Other than earning interest on my savings account, my first real experience with long-term passive income was when I wrote and self-published a computer game for MS-Windows. I think I released it in 1995. It was a simple side-scrolling shoot-em-up game. I did the programming and artwork for it myself (I wasn’t much of an artist though), and my friend at the time did the music and helped out with the sound effects.
The game didn’t sell particularly well. I put it up on my website, by my website had virtually no traffic. I also uploaded it to a bunch of free download software sites. I had a free demo with a couple of levels, and then people would get more levels if they bought the full version. Initially most of my sales came from people finding the demo on a game download site, and the demo would refer them to my website to buy the game.
I opened a Post Office box and started receiving mail orders for the game. Later I got a merchant account, so I could take credit card orders. Then I started accepting online orders. Eventually I set things up so that orders could be processed and fulfilled automatically.
On average I earned about $75 per month from this game. I didn’t do much in terms of marketing, other than posting it on my website and submitting it to those download sites, which was a one-time effort. Once the game started selling, I moved on to other projects.
This was a Windows 3.1 game with a fixed 640×480 resolution. It was strictly 2D, so there were no fancy 3D graphics or anything like that.
A year after I released it, the game was still earning about $75 per month.
Five years after its release, it was still earning about the same.
Ten years after its release, it was still earning about the same.
I varied the price of the game over the years, testing $9.95, $14.95, and $19.95. It earned roughly the same amount of money regardless of the price. I could sell 10 copies for $10 each or 5 copies for $20 each.
The game was initially available on 3.5″ diskettes, then on CD-ROM. More than 90% of the customers bought the instant download version.
I also did some licensing deals for this game with LCR publishers (LCR = low cost retail). These publishers found me as a result of finding my game on some download site. They’d put together collections of cheap games and sell them on CDs for under $10. I didn’t earn much money from these deals, but they gave my game wider distribution, and every copy included a link to my website.
Occasionally the game got some special attention, and there was a surge in sales where it might do double sales for a month. So overall it probably earned in the range of $10-15K over its lifetime.
It took me about 6 months to write and release this game. I had a lot to learn, so it was slow going. I got much faster as I learned and practiced. Writing a similar shoot-em-up game in 1998 only took me about 2 weeks, including the design, programming, artwork, and sound effects.
Eventually I released three more games at about the same level of quality. And again, each of these added another $75 month in passive income, so with 4 of these titles, I was up to $300 per month.
Finally I got smart and spent 6 months creating a much better game and put more effort into marketing it. It did $500 in sales its first month and was up to $2K per month a few months later. I kept building it up from there with two expansion packs and a deluxe version that sold for $24.95. The game did very well and dwarfed the results of my previous games. I also did more licensing deals for it, including one that had a minimum guarantee of $5K per month just from that one source.
I developed this hit game with a $0 budget. I did the design and programming, the artist worked for a percentage of royalties, so I created a passive income stream for him.
Then I went on to license and republish games from other developers, which created new passive income streams for them and me. Eventually I built up a suite of about two dozen games, which means two dozen streams of mostly passive income. Some streams were pretty good. Others were just a trickle.
In 2006 I finally took my games off the market when I shut down my games business. By this point I was earning so much more from blog that I didn’t want to divide my focus by keeping my games business going. But the passive income stream from these games helped me launch my personal growth business. My games income covered all my expenses while I got my other business up and running.
While you ponder that, be sure to check this out.