Open Environments in a Closed Office

I've been railing against open offices and office meetings (especially micro meetings) on my blog for the last few weeks, and I have one more thing to add to this series. I'd like to talk about creativity in a "meetingless" / "interruptionless" office. Generally, people that believe in open offices believe in the creativity of the micro-meeting, and they believe in the collaborative power of spontaneous large group meetings (hence the open office). There is some truth to the fact that a spontaneous large group meeting, or hallway discussions, can lead to some very interesting and creative decisions. But why? And how can you create a creative environment within a constraint of few to no meetings?

First, let me say that an interruptionless office does not mean that there will be no hallway discussions, discussions over coffee, lunch, donuts, etc. In fact, I've found that even in semi-closed offices, these happen more often, because people feel more at liberty to just walk around. There's no chance of them disturbing anyone directly, so when they feel the need to be creative, they'll wander the halls, go to the cafeteria, or sit in a lounge, and just talk.

Second, as I talked about in the "Meetingless" post, a Meetingless office doesn't have no meetings, it just creates a culture of most group meetings being optional, minimizes interruptions caused by meetings, creates times that are guaranteed to have no meetings, and creates alternatives to split-second, micro meetings and micro decisions that I feel are an overall team detriment.

In general, there are three things that I feel open offices achieve automatically, that a closed office needs to work on:

  1. Removing psychological barriers to communication. As I've stated before, I admit that walls create psychological barriers to communication. To remove these you need to create an atmosphere that people are approachable in and outside of their office. Team building (the next point) helps with this, but managers, and leaders have to take extra steps to make sure that they are approachable. A few suggestions are to implement skip levels, hold frequent one-on-ones (which you should be doing anyway) and to meet outside your office. Coffee shops and established open areas in the office are great for this.
  2. Foster team building.  This doesn't mean everyone has to do trust falls, but it does mean you need to make efforts to bring the team together. This can be anything from catering lunch (which is what Fog Creek does), hosting in office Happy Hours, office Board Game Night (a personal favorite), or other office parties. Just make sure people mingle.
  3. Create open spaces for work and discussion.  This may sound like it goes against everything I've said, but I do still believe in having portions of the office be open spaces. Sometimes, you want to get out of your office, sit on a couch, and relax. Maybe go with a few other team mates to look over a problem. Maybe discuss something in a smaller open environment. Make these comfortable spaces and give employees the means to work in them (laptops or otherwise portable workstations, whiteboards, lots of power and wireless) and people will.  Even more so if they know they won't disturb others by doing so.

Generally, I feel like, cost aside, closed offices create happier, more productive employees, and that the benefits of an open office can be simulated more readily than those of a closed office.

The Interruption-less Office

In a previous post, I talked a bit about why I'm not a fan of open offices, and one of the main reasons is because they are too prone to various types of interruptions that actually keep creative people from being "in the zone." In addition, the types of "meetings" that happen in open offices can actually create a culture where split second decisions and decisions between small groups are the "norm." While this is fine in smaller studios, it can become an issue as teams get larger.

First, let's look at the common types of meetings that are encouraged in an open office, or one that encourages meetings, and see how we can remove most of them.

  • Quick Questions – You know these meetings because they're always prefaced with the person interrupting you saying, "Hey, quick question…" Frequently these are anything but quick, and almost always it is not imperative that they be answered immediately. However, in an open office, the person will frequently ask you directly, which means you need to give an immediate response. These meeting can be handled in private chat rooms where the question can be either answered by someone else or answered at a more opportune moment.
  • Class A Bugs – These are bugs are actively blocking, and need to be fixed ASAP (and I'm talking actually ASAP, in that people are actively losing work). These things happen. My recommendations for this are, first, make sure that all bugs are documented and tracked. Frequently with class A bugs like this, people just report it to the person they "think" is responsible verbally. If they're wrong, you can get two people working on the same bug at the same time, which can be hugely problematic. Once the bug is documented and tracked then you can interrupt the responsible coder (or producer responsible for assigning it).
  • Micro Meetings – Micro meetings are when (usually) two people decide to discuss an issue quickly to try to come up with a solution. These actually have two forms:
    • Idea bouncing – One person has an idea they want to flesh out, or run past someone, and just wants to talk it out. Frequently, this doesn't actually require the other person, just something to talk to. (I know a designer that keeps a stuffed monkey on his desk for exactly this purpose). I'm actually okay with these types of meetings provided they do not actually interrupt someone's work
    • This Isn't Working – These meetings come about because someone feels something "isn't working" and needs to be reworked. In my experience, these meetings have several drawbacks, besides the interruptions they frequently cause. First is that they rarely involve all of the people that need to be part of the decision making process, which means that  certain people are left out of the loop and surprised by changes they didn't know were going to happen. Second, these meetings frequently cause or require snap decisions without a real good amount of thought, which can be problematic. Lastly, decisions made at these meetings can contradict other decisions that were already made and documented. Now not only do you have a change that isn't documented based on a decision process that isn't documented, but it contradicts documentation that does exist. Again, these are probably better handled in group chat rooms, so that all people invested can see the discussion, the decision, and update the documentation accordingly.
  • Micro Meeting Turned Team Creative Session – This is really what people that want open offices cite as a benefit of open offices. Start with a "This Isn't Working" micro-meeting which becomes a full fledge, whole room creative discussion about how various systems and designs should work, interrupting everyone. The results of these meetings can be great creatively, but because they're always impromptu and records are scant, decisions made can affect entire teams without their knowledge or input. These meetings have the same all the same drawbacks as micro meetings, except with the added benefit of you keep several members of your team from working (including those that aren't in the micro meeting) for several hours. These should be avoided at all costs
  • Actual Meetings – Then there are actual meetings, which I'm not against, but only in certain forms, which I'll talk about in a bit.

In general, you should be always be striving to move to an "interruption-less" and "meeting-less" office. But, there are a few types of meetings that I'm okay with, with one caveat: you should strive to have days with no meetings at all, and as many of them in a row as possible. In addition, if you can schedule meetings to overlap with other times that people are taking breaks (lunch, for example) this means you're not interrupting actual work flow. This gives people lots of time to get into the groove not only on a single day, but multiple consecutive days.

The type of meetings I'm generally okay with:

  • Review Meetings – We have to review our work. Artists need art review, coders need code review, designers need design review and the whole game needs to be reviewed as a whole. It's important, and frequently it's important to do this with groups rather than one on one (depending on the type of review). If you can get these to be outside of meetings with tools (like Review Board) that's great.
  • Creative Meetings – Large group creative meetings can be great, but they have their own place and time, and their own rules. This is the subject of another post.
  • Planning Meetings – Generally I'm okay with planning meetings, provided they're shorter. This is for sure a good candidate for a lunch meeting.

Any other types of meetings I'm missing? Do any of these meetings work better in an open office? Am I right about most of these meetings being avoidable?

Thoughts on Open Offices

There's been a lot of talk on twitter lately (some of it pushed by me) about open offices, interruptions at work, and generally how to avoid being multitasked to the point of lost productivity (frequently the cause of being interrupted and asked to fix too many things at once).

From an individual standpoint, there are things you can do to make sure you stay on task, but that's the subject of another post. For now, I want to focus on the external factors of interruption, and the negative impacts there. This is probably the first of several posts on the factors that lead to interruptions at the office.

First, let me talk about open offices. Many of us, especially at game companies, work in open offices. No one really knows why, except that it is less expensive to build cubicles and set up tables than it is to build actual offices. The given reason for using open offices is that they foster team collaboration, information sharing, and that they work as a way to bring the team together. By having an open office, people can (essentially) eavesdrop on each other's conversations, and offer their input to creative or technical decisions, should they want to. But the downside of an open office is that everyone can hear your conversations, whether they want to or not.

"Open offices aren't a problem" you say. "If you don't want to be disturbed, just put on your headphones. Have a standing rule that you can't be disturbed if you have headphones on, and your music will drown out the office noise." But what if you're like me and don't like the feel of headphones (they push my glasses into the side of my head). In addition, I can't think clearly on hard problems with music playing. I can only listen to music when I have a clear direction, or when I'm doing a less thought intensive task (I'm sure many people are like me in that respect). If you have the rule of "you can't be disturbed" and you're actively encouraging people to escape from office chatter, how are you say that the open office actually encourages creativity and collaboration? Instead it forces interruption unless people explicitly block it out.

Interestingly, I've not been able to find any studies on open offices fostering collaboration or productivity, and neither could the authors of Peopleware, though they could find numerous studies showing how interruptions and open offices hurt individual productivity. Though not backed by science, listen to Jason Fried's TED talk about open offices, and why "Work doesn't happen at work." Anecdotally, I'm sure you've experienced exactly what he's talking about. Fog Creek takes this to the extreme. Everyone has an office and can't be interrupted when the door is closed. It also has a no meeting culture, which I may also write a blog post on. People communicate through private chat. Bugs and support requests must go through their bug tracker.

The problem is, I think an open floor plan does encourage communication in some ways. Not through eavesdropping, but by removing psychological the barriers between you and other people. I think people are more likely to come talk to you if you're sitting at a desk on an open floor than if you're sitting in an office. Additionally, being able to just poke your head up and ask a question feels less intrusive than having to walk into someone's office. That said, this is kind of the point. If you do a Google search on the cost of even minor interruptions, you'll find that they can be extremely damaging, to productivity, to stress levels, and to quality of work.

For me, 90% of these "micro meetings," questions, etc, are better handled somewhere that would keep a record, a place that questions asked could be asked as easily, and more efficiently, and be easily ignored if someone is "in the zone" or doesn't want to be disturbed. Fog Creek recommends HipChat (which is what Fire Hose uses), but 37 Signals own Campfire also gets good reviews. These both have the added benefit of, if you have remote workers, it Is less likely that they will be excluded from the decision making process if your team is good about using chat for minor / micro discussions over open office eavesdropping.

What do other people think? Am I missing a benefit of open office plans (other than cost)? Do people feel that the interruptions of an open office aren't as bad as I make them out to be?

Is There Money To Be Made?

As I said in my last post, I'm looking at releasing an Xbox Live Indie Game in the next few months. Today, along with Darius, I started doing a little bit of math about indie game numbers, and it's gotten me wondering, can you actually support yourself, and a company, on indie games (indie, in this case, meaning a smallish team experimenting with interesting gameplay concepts and styles). Now, I understand that this whole post, since it deals more with money than passion, may end up alienating me from the indie community, but as a developer I want to see small experimental games flourish, and I want to see those people developing them do well for themselves. This post questions whether or not that's even possible under our current thoughts and models.

We've been seeing recently a number of small game companies really hitting a wall when it comes to funding. Introversion had a post on their blog about their money problems, and Mommy's Best, though still pushing ahead, made it clear that the number's on Weapon of Choice were not good. We've had rants from game players about alternative funding models and suggestions from Gabe Newell about public funding for games. What can we take from all of this? What can we do for funding models?

So this whole thing starts with one piece of information: How many copies of a single game does a developer need to sell per year in order to support themselves? Let's start at a base line of $40k per year for a single developer. This may sound like a lot for indie developers and, let's face it, it really is. But I will tell you it SHOULD be a pretty good base line number, for a lot of reasons, not the least of which include the fact that, in the US, as a single developer, you will be taxed on that both as a business and again as a person. Also take into account health insurance costs and the possibility of supporting any person other than yourself, and $40k starts to sound pretty slim.

Now we need to figure in loss to distributors. Let's ignore distributors with up front cost / approval process (XBLA, PSN, and WiiWare) because even developing for these services usually requires either an already proven game or proven team, and we're assuming neither. This leaves us with iPhone, PC (in various forms, we'll focus on two as you'll see shortly) and Xbox Live Indie Games. For each platform, you need to look at distribution numbers, likely price points, and gross income, meaning the income after your distributor (or whatever) has taken their fair share.

iPhone

Let's start with the newest (and, for all accounts, sexiest) guy on the block, the iPhone. Most apps on the iPhone sell for $.99 to $3, with Apple taking 30% off the top. In addition, selling on the iPhone is really all about staying new, staying fresh, and staying on top of the most popular list. In order to do that, you need to stay at the lower price points to encourage impulse buys. That means staying at around $.99 for as long as possible. Here are the numbers:

App Price Gross to Dev Number of Sales Needed / developer
$1 $.70 57,000 / year
$2 $1.40 28,500 / year
$3 $2.10 19,000 / year
$5 $3.50 11,400 / year

So at the pretty much standard rate of $1, a single developer needs to push 57 thousand copies of their game per year in order to support themselves, or push multiple applications which can come up to that number. With the number of iPhones on the market somewhere around 6 to 10 million, the question is, how many sales can you except? Mac Rumors reports 4 apps that easily hit almost a million sales, but what's the data like for games? And indie games at that? The most telling post probably comes from the developer of Dapple, who wrote a very long post on how much money he actually made on the product (summary, he has sold a total of about 500 copies). In addition, this post on the price of apps versus their popularity shows very few indie games in the list, Field Runners (essentially an App Store Launch Title) being the notable exception, and very little money being made. Is it possible to be an indie and loved on the App Store? Only indies who have accomplished this can tell you, but 57,000 copies is a really hard number to hit with something interesting or experimental.

Xbox Live Indie Games

So what about Xbox Live Indie Games. Their Gross To Dev numbers are actually exactly the same, though the $2 price point doesn't exist, and the highest amount you can charge is $5. That said, until recently $2.50 was the lowest you could charge, which required about 22,800 copies to be sold per year. Unfortunately, XBLIG sales figures came up very short for most developers. Total download rates are low, as Indie games were hard to find on the dashboard until recently, and good apps are very hard to find, so I believe most people have been ignoring the service entirely. Sales for most games topped at probably around 5,000 copies since launch, far from the required 22 thousand to support a single developer.

PC

Finally we come to PC. On PC, sales numbers small, but you can expect to be able to charge more, though more is expected of a finished product. Games average anywhere from $5 to $30, even from indie developers, and you'd think that, hosting it on your own or through Steam, you'd get more of the pie. Steam unfortunately doesn't publish their numbers, but PayPal does, and we can actually use them as a baseline. Now, we're assuming that you're looking to get above $40,000 here, so we're going to use their range for $10,000 to $100,000, which is 2.2% + .30 per transaction. Here's the numbers:

Game Price Gross to Dev Number of Sales Needed / developer
$5 $4.59 9000 / year
$10 $9.48 4000 / year
$15 $14.37 2800 / year
$20 $19.56 2000 / year
$30 $29.04 1400 / year

Looking at these numbers, it's almost obvious why most successful indie developers start on PC. Even with the PC market shrinking (this talk form GDC shows us that you can expect PC sales numbers in the hundreds of copies, thousands if you're lucky), you get to keep a lot more of your money, and the audience is self selecting. People interested in indie games tend to have PCs and may buy your game. (A note to pirates: Look at those numbers and see how much you're taking from that developer, and the numbers EACH DEVELOPER has to hit before even becoming profitable. That, more than anything, should make you think twice about piracy). Hitting these numbers is possible, but not probable. It's quite obvious, to me, from these numbers why most successful indie devs are one man shops, making fairly quick games. This model doesn't scale to multiple developers, and definitely not for multiple years.

Alternative Funding Models

So what about Gabe's suggestion? Running basically a "stock market" for games where you can invest in projects, get a game out of it, and possibly see a little bit from the net profits off of a game? So far, We've seen a commission system partially go out, and partially work, but what about Gabe's suggestion?

Let's assume that for these systems, we're talking about multi-developer, multi-year projects. Still talking indie, let's say 4 developers over a year and a half, which is pretty reasonable I think. This totals (not taking into account taxes, office space, servers, or anything else) $240,000 that needs to be raised over the course of a year and a half. Though this is potentially possible, we'd have to look at other concerns. If a person invest in this game with a promise of returns on the net profits (after other expenses / taxes), he needs to understand the risks involved. After all, if a game company never hits that $240,000 number, and can't survive long enough to complete the game, that money is lost. Attached to this, is the idea of due diligence. Each investor is now an INVESTOR in your game, and can have possible legal rights to it. If you just take the money and never finish the game, they might be able to sue you. What is there in place to protect both the investor and the investee if this happens?

Now, provided these legal fees could be worked out, how much of net profit would you be looking at loosing, and how much would you charge for each point of net profit? What would developers look to gain, and what would investors look to gain. This post is all about numbers, so here we go.

First, let's start with a game that sells about 20,000 copies at $20 each (we're assuming these are good games that have a following, otherwise they wouldn't have been funded in the first place), on PC using the numbers above. That totals $391,000 revenue on the game, and let's assume (for argument's sake) that we have $41,000 in expenses for the game (to make nice round numbers). That leaves us with $350k net. Assuming we split to always end up with getting the funding we need, here's what the graph looks like:

Percent of Net Available Value for each point Net Total Invested Total Revenue to Investors Total Revenue / point Total Revenue to Developers
70% $3500 $245,000 $245,000 $3,500 $105,000
60% $4000 $240,000 $210,000 $3,500 $110,000
50% $5000 $250,000 $125,000 $2,500 $125,000
30% $8000 $240,000 $105,000 $3,500 $245,000

In general, that's pretty grim. Only in the 70% case do the investors come out just breaking even, and the developers have enough to fund half of their next game. Is it possible? Maybe. But is it worth it for the investors? How many times will an investor loose most of their money from games that aren't finished, or games that don't break 20 to 30 thousand copies before they just kind of give up investing? How much work is required of developers just to set up the legalities to make sure they don't get sued, and their investors don't get screwed?

Another funding model for indie devs is to keep titles relevant from year to year, keeping sales of the title up while you work on the next title, and into your third.  By keeping these games selling, you can start to see actual profits. However, this also means consistently releasing games year after year, and surviving until these games come out. This takes a lot of start up capital, or at least the ability or desire to eat ramen for years on end, with only the smallest chance of reward (from looking at these numbers anyway).

Conclusion

These numbers make it really obvious to me why most indie (and, in some cases non-indie) business models exist, and why they produce the games they produce. To be successful, you need to be in one of a few situations:

  • A single developer that makes a good title (Petri, for example)
  • A single or set of developers with short release cycles to keep multiple games relivant over short periods of time.  (Almost all iPhone developers).
  • A developer that has an already popular game and is able to get on one of the more visible services  like XBLA, PSN, or WiiWare (That Game Company, the Behemoth, 2D boy, Number None)

This is why indie games experiment the way they do.  Shorten the dev cycle, concentrate on mechanics and prototypes, keep art resources and requirements low, release lots of games quickly.  I feel like there needs to be more available.  I'm sure there are indies out there that want to experiment with things that take longer dev cycles, (weird dynamics, involved dynamic art styles, or, god fobid, strange narative structure), but can't for survivability reasons, and that's a damn shame.

So my answer to everything here is, maybe there's not a good living to be made in indie games. Even with alternative money sources, it doesn't look like you can sustain a business, even of small number of developers, without competing for AAA numbers, which seems to have a quality bar that almost requires a AAA team. Obviously, the math for that is wrong somewhere, as we've seen it happen, but is it worth it for me (or anyone else) to attempt the struggle when the reward seems to be mostly just more struggle? Is there an answer I'm possibly missing? Is there money to be made in remaining truely independent, or even survivability?  And if there is, can it be done for more models than what we have now?