Basket factor is a game industry term (that I’m making up right now) that means the number of ‘baskets’ that need to burn in order for your team/organization/company to fail. This is a spin on another industry phrase ( Bus Factor ).
Putting all your eggs in one basket (devoting all your resources to one project) is generally not a good business strategy, because if that basket burns then your company fails. So typically you would want a larger basket factor.
Many small indie game companies do software engineering contracts on top of their games, this way if their most recent game doesn’t succeed, then the company isn’t fatally crippled.
Depending on the success of your most recent title, you can actually get away with working on a single title next since your budget will hopefully stretch out over a year as a result of a successful release.
Example Scenario 1
Let’s say game company A is about to release 1 title in the fall right before Christmas. Their capital budget looks ok and they are all set until quarter 3 of the next year if the game doesn’t make any money.
This company has a basket factor of about 2 because their fall release doesn’t need to make tons of money for them to release the next title.
Example Scenario 2
Let’s say game company B has a release coming up in December and they don’t have another project that they are working on. Their budget only stretches to end of January without money from this release, so they need to succeed on this release to stay afloat. Since they haven’t started on a new project it may be a while before they can release again.
This company has a Basket Factor of 1. If this release bombs and sells barely any copies, and the company can’t crank out another title by March(Let’s assume they made some money on the release) then they will crash and burn.
Conclusion
Since creative media has a high failure rate it is a good decision to split your resources and not put all your eggs in one basket. A company can achieve this by many means. One way is to have 4 small releases in the year, this way if one fails then the company is only at 25% failure rate for the year.
Every game developer agrees that you should fail fast because then you’ll spend less time/money failing and more time towards success.