Gold Rush: The race for crowdfunding dollars and the squeeze on smaller game developers

Kickstarter is fast becoming a mainstream funding source for big video game projects. But this trend could be hurting smaller developers as they fight for attention and backers on the biggest crowdfunding site.

“If [Transformers director] Michael Bay came along and wanted to do a Kickstarter, we’d probably tell him, ‘Please don’t,'” said Kickstarter cofounder Yancey Strickler in an interview last year. “I would never want to scare the girl who wants to do a $500 lithography project, ’cause that’s why we started this thing. We think we have a moral obligation to her.”

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But Kickstarter has helped 21 big video game projects each raise over $1 million in the last two years (with 12 raising over $2 million). Most of these were from veteran development teams with gravity in the industry.

So, why are these large-scale projects looking to crowdfunding sites to raise money, and is their presence squeezing out the bedroom developer who isn’t blessed with media and industry connections?

The million dollar Kickstarters

Kickstarter first embraced U.K.-based projects in October 2012, and open-world space game Elite: Dangerous was one of the big early successes. It raised $2.6 million in funding, beating its ambitious $2 million target.

David Braben co-created the original Elite — a seminal title in the early days of video games — while still an undergraduate at Cambridge University. It went on to sell around 600,000 copies across multiple platforms. Braben, the founder of development studio Frontier Developments, turned to Kickstarter to gauge demand for a new installment in the series while trying to raise money to fund what was originally a “slow-burn skunkworks type project.”

“We were getting regular email asking about the game,” Braben told GamesBeat via email, “but we were unsure of exactly how big an audience that represented — was it just a few aficionados, or was there a viable market for the game?”

Asking for such a high amount of funding was a risk, but it paid off. Over 25,000 people backed the project, including 141 who gave $1,250 or more.

One key reason for choosing Kickstarter was that Frontier Developments could keep creative control of the project. “Several aspects of Elite: Dangerous are very innovative,” said Braben, “and it’s precisely those aspects, those differences to the ‘norm’, that will make it successful but would be perceived as risks by a publisher. We don’t think we could have placed the game with a publisher and retained the control we wanted.”

This mantra of creative freedom resonates through many Kickstarter projects.

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Chris Roberts, creator of the classic space game Wing Commander and the man behind the space adventure Star Citizen,offered a rallying cry to his potential Kickstarter backers: “Publishers are useful in the old physical distribution world, but the Internet is the great equalizer. Notch didn’t need a publisher to reach 20 million Minecraft fans. Riot games didn’t need a publisher to reach 30 million League of Legends players, and Wargaming.net didn’t need a publisher to reach 20 million World of Tanks gamers.”

According to Roberts, making a PC game backed by the playing community means “the game will cost less, be more creatively pure, and most important, be built for the real ‘core’ audience – not some corporate suit worried about including all the casual gamers.”

Roberts went on to raise over $15 million for Star Citizen, raising crowdfunding money on his own website long after the Kickstarter campaign had finished.

Legendary game producer Keiji Inafune, the driving force behind the Mega Man-inspired Mighty No. 9 project — which raised $3.8 million through its Kickstarter campaign — has similar thoughts on the Kickstarter model. “We have been getting the money from the fans who want this game made, but one of the big differences is there’s not the bureaucracy of publishers telling you what you have to do and what you can’t do,” he told Games Industry International.

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But does this creative freedom come at a price to smaller developers? Not everyone has a ready-made fan base or the marketing know-how to pull in backers, especially first-time developers looking to the Kickstarter community for support.

Starting from scratch

At the other end of Kickstarter story, away from the millions of dollars, sit projects like James: Journey of Existence, by Canadian university student Andrew Hlynka. The hand-drawn 3D game failed to reach its Kickstarter target of $5,000 earlier this year.

Hlynka turned to Kickstarter so he could bring in paid help for certain elements of the game, such as music and voice acting. He also hoped the campaign would help spread the word about James’ unique visual style.

Despite not getting funded, Hlynka appreciates the interest his campaign generated and the connections he made with the community. He has mixed feelings about the number of larger projects on Kickstarter, however.

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On one hand, Hlynka recognizes the value of big industry names bringing fans to Kickstarter in the first place. “Most people would never have a Kickstarter account unless something they felt very strongly about existed there,” he told GamesBeat. “After setting an account and pledging once, they’ve walked through the door and might be willing to look at other projects.

But Hlynka is wary of the enormous goals set by larger projects. “Such goals seem enough to pay the teams to work on the project full-time,” he said, “whereas most smaller indie developers don’t have that luxury. Asking more from backers takes away [from] what they could provide to other projects, or other aspects of life, when it is questionable that [the developers] need the money at all to complete the game.”

Hlynka is also acutely aware that the quality of larger titles can make some smaller projects seem “laughable by comparison.”  He says that “ultimately,the huge number of large projects that came in January 2014 had a negative impact on attention to smaller projects like mine.”

Another small project recently saw better luck on Kickstarter. 39 Days to Mars is a cooperative survival game that New Zealander Philip Buchanan is developing. It hit its funding mark of $900 with 25 days to spare and is reaching for a $3,600 stretch goal.

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As a small, relatively unknown developer, Buchanan had limited funding options. “39 Days to Mars is a small game with a tiny budget in a niche genre,” he told GamesBeat. “Bringing in external funding from a publisher often comes with strings attached, and the desire to see the game perform well commercially can mean pressure to change the style and approach of the game. This is also assuming I could find funding from another source. I’m fairly unknown as an indie developer, which makes it difficult to pitch a concept to a publisher in the first place.”

Buchanan is generally positive towards the trend for larger projects using Kickstarter. “At the moment I believe “big” Kickstarter campaigns are a good thing for smaller projects and for crowd funding in general,” he said.

“As a small developer reaching out to an audience, you not only have to sell your concept, but you often have to sell the idea of crowd-funding. Popular campaigns introduce large numbers of people to Kickstarter, and I would imagine that some of these go on to support more projects. Certainly, it’s easier to pitch a Kickstarter campaign to people who are familiar with the model, and while most of my backers found out about 39 Days to Mars from other websites, the majority already had Kickstarter accounts.”

He does, however, see a problem with the raised backer expectations from large, well-organized Kickstarter campaigns.

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“Physical rewards have become standard for most game Kickstarters,” said Buchanan. “But between small production runs and being based in New Zealand, most options were too costly to offer. Replying to backer questions and producing regular updates may be possible for a large team, but it’s almost a full-time job for a single developer.”

Buchanan is also concerned by campaigns raising money for what seem like finished products. “This turns Kickstarter into a ‘preorder’ type of system,” he says, “and introduces a false expectation for how long it actually takes to develop a game from scratch.”

The expert view

Games industry expert Jon Kimmich edited crowdfunding guide The Crowdfunding Bible. The number of larger developers using this funding route doesn’t surprise him.

“It’s not solely for the access to capital,” said Kimmich via email, “but also to prove out, or not, concepts and to build community around them well in advance of launch. That community built through crowdfunding is easily as valuable as the revenue generated, because it is a passionate, engaged community that will be ready to carry the message of your game when you’re ready to release to a wider audience.”

Indeed, developer Playdek saw Kickstarter as a prime way of building and involving a community for its role-playing-game Unsung Story: Tale of the Guardians, which recently achieved its funding goal of $600,000.  “We saw a tremendous amount of support when we first announced this project back in September,” Playdek community manager Shyla Bragg told GamesBeat. “When we decided to develop Unsung Story for other platforms, we were looking for a way to involve this committed fan base. Kickstarter made sense because it offers so much fan engagement.”

Services like Kickstarter make “a ton of sense” for bigger developers, according to Kimmich. “They allow larger entities — publishers, and “wannabes” — to leverage their knowledge of PR, marketing, identifying an audience and then reaching it, to leverage those skills to build community and prove out concepts. Makes a ton of sense.

“Now, there may be teams or people who find this distressing, or have a philosophical objection, but that’s really nothing new either.  Media markets and distribution have a tendency to undergo consolidation, aggregation and exploitation by successively larger players. That’s just how things work.”

What does Kickstarter think?

In the wake of Kickstarter’s second-ever million dollar campaign — Double Fine Adventure from veteran developers Tim Schafer and Ron Gilbert, which eventually raised over $3 million — critics questioned whether such blockbuster campaigns detracted from smaller projects.

Kickstarter analyzed the figures at the time and concluded that the opposite was true. “In the month before Double Fine, the video games category averaged 629 pledges per week,” said a Kickstarter blog post. “After Double Fine’s launch, the video games category averaged 9,755 pledges per week, excluding pledges to Double Fine itself. The jump is similar in terms of dollars.”

Those figures were from early 2012, but according to Kickstarter spokesperson Justin Kazmark, there is still space for small and large developers to coexist on the site.

“Emerging and established game developers alike continue to find tremendous support on Kickstarter,” Kazmark told GamesBeat. “While most successful video game projects raise less than $15,000, we’ve seen more and more million-dollar projects brought to life with thousands of backers.

“The diversity of projects in terms of scope and scale is very healthy for the Kickstarter community overall and it’s good for creativity itself. Creators learn from and inspire each other; the growing network of backers bring increasing support to projects of all sizes; and gamers have the opportunity to get behind more imaginative, ambitious, and whimsical ideas.”

Crowdfunding as marketing

The other big crowdfunding player is Indiegogo. It recently announced a partnership with video game publisher Square Enix, bringing a whole new angle to video game funding and pushing the issue of marketing to the fore.

The Square Enix Collective puts gaming projects in front of a Square Enix fanbase and permits them to decide which are worthy of pushing for funding on Indiegogo.

John Vaskis, the gaming vertical lead at Indiegogo, told GamesBeat a bit more about the project’s purpose. “The Square Enix Collective partnership has been created to help promote, market and finally fund indie/mid-tier game development,” he said via email. “The initial group of developers that were selected for the Collective program have garnered a significant jump in media going on around their game early, which is great in a crowded market, and they have received feedback from their fan bases early on to help guide game development as it goes on.”

Kimmich says that the Collective is effectively a way for Indiegogo to rapidly build its user base, meaning more funding dollars available to all.

“If I’m Square-Enix and I cut what is effectively a gray-label deal with IndieGogo to run ‘sponsored’ campaigns through the service, utilizing the IndieGogo brand for its crowdfunding credibility, and my own resources to drive new products and hopefully backers to the site, then perhaps I’m actually contributing to growing the available base of potential backers for everyone,” Kimmich said. “And this is why IndieGogo has pursued these sorts of deals: to grow their reg-base faster than what might otherwise occur organically. Kickstarter, as the market leader, chooses to use a more organic approach to ‘user acquisition.’”

On a case-by-case basis, the importance of Kickstarter and Indiegogo campaigns as marketing tools is undeniable.

Carmaggedon: Reincarnation raised over $600,000 on Kickstarter back in June 2012. Neil Barnden, the cofounder of developer Stainless Games, told GamesBeat that “Kickstarter was an option that meant those pledging their money had a genuine interest in the project and would therefore support us and our vision for the project. It was also a way for us to partly kick-start the Carmageddon Brand, by using Kickstarter as a platform for marketing the title.”

As a small developer, Buchanan soon realized how tough it was to be the marketing team for his own project. “Running a Kickstarter campaign is almost a full-time job,” he said. “The time I had been spending working on the game was suddenly being used writing press releases, Kickstarter updates, and corresponding with backers. I set up a facebook page, started tweeting, wrote interviews, and slowly but surely the campaign started gaining momentum. I’m very lucky that I had the free time to manage all of this, but I suspect some of the failed Kickstarter campaigns simply underestimate the amount of energy required.”

Buchanan says that marketing your game is something you need to do before heading to Kickstarter to avoid sinking without a trace. “When I launched the campaign, it fell into the sea of Kickstarter projects with barely a ripple,” he said. “With no prior knowledge of the game, most news outlets saw it as a risky bet and didn’t consider writing about it until after it had successfully funded.”

Hlynka agrees wholeheartedly. When asked for the one key lesson from his failed campaign, he said,”Attempt building an audience before using Kickstarter. [Use] other sites and news outlets, conventions and contests before seeking crowdfunding, to get [your game] in people’s minds. And make sure any gameplay videos and descriptions are as polished and clear as possible before asking for money.”

The future of crowdfunding

“With every passing day, crowdfunding becomes more of the norm for funding for game development, which does make it a bit harder for developers big or small to raise funds,” says Indiegogo’s John Vaskis. “Developers need to become more creative to mobilize their fan base to their campaign.”

This is easier for big companies with marketing budgets and large fanbases, but it’s harder for small developers to aspire to.

But in order to remain relevant, independent developers must embrace the marketing of their own titles, according to Kimmich.“Most independent game developers think of themselves as ‘developers,’ not ‘marketers’ or ‘publishers,’ and fail to recognize that there are key skills that are embodied in these terms that they must learn to continue to be relevant in the future.

“In any system — be it the iOS App Store, Google Play, Steam, Kickstarter or IndieGogo — where there are low barriers to entry, and limited or no curation, there will be noise, discovery will be hard, and large players with the capability to use their know-how and cash to build up an advantage. History would indicate that, usually, consumers end up seeing this as a benefit — at least in the short-term — even if the content creators do not.”

Both the Elite: Dangerous and Carmageddon: Reincarnation teams told GamesBeat that they would likely return to Kickstarter, given the success of their campaigns. “We’d absolutely do it again; it has turned out to be an exceptionally positive experience,” said Braben on his Elite Kickstarter.

So with the trend for larger projects using crowdfunding only likely to increase, the need for smaller developers to market themselves effectively is absolutely paramount.

“The bar is being raised by those with the ability to do so,” Kimmich said, “and the Earth continues to spin on its axis. Life goes on.”

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