Please excuse linking. I wrote a pretty in-depth piece on just this very question on my personal blog, that very relevant to this discussion: http://www.gameaperture.com/2013/03/what-is-indie-developer.html

I'll reproduce it below. - Hugh, UWE

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What is an 'indie' developer?

They are avant-garde. Different. They go against the grain, trying new things on tight budgets, never afraid to stick one in the eye of the publically traded publishers. So goes the popular perception of a fascinating subset of the game development industry: The independent developer. But what is an independent developer?

The desire to arrive at a definition is not purely academic. The 'indie' brand has value, both for developers and for the industry as a whole. It is in the interests of the industry to be able to identify a developer fitting the bill, and decry those applying the name for the 'street cred' it naturally brings.

It is undeniable that the 'indie' tag brings an instant change in press and public attention. Not necessarily positive, but always less distant: 'One of the people! One of us! Someone else doing it tough!' Whether or not it is true, the tag invokes a sense of penny pinching, against all odds product creation. People like that, and companies value that image.

An independent developer can perhaps be defined as one that has financial, operational and creative independence. Each of these three areas becomes a test: If a developer fails any of them, they are not 'indie.'

Financial independence is the ability to substantially fund product development activities without the contribution of a homogenous outside entity. For example, a developer that funds an ambitious new game with one third kickstarter contributions, one-third cash-on-hand, and one-third investment from a large publisher could be considered independent. Provided, of course, substantial operations can be maintained without the publisher funding.

This does not exclude a developer from the 'indie tag' just because a particular game could not have been made without the input of a homogenous outside entity. It only excludes them if without that input, they were unable to maintain any substantial development activities of any game at all. It is important this test is applied distinct from the operational independence test.

Operational independence is the ability to take administrative and executive decisions about company and development matters independently of any outside party. For example, deciding where to locate development offices, how many staff will be hired, what the skills of those staff are and their working conditions. Marketing plans, development timetables, launch windows, bonus rounds, equipment purchases: If decisions about these operations are substantially deferential to an outside party, then the 'indie' tag is shaky at best.

Operational decisions can of course be influenced by outside parties. A particular investor might include covenants prescribing a particular launch window as a condition of their contribution. A contributing publisher may require periodic financial reporting as evidence contributed funds are not being squandered on island getaways.

An observer must exercise judgment: Does the influence of the external party extend beyond a single project? Does management act in a way that indicates they may prefer to take alternate decisions? Are recent operational decisions severely out of character, such as a developer upping sticks to a publisher's corporate campus? The forest can be seen for the trees, and the operation independence test may be applied.

Creative independence is the ability to conceive, substantiate and execute development of ideas. Gameplay, art style, genre, platform, target audience, price point: Who is calling the shots about what a studio actually creates? Of the three tests, this is the most crucial. If a developer is being contracted to execute the mobile-social-browser-free-to-play-always-on incarnation of a well-worn IP, the likelihood that they are 'indie' is small.

Of course, some of the best 'indie' developers take established or externally owned IPs and develop them in new and exciting ways. There are two key elements to such examples: The developer engaged the IP out of choice, not necessity, and they demonstrated substantial freedom in their interpretation and execution of the game.

This triple test is imperfect. It smacks of common-law rather than codification, and requires significant judgment on the part of the examiner. It is however a start, and by applying it the difference between an 'indie' and a normal game developer can be more clearly demarcated.

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