Licensing software, especially to the video game industry, isn't sustainable unless you stay extremely small. Even then you will just survive. The only way to thrive and be sustainable long term is to be bailed out, bought out, or make a handful of very large licensing deals.

In every case we've seen a small company try to make it by licensing software, they only basically survived until a larger corporation came along and cut a big check. You can get the small licenses rolling in, and these can be used to establish credibility and give you leverage.

But unless you are only 1 or 2 people, I wouldn't expect these small licenses to keep a US company afloat long term. Negotiating these contracts with the smaller companies can be brutal, and in many (certainly not all) cases the amounts involved barely cover the legal fees.

Another financial sustainability solution is to contract out your company's people to other corporations, basically directly turning your time into money. You can then invest this contracting income back into your product. We did this and we've seen others do this too.

The video game industry in particular is *brutal*. Even the largest/most well known middleware licensing outfits get negotiated down to only a few thousand per license. They expect your software basically for free after you factor in negotiation & legal costs. It's not worth it.

Even the most successful/most well known outfits can only pull in enough licensing income to keep one developer going, barely, unless you can get a big corp to cut a large check.

The key to thriving is to build credibility by making numerous smaller licensing deals, to survive at all costs no matter what (because the larger corps will purposely wait you out!), then figure out how to get a larger corp to cut you those very large checks.

During this process you always keep marketing to the smaller corps, which brings in a trickle of income. It also helps boost your visibility and negotiation leverage, so when you negotiate with a larger corp you're not a nobody.

All of the above information is backed up by decades of working within the software and video game business, our experience at Binomial, and by us talking to numerous startups/smaller companies. We have seen inside a lot of these companies.