For what it is worth, rewind to December 2010, I was a lead programmer, working in the technology team for a large AAA studio, pumping out console games that clogged up the top 40 charts, bringing in a decent salary, working with good people and generally feeling pretty good about how things were shaping up. A month later I was a director of a little start up, Paw Print Games... For me it wasn't an overnight thing, I had been part of a team that had put out a couple of titles onto iOS, the first 'KamiCrazy' and the second 'Soldier Ants'. KamiCrazy launched the first Christmas the App Store went live for iOS submissions and got to #2 in the free charts, the paid version never got any decent chart position. Overall it was a cool experience, and the game made around 6,000 GBP (split between three people, minus a publisher fee, so we made about 1,600 GBP each). The project took about 17 weeks (evenings and weekends) and was an eye opener for what can be done as a small team on the iOS App Store.
What KamiCrazy also showed me was that a single game that does 'okay' can easily make a small enough amount of money that going indie wouldn't be a sensible option. After that we pushed out Soldier Ants, a Worms style game, that did a bit better, around 15,000 - 20,000 GBP in total, although that was split in more ways, but showed a little more promise, although still not enough to be quitting our day jobs (or I should say, we were not brave enough to!).
Fast forward a bit further and we made a demo of KAMI RETRO, we posted a few videos, got interest from a couple of publishers, and ultimately secured a minimum guarantee that gave the studio six months to run (on lower, 'junior programmer' type salaries). This was the chance that we took and went full time as 'Paw Print Games', initially working out of a converted garage at the bottom of one of our gardens.
The first six months disappeared pretty quickly, polishing up KAMI RETRO for release, and then sorting out an Android port (part of our contract was for both platforms). This was before Unity and the like were available, so everything was coded up ourselves. As we approached the end of our six months we prototypes a few little ideas, and 'shopped' around to see if any publishers wanted to sign our next title, but we weren't so lucky. Looking back the game idea we were pitching wasn't very good, and I wouldn't have backed it, so it isn't surprising really! Luckily we got a break though, we designed a free to play game (Wacky Rapids) purely on paper, pitched that, got a couple of offers and took one which gave us money to keep running. It meant we could learn about free to play mechanics and add more technology to our engine.
Overtime we started pushing our older games onto more platforms, securing minimum guarantees were we could, being launch partners for new platforms, getting little bits of money here and there along the way. Wacky Rapids went out, and the knowledge we then had on the free to play space meant we were able to get a contract to make 'Swashbuckler' a 2D side scrolling platformer game for the Paul Frank fashion brand. It was a nice project as it meant working with an established IP, and we had full creative control over the project. We had wanted to make a platformer game for a while, so it was nice to be able to do it.
That takes us up to the start of this year, since then we have been working on a new IP, doing a few little contracts and are currently doing some paid R&D work utilising the Leap motion controller. We aren't millionaires (far from it), but we have banked money each year we have been running, we are hoping to secure a contract for the new IP we are developing to put us through next year, and give us time to keep moving forwards.
Would I say we have been successful? My answer would probably be 'successful enough'; we want to survive another day, month, year, we want to have time to develop bigger, better games, ultimately make the hit game that makes more money, break into the console space, etc. But our philosophy has always been to look carefully at the books, work out how much we need each month (and each year) concentrate on bringing that in. These days we have a nice office in Chester City Center (in the UK), have good people that work for us on each project. I know quite a lot of people who have 'gone indie' and ultimately had to fold, and in just about every case the reason they have folded is the pinned everything onto their first product being successful. Our experience from KamiCrazy and Soldier Ants warned us against doing this, instead we never rely on software sales to keep us going.
We are hardly the benchmark of how to run a games company, so take it all with a pinch of salt, I just thought sharing my experiences might be of the slightest interest! In terms of KAMI RETRO sales on the Pandora, the download figure is actually very close to the number of paying downloads we have had (e.g. not very many people downloading multiple times and paying once).
Above everything else, good luck! It is a brave move to make, hopefully it'll work out great, but at the very least it'll be a good learning experience (it has been for us so far anyway).