Eight Years of Making Indie Games: How This Company Found Its Own Way to Survive

Eight years into making indie games, publishing has become Coconut Island's new business for staying alive.

The first game the indie studio Coconut Island Games ever made was a bit of a prank.

The goal of that iOS game, called iDragPaper, was to pull toilet paper off a roll. The idea came from a small mischievous impulse in the everyday life of Coconut Island's founder, Bao Weiwei: "Have you ever had the urge to just keep pulling toilet paper off the roll?"

In a way, that fit exactly why Bao decided to start making indie games. "That was the era of PC client games and browser games, and most of them were pretty boring. I wanted to make fun games that I could actually make myself."

Before founding Coconut Island, Bao spent two years at the Shanghai office of Konami — the company behind Contra and Silent Hill — and then a year at a startup in Taiwan. Once he had a feel for how startups worked, he founded Coconut Island Games in 2009 and released iDragPaper.

Apart from the art, which he outsourced, Bao did all of the development himself. It was only a small experimental game, and he did nothing at all to promote it, yet iDragPaper went on to reach 10 million downloads.

Bao puts part of that success down to timing: smartphones, and the games made for them, were still very new, and there was hardly any competition. "It was early. As long as a game was reasonably fun, there were plenty of opportunities."

In such a forgiving market, Bao spent a long time not running Coconut Island as a company at all. Make a small game he found interesting, put it on Apple's App Store, aim it at markets abroad and earn a modest 300,000 to 500,000 yuan — that was his thinking at the time.

But as iPhone sales climbed and China's mobile game market grew, big companies such as Tencent and NetEase moved in, and the competition grew fierce.

For Coconut Island to survive, and for the games it made to bring in money, it could no longer be as freewheeling as before. It needed to improve two things: development — building a complete process that ran from idea to greenlight to production — and publishing, so that the games it made actually reached players.

In that sense, the studio regards Naughty Kitties, which it released in 2014, as a strategic turning point. It helped Coconut Island get a foothold in an increasingly crowded market.

Naughty Kitties is a strategy tower-defense game: the player controls a spaceship and places different cats in different positions on it, and the cats fight off invading enemies on their own. The cat theme came about because most of the team were cat lovers, and the casual, cute look was something Coconut Island had always been good at. Two people built the game — one on art, one on programming — at a final development cost of around 300,000 yuan.

Naughty Kitties launched in February 2014 and was featured by the App Store. "We had made no preparations at all. Nobody contacted us, Apple just featured it automatically," Bao said; it was a happy surprise. Within a week the game had close to 2 million downloads, and over the full year downloads passed 4 million, bringing Coconut Island about 10 million yuan in gross revenue.

More important, Naughty Kitties arrived at the right moment. "[Microsoft] wanted to find local Chinese indie teams to bring onto their platform," Bao recalled. In 2014 China's console market was only just appearing; Microsoft planned to bring the Xbox One into the country by the end of the year, and the new platform's hunger for content opened a door for small developers. Microsoft invited Coconut Island to port Naughty Kitties to the Xbox.

Bao thought a mobile game ported to a console was "not really up to standard," and he admitted the game itself "wasn't all that well made." But judging by the result, the Xbox version of Naughty Kitties did a great deal for Coconut Island's name.

Coconut Island now has more than 30 people, 25 of them working on development, and plans to put out one of its own games every one to two years.

Judging by the games released so far, Coconut Island's ideas come from roughly two places. Haywire Hospital, released in 2016, is an idle game set in a hospital. The player builds a clinic, attracts patients, cures them, earns money, expands the clinic and attracts more patients.

That idea came out of one of Coconut Island's internal Game Jams. The studio's Game Jam can be understood roughly as a brainstorming session for game-making: programmers, designers, artists and other roles gather, and Bao gives them a week to build a rough prototype of a game. The good ideas get formally greenlit.

Shio, released in 2017, is a game Bao dug out of student work. Liao Yi, then a senior in college, had made an action game with a Japanese-leaning style; in 2014 it was a finalist in the Chinese student category of IGF China, the Independent Games Festival. Bao liked it enough to poach Liao from the game-outsourcing company where he was then working, so that he could finish Shio.

From Naughty Kitties to Haywire Hospital to Shio, Coconut Island's style is hard to sum up. Naughty Kitties is cute and cuddly; Haywire Hospital is a deadpan gag; Shio is lyrical and stream-of-consciousness. The genres cover tower defense, idle games, action and more. That, too, is where Coconut Island's ideas come from: it sets few limits and lets its developers do as they like.

Bao is clear about one thing. From the data gathered in the year after Naughty Kitties launched, he began to understand who Coconut Island's players were: "My goal is to make games for the middle class."

That middle class, as he sees it, is mostly young people born in the 1980s. They tend to live in first- and second-tier cities, have some spending power, are easily influenced by fashion and pop culture, and want a certain quality of life. They are not easily won over by the cheap pay-to-win online games flooding the market; they ask more of a game's mechanics, story and art. Almost every game that gets greenlit is built for them. This, in his view, is a market separate from traditional online games.

Development is still where most of Coconut Island's money comes from. Haywire Hospital alone brought the studio more than 10 million yuan. In 2016, development accounted for over 90% of Coconut Island's total revenue.

But development is extremely risky. Behind every hit there are dozens, hundreds or more games the market never took to. "Indie games are about winning big with small stakes — you have to keep costs under control. If it succeeds, the return is more than tenfold, but the chance of failure is high too," Bao said.

Shio, released this May, is the most expensive game Coconut Island has made. It cost between 1.5 million and 2 million yuan to develop, no small sum for an indie game. The team on Shio also grew from the two people originally assigned to five.

"It kept slipping. It took two and a half years to come out, and some of the mechanics weren't as good as they had been, so the result was just that and no more," Bao said. "That's one of the serious risks with indie games: if you don't control costs, the risk gets very big."

For an indie studio, a game's development cycle tends to be long, and feeding the team while it runs becomes a problem. After a good deal of trial and error, indie game publishing became Coconut Island's new business. The first game it published was its own Haywire Hospital.

Coconut Island had worked with various publishers at home and abroad, but Bao found that many of the so-called big ones simply could not publish an indie game well: "The strategy for publishing indie games is different from publishing big games."

Big commercial games are usually published by occupying every traffic gateway there is. Tencent's advantage is distribution: WeChat, QQ and Yingyongbao, its app store, deliver enormous traffic between them. NetEase, for its part, put serious money behind Onmyoji: besides the usual app platforms, subway ads and television ads went up too.

For an indie publisher, mastering marketing and promotion — and getting across to as many players as possible, on a limited budget, just how much fun a game is — is not an easy thing to do.

With Haywire Hospital, Coconut Island tried promoting the game through streamers. It found 10 of them, half on paid deals costing between 8,000 and 30,000 yuan. When the game launched, it brought in 20 more. Together with reposts from big Weibo accounts and a feature from Apple, Haywire Hospital reached 1 million downloads in its first week.

Coconut Island buys traffic too, but according to Bao it buys only cheap long-tail traffic, and then uses artwork unlike the ads for traditional PC, browser and mobile games to draw clicks.

Last comes community management. Coconut Island set up more than 20 QQ groups for Haywire Hospital and used Q&As and gift-pack giveaways to hold the players together. In the end, Haywire Hospital reached close to 10 million combined downloads on iOS and Android and more than 10 million yuan in revenue — from a game that three people and a 500,000-yuan budget had started.

Having published its own game, Bao decided Coconut Island now had real publishing skill, and that the skill could be put to more use. A more practical point was that if it published only its own games, it could put out just one every two years, which meant the company's internal resources would go to waste.

Coconut Island has its own logic for choosing what to publish. "The most basic point is that it has to be fun, and it has to get some response from players early on. The second is that the game has to be innovative in some way. Whether in its mechanics, in how it expresses itself or in its art, it has to have something nobody has seen before."

Detention, set during Taiwan's White Terror, was one of them. At an indie game awards ceremony Coconut Island helped organize, Detention was nominated for two awards. It showed well, and the response afterwards was strong, which is how Coconut Island first noticed this unusual game. Detention was in fact considered "sensitive" in mainland China because of certain words in the game's first version. The game itself was never banned, but the videos streamers made of it were taken down by video sites, which made it hard to promote.

In the end, after a series of efforts, the Taiwanese development team "harmonized" some of the sensitive words in Detention without affecting the plot, while Coconut Island spent a long time explaining and negotiating with the video sites before the game and the commentary videos that followed could go up normally. Bao's hopes for the game's returns were low when he signed Detention, but he is happy with how it has done: "It has already far exceeded what we expected when we signed. Sales on the mainland are now around 70,000 to 80,000 copies."

Bao believes one of Coconut Island's big advantages as a publisher is that it understands developers. "We respect indie developers more than the other big publishers do, and we focus on making the game better. A lot of the big publishers hand down unreasonable demands to change the game."

Coconut Island has now published a number of indie games it did not make itself, among them Home Behind, Detention and Enlightenment. As the number of projects has grown, six or seven people in the team now work on operating and publishing games.

The company's business still centers on development, but the revenue from publishing has been climbing, and Bao expects it to pass development revenue by the end of this year. He has noted, though, that publishing margins are thin: "Our most successful product might reach 3 to 4 million yuan in gross revenue, and what comes to us is only a few hundred thousand. It's still hard work."

Indie games have become a hot idea over the past two years, and big game companies such as Tencent, NetEase and CMGE have begun paying attention to making and publishing them. At an event this April, Tencent announced its Aurora Program and its formal entry into the indie game publishing market.

But on indie publishing alone, Bao does not think the big companies threaten Coconut Island much in the short term. The main reason is that the margins in this business are low.

An indie game might carry promotion costs of 100,000 to 200,000 yuan, or even a few hundred thousand, and return a few million. A big game company with a product earning several hundred million yuan a year does not expect much money back from publishing an indie game; it does it for the reputation, for an Apple feature, or for other reasons.

"It isn't being run on normal business logic, so it's different from what people like us do — pure indie game publishing, which is how we make a living," Bao said.

Bao thinks there is still a good opportunity in China's indie game market. At a salon talk this April he said: "What makes me very happy is that the gold-rush era of mobile games ended last year. I particularly hated that era, and it's finally over."

But he also says that building up a game company's brand in China is hard. "Succeeding again and again in development is very, very rare — succeeding on a big scale again and again especially so — and there aren't many companies that can succeed again and again in publishing either. That's why so very few companies manage to build a game brand in China."

On the App Store or anywhere else, competition in the game market keeps getting fiercer. Coconut Island faces the same question as everyone else: how to keep making good work that succeeds, again and again, in development and in publishing alike.

Cover image via: Coconut Island Games