The year is 2020. Kickstarter is now the standard funding model for video games. From indie darlings to the next Call of Duty, practically every game is crowdfunded. Japanese megacorps and a few daring rogues play outside the system, but a crowdfunding campaign is assumed to cap off pre-production, generally launched in conjunction with the game's announcement. The last three headliner announcement videos at Sony's E3 press conference all had crowdfunding campaigns attached, from a Brazilian newcomer's humble $30,000 Kickstarter up to Naughty Dog's ask of $200,000, hosted on their website.
I'm not exaggerating. In the next five years, either:
A) Kickstarter changes its terms, due to greed or legal sanctions
B) Crowdfunding becomes a part of the majority of games developed, including AAA.
Whether it's a new IP, a sequel, or a spin-off, crowdfunding your game when it has a sweet announcement trailer just makes sense. Even if you don't need the money. Especially if you don't need the money. The point isn't to fund the game anyway - it's to start building your brand. In an increasingly crowded space, filled with people who don't click on advertisements, crowdfunding is the obvious choice.
"Crowdfunders don't expect us to pay them back except by making a great game"
I'm the Captain of Kitfox Games - president, CEO, lead designer, whatever. We're four nobodies up here in Montreal, Canada, and we just want to make great games. In this pursuit, we've received investments from venture capitalists, taken pay from publishers, accepted loans from a government agency, and run a successful Kickstarter. Hands down, the Kickstarter was the best source of cash for us - because it raised our profile, proved our concept had appeal, and plus, crowdfunders don't expect us to pay them back except by making a great game. Backers share our priorities, and want us to succeed. Unlike venture capitalists, lenders, or publishers, our backers would rather see us go on to make more games than take 20 per cent of our paycheck. No wonder we love them.
But even aside from the potential profit (which is honestly low in the scheme of things), the marketing advantage is enough to seal the deal.
You're a game studio. You have salaries to pay and want to get an idea of how well your game will sell. If you run a crowdfunding campaign, you will receive an additional chance at good PR, word-of-mouth, merchandising, and pre-orders, all for the low, low cost of a month or two of community manager salary. It lowers your risk in every way.
Even if the campaign fails to fund for some reason, you can always cancel the game or re-launch it with tweaked marketing later, all with less risk than if you waited until later in production. Even in the worst of cases, if the game needs to be cancelled after successful funding and you need to refund the money, usually these games cost upwards of $30 million anyway - refunding a few hundred thousand is cheaper than many license deals.
The first few days of our Kickstarter campaign were terrifying, of course, but less terrifying than launching a game into an increasingly crowded marketplace without any sense of how it would go. In start-up culture, business-types are fond of saying "fail early," meaning that new ideas should be tested before investing years. It's good advice not just for new inventions and apps - it applies to games, too.
And if you're a big corporation considering whether to spend dozens of millions of dollars on an idea, wouldn't it make sense to do a bit of a market test before investing those millions, rather than after?
But nobody would accept an Activision Kickstarter!
It's already happened in the board game space.
Kickstarter began as a place for the niche and desperate game designer to reach an unprecedented fanbase and fund projects that otherwise couldn't succeed. And when some of the biggest, most established board game publishers created Kickstarters, some people complained, but they succeeded, sometimes wildly. And this continues to happen.
The key difference is that board games have comparatively low production cost and risk, but high manufacturing cost. Thus, it's expected to complete a fully-functioning game before crowdfunding - much like video games must, before acquiring publishing deal.
"One of the primary weapons for overcoming skepticism is legitimacy. But guess who has more legitimacy? Activision-Blizzard has more than Kitfox does, I'll tell you that much"
Video games have a much higher production cost and approaching zero manufacturing, which causes more failure between pre-production and launch, which leads to heightened consumer skepticism. One of the primary weapons for overcoming skepticism is legitimacy. But guess who has more legitimacy? Activision-Blizzard has more than Kitfox does, I'll tell you that much.
As in every other kind of business, the rich and famous continue to have an advantage over our beloved underdogs. And lest you think my information is outdated, an old hoary IP from an established (though smaller) developer is raking in hundreds of thousands of dollars as I type this.
Terrible Reasons Not to Crowdfund
- You are poor. Great - you need the money.
- You are wealthy. Great - you can always try again.
- You are a nobody. / Your brand/IP is new. Great - you need to get your name out there.
- You are famous. / Your brand/IP is well-established. Great - you have a fanbase to mobilise.
- You get funding from other sources. Great - you can have a very low goal.
- You have a small team. Great - you can have a very low goal.
- You have a large team. Great - their morale will be boosted by the success, even if they don't get a raise.
- You don't have an artist. Great - hire one, or profit-share with one.
Plenty of developers make excuses as to not crowdfund. Most of the time, these excuses simply don't hold up to any logical scrutiny. Even free-to-play (or completely, utterly free) games can be crowdfunded, provided the backer rewards are appealing enough and/or the game's creator makes up for it in fame, good will, or other desirables.
So Literally EVERYONE Should Crowdfund?
Well, okay, fine, yes, there are a few good reasons not to crowdfund.
- You don't have a game concept.
- Your game concept is very, very difficult to imagine* without experiencing it, even with copious diagrams and game footage
- You are known, to yourself and others, to be a liar, incompetent, gambling-addicted, and/or irresponsible.
- You are ethically opposed to consumerism, "economic innovation", or money**.
- Your last Kickstarter failed, you have no idea why, and/or blame things completely outside your control which have not changed.
* Note I said "imagine", not "understand". Comprehension isn't necessary, only a spark of excitement.
** I actually loathe money and related evils. I greatly desire a Star Trekkian utopia without capital, property, or finance industries. I will happily vote for the abolishment of all inheritances. But since I don't oppose money quite enough to stop creating and selling products, that theoretical opposition is not relevant here.
That's about it. In fact, I've even made you a handy flowchart to handle your concerns:
I've spoken with developers who believe crowdfunding in its current form shouldn't be legal, as it conveniently uses the language of charity and investment while offering consumers the benefits of neither. In fact, Kickstarter rules specifically stipulate that it neither supports non-profit projects (presumably for tax reasons) nor permits financial rewards (such as profit-sharing that would appeal to investors).
To date, most court cases treat Kickstarter as a product catalog that sometimes doesn't deliver. What about the games that do deliver, sell the game for millions of dollars of profit, pocket the money, and then Kickstart again for the sequel? It's clearly in bad taste, buyer beware, etc, but how much predation is good business and how much is fraud? After all, we allow pre-orders months or years in advance, even of arguably overpriced "limited edition" sets of merchandise. Is there any difference?
"What about the games that do deliver, sell the game for millions of dollars of profit, pocket the money, and then Kickstart again for the sequel?"
It sure would be best if everyone mutually agreed to only crowdfund when they needed the money, wouldn't it? We can all see that the market is polluted when greedy suits come in and sharpen their blades against our wallets. Unfortunately, the tragedy of the commons means that the gold rushers will continue to deplete all of the goodwill for decreasing gain. If the demands for legitimacy from creators skyrockets and funding goals plummet, Kickstarter really will be only a marketing exercise. Bubbles burst, platforms mature, life goes on.
For my part, I don't know if Kitfox Games will Kickstart again. Game development is a crowded space, and maybe something better will come along to help us stay afloat, before our next project. If it makes sense, sure, we'll crowdfund again, and we hope we'll have your support, depending on how well Moon Hunters turns out.
Nearly 2,000 game projects funded on Kickstarter alone last year, earning $89 million. That's only a third the cost of Grand Theft Auto, but maybe that's because Rock Star hasn't launched a campaign yet. If (when?) they do, I imagine it'd be on their website, to dodge the Kickstarter fee. But even if we have to campaign alongside Rock Star (or Activision-Blizzard, or Ubisoft), we're happy to take any possible ripple effects from those monster marketers.
So let's get cracking. There's games to be made.
Tanya X Short is CEO/Captain at Kitfox Games