the kids there. Is using this tool professional? Does your game look professional? (Okay, half of them couldn't spell the word but that's another issue.) They were obsessed with people building tech demos of attempts to hack in 3d support (which used to be quite spotty), because 3d is "more professional", and paid less attention to people making full-length games. Which bit is more likely to result in some sales?

Is your goal "make a game that looks like a Japanese game" or is your goal "make a sustainable profit"?

Backstage Pass looks awesome and I wish it every success and my comments are not aimed at BP because it's being made by people who have some idea of what they're doing. :) But I would not encourage other people to look at this and go "You know what we need to do to make a successful visual novel? We need to spend a million bucks on a big team and looking slick."

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Re: Dysfunctional Systems cancelled! Wait, what?

#14 Post by jack_norton » Sun Jan 04, 2015 10:45 am

papillon wrote: Is your goal "make a game that looks like a Japanese game" or is your goal "make a sustainable profit"?
I agree and only want to add that there isn't "A RIGHT WAY" to do this, but a lot. Personally I took the approach to make small step forward every game. Nowadays I make only dating sim / RPGs, but still I didn't make Loren or SOTW immediately, I waited until I had enough experience. I made a lot of games first, to learn. People have no clue what takes to sell a game, the problems you encounter and so on. If you fail, is better to fail with a project in which you spent $5k than one you spend $50k no? :)
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Re: Dysfunctional Systems cancelled! Wait, what?

#15 Post by TeeGee » Sun Jan 04, 2015 11:05 am

New indie studios ran by young people make mistakes and fail all the time, so I don't find it that surprising. It's a valuable part of the learning process. Shame that this time it's a bunch of cool people, who just wanted to support a nice project, that took the cost.

This is why we didn't want to go the crowdfunding route, even when we were desperate for money. It's a huge responsibility not to be taken lightly. I can't say I feel okay with people asking for real money without having a real plan on how to use it. :/
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