Corporate crowdfunding might not be all bad

Sony's First Flight is a morally uncomfortable development - but could result in better games and products

Another week, another round of pained creaking as crowdfunding continues to shift around uncomfortably, desperately trying to figure out where it fits alongside the rest of the industry's business models and practices. This week, Sony returns to what now appears to be a regular guest-starring role; fresh from the post-E3 fallout of the Shenmue 3 announcement and Kickstarter campaign, Sony has now announced that it's launching a crowdfunding platform to allow small internal teams at the company to test the market for innovative new ideas.

It's all a process, isn't it? We started out being terribly uncomfortable with crowdfunding being used by anyone except Johnny Unknowns putting together genre-bending games with entirely untested teams of debutantes; then we all gradually got used to the idea of well-established developers using Kickstarter and its ilk to resurrect long-lost, beloved franchises or free themselves from the shackles of modern AAA development and try brave new experiments. Now we're struggling with the next stage of that process, wherein we question whether we're okay with corporations getting directly involved in crowdfunding.

I don't want to belittle the moral question that's being grappled with here. In part, the reason that established creators' use of crowdfunding has been so widely accepted is that it's seen as a way for these people to escape from the stifling environment of corporate-sanctioned creativity. Hence, when a global corporation turns up to the party, you can understand why the music dies down and everyone shuffles uncomfortably; not only were corporate interests not invited, but this party was specifically convened to celebrate a new way of allowing creators to escape from corporate interests by engaging directly with their fans.

"Sony doesn't own the Shenmue franchise but has backed the game to the hilt, providing what is almost certainly the lion's share of the development costs for the game"

At the same time, Sony hasn't actually done anything wrong with crowdfunding so far. Some corners of the Internet lost their collective rags with the company over Shenmue III, but this seemed deeply unfair from the outset. Sony doesn't own the Shenmue franchise but has backed the game to the hilt, providing what is almost certainly the lion's share of the development costs for the game; Sony also gave the developers a most extraordinarily high profile stage from which to launch the Kickstarter which was designed to provide their own fraction of the investment. Perhaps more importantly in the case of a long-dormant franchise like Shenmue, Kickstarter's role was also to confirm that there's really enough interest out there to justify throwing money into this thing.

"Okay, but Sony should have been willing to take the risk and fund the whole thing without Kickstarter!" is a common response to this; the same response has been floating around Sony's more recent crowdfunding venture, First Flight. It comes from a place of curiously warped logic; I know we all want businesses to take creative risks, but a businessperson who decided to go ahead with a risky project based off gut feeling rather than using every research tool at their disposal to find out if the project would succeed wouldn't be a brave, thrusting entrepreneur; they'd be a damned fool. Risk-taking is an important part of a creative business, but only if your guesses are measured and educated to the best of your ability; otherwise it's not creative risk-taking, it's just, as Peter Moore put it this week, "throwing stuff up against a wall".

"Crowdfunding, in the hands of a company like Sony, isn't really about money. The company doesn't need a few million dollars from consumers to fund the development of its ideas"

Crowdfunding, in the hands of a company like Sony, isn't really about money. The company doesn't need a few million dollars from consumers to fund the development of its ideas - even its stupid ideas, like the Rolly, if anyone recalls that, or the ill-fated PSX, an unloved mixture of PS2 and set-top DVR. What it's about is data; it's about allowing the company to take risks that are informed by real data, from real consumers, who are - crucially - putting real money behind their actions, and therefore hopefully preventing the company from developing something as utterly unwanted as the Rolly ever again, without making it so risk-averse in the process that cool ideas can't come to the surface. Cash committed on a platform like Kickstarter is a world apart from a button clicked on something like Steam Greenlight, as anyone with any experience in designing and interpreting economic experiments (which is precisely what both of those systems are) can tell you; a result which comes from a consumer's commitment of their own money is vastly more believable and relevant than one based purely on a consumer clicking a "Yeah, sure, I might buy this, I guess" button.

In other words, for Sony and the other corporations looking into crowdfunding, this isn't about the money, but about the absolutely invaluable chance to get market research data for markets that don't exist yet. If you're not going to take any serious creative risks and plan simply to clone the games or products other people have made, you can pretty easily look at the performance of those rivals, draw a pretty graph and say "yeah, we'll do okay"; market research done, bosh, everyone off down the pub. If you're doing something genuinely creative, though, and hoping to open up a new field or genre, you find yourself in a territory almost totally lacking in data. Why do you think so many publishers, and corporations in general, are so miserably bad at innovating and act in such a risk-averse way all the time? Why do you think the industry groans under the weight of never-ending sequels and franchise reboots? It's because businesses run on data, and just as nature abhors a vacuum, business abhors an empty spreadsheet or a blank chart. Crowdfunding fixes this; it allows people with interesting, creative ideas to stand up in the board-room and say "hey, here's our cool, crazy idea, and here's the data which shows that consumers genuinely will pay money for it". Sold, to the man with the non-blank graph!

I fully confess - this doesn't answer the moral question of whether or not we should be comfortable with corporations coming out to play on swings and slides that were specifically designed to give us a safe space away from their influence. Even if it results in corporations coming up with better ideas and games and products, and being more willing to let their staff work on crazy ideas and risky concepts because crowdfunding will help to sort the wheat from the chaff before the company produces another Rolly; sure, that's all good, but the question of whether we're comfortable with this is a normative one, and I totally understand those who remain opposed to the concept even if the outcomes are almost universally good. (By the way, if you think I'm hating too hard on Rolly, just Google the damned thing to remind yourself of how stupid a company can be when it strays into data-free territory.)

"One reason for opposing corporate crowdfunding is the idea that it takes away money from people who actually need it..."

Even as I acknowledge that moral arguments aren't solved by data points, I do have one more that I'd like to add to the argument. One reason for opposing corporate crowdfunding is the idea that it takes away money from people who actually need it; that smaller creatives will be squeezed out of the crowdfunding market by the arrival of big corporations who don't even need the money, but who starve everyone else of attention and finance, steamrollering over the green shoots of crowdfunded creativity in their single-minded pursuit of market research data. It's a fair concern, but to me, it echoes the same concern that was voiced when famous creators began turning to Kickstarter; that they would drown out the smaller voices and choke off finance to unknown teams. In the end, the opposite happened; big creators bought swathes and swathes of their own fans to crowdfunding for the first time, and many of those fans hung about to help fund smaller projects. Far from taking the lion's share of the pie, the arrival of famous creators actually helped the whole pie to grow, for everyone's benefit.

The push of corporate interests into crowdfunding may not have such a positive effect, but in the absence of data, there's equally no reason to believe that it won't precipitate a growth of the platform as a whole. Moreover, while we don't have to like or endorse it - again, that's a normative question and relies largely on everyone's individual views of the ethics of crowdfunding - the reality is that corporate crowdfunding is going to happen. Sony isn't the first company to enter this field (Square Enix was the first major games company to do it, as I recall) and won't be the last, either. Corporate crowdfunding platforms are going to happen; this needs to be watched carefully and any sign of crushing the flowering of creativity that we've seen on Kickstarter, IndieGoGo and their ilk will demand a strong and determined backlash. At the same time, we shouldn't automatically assume the worst. After complaining for so long that publishers and platform holders don't listen to gamers and rarely make the decisions that give consumers what they truly want, it would be churlish not to recognise that crowdfunding has finally given consumers the only voice that truly matters in corporate capitalism: a voice spoken from the wallet.

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Latest comments (8)

Phil Elliott Project Lead, Collective; Head of Community (London), Square Enix5 years ago
Just to be clear, we're not crowdfunding for our own games - we're opening up our comms channels to help indie devs build awareness and prepare for their own crowdfunding campaigns.

Edited 1 times. Last edit by Phil Elliott on 3rd July 2015 3:38pm

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I think we are all concerned that very well funded game publishers would use crowd funding - it smacks of "staw-poll" means to work out which products to back, and also a great way to maximize their investment. We saw Kickstarter change its rules after the issues surrounding big successes such as OculusVR sell on - and I am sure we will see them again with these shenanigans.

The need for them to run a straw-poll of what the customer wants illustrates how far away and bloated these publishers are from the actual pulse of the playing / paying audience - may be they need to cut the fat and get people who know what is wanted, rather than depend on spread sheet development.

With the mess that is the Sony/SEGA Suzuki-san crowd funding fiasco, I wonder if some of the old guard of the game development community are able to cut it? Do they really know what the audience wants, seeing Nintendo's Miyamoto confirming is is now off from mainstream projects (one WiiU too many!), is it time for a reality check on the true talent pools (against the team effort)?

Next thing we will start seeing is some director of a studio asking other members of the industry to test their work to gain credibility!
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Richard Archer SME - Data and Asset Protection, Square Enix5 years ago
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Show all comments (8)
Darren Adams Managing Director, ChaosTrend5 years ago
Well I have been very vocal on this issue so I won't reiterate what I have already said, but I will agree with kevin's post.
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Marty Howe Director, Figurehead Studios5 years ago
Perhaps the Crowdfunding sites, should have a rule:

f you are a mult-million (or billion) dollar corporate entity, you are ineligible to start a campaign"

The money should go to people who need it.
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Lucas Seuren Freelance, Only Network5 years ago
So the idea is that corporations crowdfunding works something like pirating music; you see more, so you in the end buy more. On average of course. There are pirates who buy nothing, but on average people that pirate music, buy more music.

On the other hand, you can only spend the money once. One of the major reasons to crowdfund, as is very clear from this article as well, is risk management. You can have a great idea, but you don't have the money to support it and banks won't finance it because the risks are high. Crowdfunding allows developers to get funding for projects that are high risk, because the risk is to a large extent for the backers. Clearly not all, because you still invest year(s) of your life and your reputation into a project, but that's better than your entire life savings and a second mortgage on your house.

But risk management works both ways. Backers will finance a lot, but they will more freely back a project that is low risk. We're dealing with investments here, and people tent to prefer small risks over high risks, especially if the profits are very similar. So the more major companies that go onto platforms like Kickstarter, the more low risk projects there are for consumers. The product could still be crap, but at least you'll know there will be a project and Sony or Activision will try to ruin their crowdfunding reputation.

Right now that isn't a problem, because the market is growing, but of course the more low risk projects there are, the lower the interest for the high risk projects. Corporations may bring with them new financiers, but there is a good chance that they are not going to mass invest in the high risk projects when there are many low risk projects out there. The few games they back, will probably be low risk if the market becomes saturated. And so corporations will drown out the risk takers.

There are better ways to take polls. Look at LEGO. You can submit ideas for new LEGO kits, and during a year or so people can support your idea. They can say how complicated they think the project would be, how much people would spend on it, who the target audience is. And once a project reaches enough support, the LEGO team will consider whether they are going to mass produce it. This of course does not guarantee a successful product, but you definitely have more than an empty spread sheet; you have the support of 10.000 people. Even better, if your product gets made, you get credits and royalties; you become part of the design team.

In this way, LEGO uses the concept of crowdfunding, without actually asking for a dime up front. Not even commitment. Just support. And I don't see why this could not work for other corporations.
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Darren Adams Managing Director, ChaosTrend5 years ago
LEGO uses the concept of crowdfunding, without actually asking for a dime up front. Not even commitment. Just support. And I don't see why this could not work for other corporations.
Indeed. This is one of my main beefs; Sony have never tried engage their customers like this before with their games, but now there is money involved it seems as if they are jumping on the gravy train.
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Whatever the justification it's a little bit sad to see Sony using Kickstarter to greenlight game projects. It's hard not to see the move as meek execs forgetting their history and talents, signing over creative entertainment to the abrasive investor-mindset that demands never spending money unless you have data showing it's justified. In a creative industry that rule should be termed 'Followers law: never be first to create anything'. It might make sober business tactics but it sure says the wrong things about a company that we look to for inspiration and guidance about the future.
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