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Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

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Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#281

Post by pdpi »

thebigspacefuck wrote: post #217
AlwaysRock wrote: post #211

Earlier quoted context omitted.

Maybe. Factorio does a great job of putting out releases and sharing details about what they are working on and you would have thought they were evil incarnate after they recently said they had to raise their price by $5 to keep up with inflation. People are fickle and hindsight isnt always so clear.

Wow, they raised their price? I thought their whole thing was $30 forever because they were never going on sale.

The point is that they don't go on sale, not that it's $30 forever.

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#282

Post by projektfu »

fastball wrote: post #149
fragmede wrote: post #39

Earlier quoted context omitted.

What ways are you thinking of? They could have incorporated and posted losses for 2? straight years before the IRS started auditing; those losses could have been deducted against this revenue. What other angles are there?

Fairly certain they already are incorporated. If you pay yourself with dividends you're paying corp tax + long-term capital gains, so 8.7% (for a delaware s-corp) + max 20% (less if they pay themselves minimal salary I believe) for a total of 28.7% (vs 50%). IANAA.

In the US, only if your corporation is a "C" corporation. For an "S" corporation, the income, distributed or undistributed, is treated as income on the individual tax returns of the owners. So if you and a partner own an S corporation, and you make $800k in net income and pay yourselves $100,000 in salary each, you would pay yourselves salaries (SS & Medicare tax on that portion) and then income tax on the net income + salary, so you would owe about $156,000 in income tax, plus whatever your state charges, and you would owe about $8,000 in SS+Medicare (because the company has already paid the other half). Rough numbers, of course. This would asymptotically approach 37% of income as your income increases (plus state tax).

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#283

Post by eatsyourtacos »

tverbeure wrote: post #263
eatsyourtacos wrote: post #171

Earlier quoted context omitted.

>There’s a major contradiction in here. I don't think there is. I wholeheartedly agree with the prior sentiment. Way too much of peoples lives are spent on shit that does not really matter . As a people we have overcomplicated the shit out of everything to such a degree it's disgusting. And it's all based on greed. Optimize this structure to pay the least tax, optimize your income into this and that so it magically m…

This particular case isn’t like that all. Do you agree with the premise that it would be incredible dumb and dangerous not to structure their business into a legal limited liability company? Do you agree that the accounting and tax handling is best left to professionals because it can be complicated and because you trade a little bit of money for the peace of mind that you’re following the rules and more free time ?…

The fact of the matter is I'm not saying "don't use a professional". I'm against the very concept of how convoluted everything is in this world- and nearly everything is created in ways that benefit people who make up let's say the top 15% of earners.

I'm not oblivious to any of these things, I have an econ, accounting & M.S. finance degree. I have a CPA (never practiced).

And you know what? I see this shit all the time in my line of work. I've been lucky enough to do more of the technology/programming side of the industry I'm in so I don't kill myself on the meaningless garbage that the people I'm creating stuff for actually do.. but I see this shit all the time.

Structures or laws being set up constantly to avoid tax that your normal person has absolutely no way to use. Self employed people setting up S-Corps so they don't have to pay into social security because they will be rich enough they don't need it themselves so why pay into the system to help others. People in other countries setting up US structures so they can pay a lower tax rate here than their home country while they get to reap all the benefits. LLCs being set up in delaware so you don't have to pay state taxes when one could easily argue you operate there if anyone checked. People throwing money into dividend paying stocks just because of a low tax. Reducing long term capital gains to stupidly low tax levels.

I mean I can go on and on. Your average person GETS ALMOST NONE OF THESE BENEFITS.

I'm not saying all of the stuff is bad or not needed. But the vast majority is set up so people who already make way more than the average person don't have to pay their fair share.

So look- I'm more being general here. I'm not specifically talking about this case as much as I'm just bitching about how the world works. It just disgusts me at this point. What one calls "optimization", at this point in my life I call it taking advantage.

/rant off

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#284

Post by eatsyourtacos »

dcow wrote: post #221
eatsyourtacos wrote: post #171

Earlier quoted context omitted.

>There’s a major contradiction in here. I don't think there is. I wholeheartedly agree with the prior sentiment. Way too much of peoples lives are spent on shit that does not really matter . As a people we have overcomplicated the shit out of everything to such a degree it's disgusting. And it's all based on greed. Optimize this structure to pay the least tax, optimize your income into this and that so it magically m…

The tax code is structured the way it is for a reason. It’s not there to be exploited. It’s there to be followed. DF is a business and labor of love for the two owners. One which generates revenue and is clearly above board. There is nothing wrong with taking dividends as the business becomes more valuable rather than increasing salary. And it’s not some mega tax loophole for the wealthy. By any measure these two are…

You can see my other reply above if you care. But I do take issue with this

>By any measure these two aren’t wealthy

That's objectively so wrong. They are basically set for life on money or will be before too long with more sales rolling in over time.

The vast majority of people will never see anywhere near that amount of money.. yet we don't want to call it wealthy. Ludicrous.

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#285

Post by sempron64 »

azernik wrote: post #264
sempron64 wrote: post #178

Earlier quoted context omitted.

The top federal income tax bracket is 37% and the top California tax bracket is 12.2%. This is for income exceeding 500k. So disregarding local taxes and property taxes, in California most of this income would be taxed at 49.2%.

This is a subthread about the median income that we would compare the $7M payout to, not the $7M payout itself. It certainly falsifies the graph paulluuk linked to, and using high CA taxes on the Bay 12 payout only further undermines paulluuk's comparison.

Apologies for the lack of clarity, I was addressing just this sentence in the parent

> That would require greater than 50% taxation, which isn’t realistic at all in the United States.

My point is that higher than 50% total taxation on a large single-year income (considering local and corporate taxes) is entirely possible in the United States, though it may be less in some states than other. I’m not saying that the estimate is correct as the Tarn Brothers don’t live in California. But if they took the income to a corporation, paid corporate income tax, and then took the whole income or a large part of it as dividends in a high tax state, then >50% is quite possible. On a pass-through entity, close to 50% is the standard and unavoidable in high tax states.

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#286

Post by Nzen »

sph wrote: post #7
ad404b8a372f2b9 wrote: post #2

The drop-off after launch is pretty wild.

If you mean in player count, that's normal. Peak is always during launch day, then there's a long tail, and very successful games might slowly rise after a couple years and surpass the launch peak. While Dwarf Fortress has had a fantastic launch, it will never be a wildly popular game to increase its player base by much more than its release, especially in the oversaturated gaming market of today.

If you would like to hear an analysis of these two trends, Jason Rohrer goes over launch day sales for a game he released in 2014 and 2018 in this gdc talk [0].

[0] https://youtu.be/sIqz5xmQKnc?t=506 While the entire video is 32 minutes, the relevant section is about 5 minutes.

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#287

Post by weknowbetter »

mlyle wrote: post #165
mort96 wrote: post #137

Earlier quoted context omitted.

I found this figure: https://upload.wikimedia.org/wikipedia/commons/b/bc/Median_p... (from https://en.wikipedia.org/wiki/Personal_income_in_the_United_... ). The individual median net income was $19k around 2005-2006, maybe they were just using outdated numbers? Or it could've been a typo or misreading, as the current median net income is $29k. In any case, their point still stands with the $29k figure.

> In any case, their point still stands with the $29k figure. Comparing comp for two people who are working really hard, doesn't really work when you're comparing to a median income that includes lots of people who don't work or don't really work. Similarly, comparing median net income (which includes taxation) with a pre-tax windfall doesn't really make sense, either. Further, we're not adjusting for time value of m…

Anecdotally I know a lot of people who work full time in the US and make well under 30k a year.

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#288

Post by chaostheory »

fragsworth wrote: post #274
genocidicbunny wrote: post #256

Earlier quoted context omitted.

As far as indie devs, yes, but in the greater scheme of things that is still fairly pittance money. $180k pre-tax split two ways, and then eaten into heartily by health insurance (Tarn and his brother have mentioned that medical issues are what pushed them to do the Steam release) doesn't leave a whole lot. But that also means that as long as they don't significantly increase the cost of their lifestyle, that $7m pre…

It sucks that their tax burden is going to be higher on account of making all this money in a single year, putting almost all of it in the highest brackets. Unless they did some clever accounting tricks throughout the 20 years to prepare for this situation, which I highly doubt they did. I don't know where he lives, but in California it could easily add up to close to 50% since he's "rich".

You’re assuming that sales will dwindle very quickly. I doubt it given its legendary, cult status.

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#289

Post by jabroni_salad »

jliptzin wrote: post #198

I haven’t played it, and I have no doubt it is an amazing game I would enjoy. But how do people have time for all these games? There are so many compelling games out there, each demanding hundreds or thousands of hours of time to fully enjoy.

As a general rule, people carving out hundreds to thousands of hours for a game are not enjoying 'all these' games, they are enjoying specifically that one and maybe one or two more if they want a change of pace.

Also, I personally find that games like DF lend themselves well to having a podcast, audiobook, or twitch stream open on the side. It isn't like a big setpiece voice acted narrative game that demands your full attention.

Re: Bay 12 Games has made $7M from the Steam release of Dwarf Fortress

#290

Post by lsaferite »

sempron64 wrote: post #178
PragmaticPulp wrote: post #139

Earlier quoted context omitted.

That would require greater than 50% taxation, which isn’t realistic at all in the United States. The federal income tax rates for lower income brackets reach 0%. State, sales, payroll, and other taxes aren’t going to come anywhere near 50%. The real, net, median income in the United States is significantly higher than what the OP quoted.

The top federal income tax bracket is 37% and the top California tax bracket is 12.2%. This is for income exceeding 500k. So disregarding local taxes and property taxes, in California most of this income would be taxed at 49.2%.

Federal taxes are marginal. You don't pay 37% on the full 500k, you pay 37% on anything below that bracket start point, you pay the lower rates. For instance, if you're single and declare $1M in income your effective tax rate is more like 33.5% and not 37%.
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