Psychochild's Blog

A developer's musings on game development and writing.

27 February, 2014

Articles on how crowdfunding has affected game development
Filed under: — Psychochild @ 4:38 PM

Over at Shawn Schuster’s brand new site Shoost.co, I’m writing a series of articles about how crowdfunding (and in particular Kickstarter) has affected game development. Unfortunately, the site seems to have gone away, so I’m posting the text I wrote for the articles below, probably less some edits.

This was originally a series of articles. I’m just posting the text here so it doesn’t get forgotten. So, the “in the next article…” bits are not quite as important. :)

Crowdfunding for Games

Hello! My name is Brian Green, sometimes known online as “Psychochild”. I’m a computer game developer who worked on the classic MMO Meridian 59. I helped write the book Business & Legal Primer for Game Development (http://psychochild.org/?p=223), and I blog about game development issues at http://psychochild.org/

I’ve held a lot of positions in the computer game industry: programmer, designer, company co-founder, corporate officer, community manager, MMO administrator, and advisor to name some. I’ve worked at larger companies and started my own. For most of my 15 year career, I’ve been an indie. Through most of this, I’ve had an interest in the business side of game development.

Crowdfunded games have changed the business of how games are made. In this series of articles, I will take a closer look at crowdfunding for games and what it means for games and for the gamers who want to play games I’ll use my experience as a professional game developer and businessperson to dig into what crowdfunding really means for games.

The Past of Kickstarted Games

There are several crowdfunding sites, but Kickstarter is the biggest and best known. Games were a big part of Kickstarter from the early days. In those days, there was a passionate community of people who helped to fund quirky little games that had no chance of getting funding from the traditional sources. These “art games” usually just needed a small amount of funding. An example is A House in California (http://cardboardcomputer.com/games/a-house-in-california/) a game that raised $1,130 total and was later nominated for inclusion at the Independent Games Festival (IGF) at the GDC conference. (That company has since gone on to work on a larger game, Kentucky Route Zero.) It’s the type of game that EA would never make for many reasons.

A community of passionate backers on Kickstarter was formed around these quirky little games. The community was willing to put down some money on games that might not be made otherwise. This planted the seeds for what would come later.

Crowdfunded Games Become Huge

The gaming industry sat up and took notice of Kickstarted games about 2 years ago. Double Fine, lead by renowned game developer Tim Schaefer, wanted to develop a brand new adventure game. Double Fine created a Kickstarter pitch and asked for $400,000 to create an unnamed game. To everyone’s surprise, the campaign raised $3.3 million on Kickstarter in March, 2012.

There were many consequences of this massive success. It was a sign that a gameplay genre declared “dead” by major publishers still had a lot of fans willing to pay for a new game. This success showed that Kickstarter was a viable way to raise money outside of game publishers. Perhaps the most important lesson was gamers could control which games would get made by making financial contributions to a project. Genres like adventure games were no longer at the whim of publishers who ignored them for so many years.

Of course, in the wake of this success there were a number of other developers that wanted to capitalize on this success. I even helped to run a Kickstarter campaign for Storybricks, although that was ultimately unsuccessful in raising money. Other higher profile campaigns also failed, but other campaigns have succeeded wildly.

The Consequences of Kickstarted Games

We’re just now starting to see the fruits of those huge Kickstarter campaigns. Double Fine just released the first part of Broken Age, the game that the original Kickstarter campaign funded. Double Fine just announced that they have landed enough funding for the next part of the game.

The campaigns have only gotten larger since then. Since the Double Fine campaign, over 15 other games have raised more than a million dollars, including a second Double Fine campaign! One very notable example is Star Citizen, which raised $2 million on Kickstarter, but continued to take crowdfunding backers via their website and has raised over $39 million since then.

Of course, there has been some bad news. Some games that were successfully funded have been canceled, without the ability to refund the money to backers. One of the early examples was Haunts: the Manse Macabre which raised over $28,000 for an turn-based strategy game. The project fizzled out as the programmers hired to work on the project walked away. Undoubtedly, we’ll see more projects fail in the future.

So, crowdfunding has changed how games get made. But, what has actually changed? In the next article I’ll go over the old way that games were made: relying on publishers.

———-

In the previous article I said that crowdfunding has disrupted game development, but what is the Kickstarter campaign replacing? In this article, I’ll present an overview of game publishing, or how games go from a concept to something you get to play in the traditional game industry. This background will help you understand why crowdfunding has been such a change in the game industry.

How Games are Made

There are two major players in how games are made: the developer who makes the games and the publisher who publishes the games. Much of the time, these are two separate companies, but there are exceptions. I’ll talk about those a bit later.

When most people think about “making games”, they are thinking about the developer. The developer is the company that hires programmers, artists, and designers to create the game. Examples of developers include Bungie Studios and Double Fine Productions.

Publishers, on the other hand, tend to handle almost every other aspect of getting the game to the player. Publishers will often invest money in the game, provide business services such as marketing and project management, and then use their distribution network to ship the game to stores. Publishers include EA and Activision.

These definitions can be more complicated, of course. Lines between developers and publishers have blurred. Many publishers have internal development teams to develop games. Some publishers acquire developers and bring them internal. For example, EA has acquired development studios, such as BioWare and DICE, and develop games internally in addition to publishing games for external developers.

With the rise of the internet, some developers do not rely on external publishers, instead theyself-publish their own games. The developer will raise money from other sources, including personal fund of the founders, and handle the business aspects themselves. The internet allows smaller companies to distribute their games to players, bypassing the expensive distribution systems that were used to distribute physical copies of games.

The Roles of Developers and Publishers

Assuming the two are separate companies, how do they work together? For example: who comes up with the game concept? In almost every case, that is controlled by the publisher. A publisher might have a specific game they want made based on market projections and look for a developer to make it. Perhaps a publisher wants a port of their game to handheld devices or mobile platforms, so they want a developer to take an existing game and make the appropriate changes to make it work on a new platform. Other times, the developer might pitch a concept to the publisher, and the publisher ultimately decides if that concept is worth funding, indirectly controlling the concept.

Then there are the details of the agreement. One of the most important parts of an agreement is who controls the IP (the intellectual property: the copyrights, the trademarks, the right to make sequels, toys, etc.) Controlling the IP rights is important, because the IP rights for a popular game can be worth a lot of money. For example, if the developer controls the IP, then they have control over the sequel; if the publisher controls the IP, then the developer still has to negotiate to see if they will be able to develop that sequel.

That’s a glimpse into the factory of how games are made. Let’s take a look at the other responsibilities that publishers usually handle.

Publishers as Business Partners

Developing a game is hard. The best game developers are the ones who throw themselves into game development entirely. This dedication means that other things that are important, such as marketing, tend to get left by the wayside. Therefore, publishers tend to handle most of the auxiliary functions of game development so that the developer can focus on making the game.

Publishers often provide project management for the developer. Since publishers are spending money for the game’s development, they want to keep track of the progress. Developers will have milestones to meet and demonstrate to the publisher. If I developer misses a milestone, the publisher will step in and make sure things get back on track.

Publishers also handle distribution, although physical distribution is less important these days. Games on physical media like DVDs have to be manufactured and shipped to stores. Publishers have the scale and connections to help with distribution that individual developers did not. Today, publishers do much less physical distribution, but they have relationships and agreements with stores and digital distributions systems like Steam that allow a developer to get their game distributed faster and easier through digital channels.

Publishers as Investors

The other major function of publishers is to act as investors. They invest money, yes, but they also invest time in the form of expertise. As an example, they tend to be experts at marketing. Once the publisher invests money into a project, they usually have a vested interest in seeing that game succeed, so they lead expertise to help success.

Investing in games is actually very difficult because games are a hit-driven business. This means that for every breakout hit that makes a big return on investment, there are many games that either barely break even or lose money. And, due to the fickle nature of the audience, it can be very hard to anticipate which games will be hits, especially unproven ones. Plus, there can be problems with a developer who simply cannot complete a game, such as by losing a key person from the company.

Next article, we’ll take a look at some of the problems with publishers from a development point of view.

———-

In the previous article I explained how developers and publishers can work together to create games. This article, I want to cover some of the problems with publishers to show why crowdfunding is such an appealing alternative for some developers.

Publishers are Gatekeepers

Publishers are “gatekeepers”. In the past publishers controlled physical distribution, and it was almost impossible for a developer to get a game into the hands of players without working with a publisher. Most publishers would decide what games they think the largest average gamer audience would play and fund those games. Games not seen as promising would languish without support.

Gatekeepers are both good and bad for gamers. The good news is that publishers stop a lot of garbage from being released. Imagine how crowded the market would be if publishers just wrote checks to every person who had a game idea. You might have noticed how there were a ton of Flappy Bird clones in the mobile app stores after that game was so popular. That’s what happens when there are weak or no gatekeepers.

Of course, there’s a dark side to gatekeepers as well. The gatekeepers probably wouldn’t have approved the original Flappy Bird in the first place. A lot of promising games are never seen because the publishers don’t think there is a market for the game and are unwilling to take the risk to build that market. Publishers are also willing to declare entire game genres as “dead” because they don’t see enough returns, as in the case of adventure games.

Publishers Need Return on Investment

As mentioned last article, publishers are investors. They invest their money and time/expertise to make a game happen. And, like any investor, they need a return on that investment to make other investments. But, games are a hit-driven business, so publishers usually focus on projects that they think will provide the best returns.

What a publisher hopes to do is use their experience and expertise to find promising games, give the development team the money they need to make the game, and then generate a nice profit from sales of the game. Even with a publisher’s expertise it’s hard to anticipate how a brand new game will do in the market. Most of the investments will not make significant money. Therefore, the publisher needs to profit greatly from the lesser number of hits in order to continue to invest in future projects.

The result is that many publishers have a conservative nature. This conservatism is why you see so many sequels and clones; it’s easier to predict the performance of established types of games than new types of games. We see a lack of “innovation” in games not because developers aren’t creative, but more because publishers are hesitant to invest in it.

Publishers Are Businesses

Because publishers are businesses and need to turn a profit to stay operating, they will be brutal about the business aspects. They know they can’t always pick winners, but they must pick enough to keep the company running.

Sometimes this business-focus comes across as antagonism toward the developer. Publishers include terms and conditions that are much more beneficial to them than to the developer. In cases like this, publishers seem uninterested in being a true partner and ensuring that a developer will survive and thrive beyond the current project.

An example of this is intellectual property (IP) ownership. Publishers will often demand that they retain the rights to the IP, such as the copyrights, trademarks, the right to make sequels. If the game is successful, a developer will have to negotiate with the publisher to make a sequel to the game. Unless specified in the original contract, the publisher has no specific obligation to give more business to the developer who created the hit game. Of course, in practice a developer who created a hit game will probably have the greatest chance to create a sequel that is also a hit. But, it’s the publisher that benefits most in the long-term from this arrangement.

However, even if the game is developed, there is no guarantee of future cooperation. If the publisher loses confidence in a project, they may shift resources away from the project that are not required by the contract. Many developers have lamented how they completed a game for a publisher, but then the publisher seemed to spend a seemingly insignificant amount on marketing the game. The publisher probably did not expect that spending marketing money on the game would help the return on investment, so they fulfilled contractual obligations and little more.

Publishers are Imperfect

Of course, publishers aren’t perfect. Publishers are made up of people, and people are fallible. Sometimes a publisher passes on an opportunity that could have been huge. Such a game might find a home with another publisher, but a developer will pitch a project, only to see a very similar one enjoy some measure success later. If the developer had been given approval sooner, they could have gone to market earlier and captured more success.

Companies also change. Many developers can share sad stories about how a game developer had a great working relationship with a publisher, only to have that relationship radically change when their contact leaves the company. Sometimes management looks at projects from the previous management team with suspicion.

Other times human elements disrupt the process; a decision-maker at a publisher may choose to give funds to his or her drinking buddy rather than to a stranger. Sometimes it’s more “who you know” than “what you can do”.

Next article, we’ll see how crowdfunding is changing all this.

———-

In the previous article, I explained some of the biggest problems between publishers and developers. Now, let’s look at what is different with crowdfunding.

Removing the Publishers

Perhaps the most radical change in crowdfunding is that it removes the publishers as gatekeepers and investors, at least at the beginning of the process. A game developer can draft a wild idea and then craft a pitch to put on a crowdfunding site.

This ability to go to the gamer audience can be liberating for the developer. Instead of crafting a pitch that matches what the developer thinks the publisher wants, the developer can craft something that speaks directly to the audience for the game. A developer doesn’t necessarily have to adjust their pitch to satisfy anything beyond their vision.

For example, an artisan of adventure games can pitch a new game do the audience; this audience might otherwise be too small or unfamiliar for a publisher to reach at the scale they need. Fans of adventure games who aren’t served by existing publishers can get a game they want from someone who has done great work before.

But, remember that publishers provide more than just money.

Developers Doing Business

All those other functions of publishers have to be taken up by other people. A game still needs project management, marketing, distribution, and all those other fun things. If the publisher is no doing it, then someone else has to, and that’s often the developer.

In many cases, the developer is taking on more responsibility. This has been a trend for game developers, even outside of crowdfunding. BioWare made a point of marketing their studio in addition to the games. The publisher gains little benefit in promoting a developer’s name, so BioWare made sure that they did the promotion for their company the publisher likely would not. Indie game developers have also had to take on a lot more business responsibilities, as they are often too small to work with a publisher.

Of course, developers can still outsource some of these responsibilities. Hiring a PR firm can help get the word out about a game or the studio. Developers can also arrange for distribution through digital means using services such as Steam or GOG.com. Cooperative marketing has also become popular through sources like game bundles.

Marketing and PR in Crowdfunding

Marketing and PR are interesting to consider in terms of crowdfunding. Some people see crowdfunding as free marketing, but this isn’t quite true. You still need good marketing, particularly a good message, for people to become interested in your crowdfunding campaign. I’ve heard that the majority of Kickstarter campaigns that raised over $1 million used the same PR firm, for example.

However, a successful crowdfunding campaign can raise awareness of the game as well. A backer who is enthusiastic about a game will tell his or her friends. Star Citizen raised $2 million, but then raised a further $37 million more after the campaign likely due to the success of the campaign. So, it is better to think of crowdfunding as a multiplier for marketing. The money you spend through marketing the crowdfunding campaign is amplified so that it can reach more people based on how much the idea resonates with the audience.

A successful campaign can also bring a lot of other attention to a game. It will be easier for a developer to get press if they have a successful campaign. The developer can also attract outside attention, such as from investors, with a successful campaign. But, in the end, the important part is finding the audience that will back the project. And a crowdfunding campaign also allows the audience to become more directly involved in the word-of-mouth marketing for a project.

The Audience as Support

Perhaps the biggest change is that crowdfunding has gotten the audience more involved in the process of developing a game. In traditional game development, the audience had only limited involvement, usually through focus groups or test markets. Often the developer would make a game in relative isolation, with only the publisher offering feedback. The game industry tends to be a very secretive place, with constant worry that someone else will copy a new concept and try to launch faster.

In general, crowdfunding doesn’t work like that. The original Double Fine Kickstarter campaign seems to be an exception, as people were excited by the concept of an unnamed adventure game. Some crowdfunding campaigns that came later tried to be generic about the game they wanted to make, but many of those failed. The most successful crowdfunding campaigns since have had a specific vision of what the game would be like.

This change in audience support is good, but requires some change. Most developers are used to the secrecy, so it can be hard to open up. Game development is often an imprecise art, as it can take time to find the best combination of elements to be fun. But, it can be heartening for a developer to see an outpouring of support for a project at an early time. And, the audience can have a greater influence on how the final product plays.

In the next article, let’s look at the positive and negatives for gamers who back projects.
———-
We took a look at how crowdfunding has changed for developers, but how has it changed for the gamers? Does crowdfunding hold promise for gamers as well as developers?

Gamers as Partners

The term “crowdfunding” begins with “crowd”. As mentioned last article, one of the big changes is that crowd of gamers is participating earlier in development and are more involved than the focus groups of the past. Backers of a game will often get early access to development and can offer suggestions to shape the development. This can give the developer boosts in morale because, speaking as a developer, there is nothing better than having a player play with and truly enjoy your hard work.

But, there can be a negative aspect, too. Sometimes a game has to grow a bit before it is really fun. Gamers can have a hard time seeing the potential the same way an experienced developer can. This can lead to gamers feeling negative about the game in development. This negativity can also drain developer morale, as negative feedback often has a lot more impact than positive feedback.

The other problem is that even if a developer is eager to listen to feedback, there are limitations. Double Fine’s original campaign raised money from 87,142 people. It’s impossible to make all of those people completely happy! And, even if only 10% of those people write feedback, it’s you have nearly 9,000 different opinions being expressed about the game. It’s likely that someone will feel their ideas aren’t being considered properly.

Gamers as Investors

Crowdfunding brings crowds, but it also brings funding. For developers who need financial support to complete their games, this funding is important. As mentioned before, gamers are taking the place of publishers in providing money to the developer.

This can be great for gamers, because it gives more direct control over what gets made. If you like adventure games, you don’t have to rely on a publisher to maybe decide to do an adventure game. If you can find a developer you trust who is eager to do an adventure game on a crowdfunding site, then you can support it directly. This early interest also gives you some of that control as a partner.

There is a dark side, though. As mentioned in a prior article, games are hit-driven, and some games will be disappointments. Publishers mitigate this risk by investing in many different game projects. In theory, crowd-funding allows you to only take a small part of the risk. However, when it’s your money wasted it doesn’t necessarily feel like a small risk. I’ve personally had projects I’ve supported fail to deliver any results, and know how disappointing that can be.

A second negative is that backers aren’t really investors. An investor will see a return on investment, whereas a backer is probably only going to get a discount on the product and a few small bonuses at best. But, if a developer is able to retain more of the income, they can end up stronger and be able to create more games in the future.

Gamers as Gamers

Perhaps the best thing about crowdfunding is that you can find all sorts of new and interesting games. Games that wouldn’t be approved by publishers are possible to find by browsing crowdfunding sites. You can see an amazing range of creativity and respect for the classics that sometimes feels missing in current game catalogs from major publishers.

You can directly support a type of game that you like with an unmistakable action that shows support. A campaign that is a huge success is likely to bring more of that type of game in the future. And, in most cases, a game that has a successful campaign will sell copies later, so even if you didn’t notice the campaign or didn’t have money at the time, you can still benefit.

But, as ever, there are negatives. It can be disappointing when a promising game you really love doesn’t get as much attention. As Kickstarter campaigns have developed, we’ve seen some people focus on tricks to run a successful campaign instead of focusing on providing what gamers really want. Most of the attention goes to bigger Kickstarter campaigns, and smaller campaigns seem rarer than they were in the past.

The other major issue is what is called “Kickstarter fatigue”. It can be tempting to throw money at every project that seems interesting. After realizing that their budget can’t support this, people get more conservative in what they support. A failed campaign or a campaign that fails to deliver can create further disillusionment.

What Does the Future Hold?

Overall, I think crowdfunding has been a great boon for developers and gamers. A wider variety of games are being made, and gamers are getting the opportunity to have a say in what games get made. “Dead” genres are being revived and are thriving in high profile projects. There are problems, but as with any new thing there will be growing pains.

I think it’s safe to predict that crowdfunding is here to stay for game development. In the final article in this series, let me gives you some thoughts to help you crowdfund great games..

———-

In this final article, I want to share some thoughts about how you can help crowdfunded games.

Make a Budget (and Stick with It!)

It’s easy to get sucked into the trap of throwing money at every project that looks cool. An RPG over here, an MMO there, and a retro style FPS! So many amazing games! Most people fall into this trap when they first start supporting games. They support a lot of project, and then things get a bit awkward when it comes time to pay for that support.

The simple answer is to build a budget, then stick with it. Set aside part of the money you expect to spend on games, and go support some crowdfunded games.

Look for the Seriously Awesome

As I wrote, the exciting thing about crowdfunding is that you can support games that would be ignored by publishers. If you want to support a game, look for something awesome and support it.

For example, I supported the fascinating project Dominique Pamplemousse (http://www.dominiquepamplemousse.com/) not because I’m a big fan of adventure games, but because I wanted to support an indie game developer with the talent to hand-craft an entire game like that. I wanted to support that type of game.

Supporting a game can be a powerful sign. Maybe a creative person will go on to make other games you like, or support for some quirky type of game might inspire other people to create similar types of games that you would enjoy.

Consider a Campaign Carefully

Remember that even with professional developers, games are often not finished. You don’t hear about these games because publishers don’t market projects until they near completion usually. Canceled games happen more often than you might think.

Be smart with your budgeted money, and look at what is asked and what is offered. If an experienced developer is asking for $10,000 to make an adventure game over 6 months, you can probably assume this is legitimate. However, if someone with no track record is asking for $50,000 to make a 3D MMORPG in 6 months, you should be very wary.

It’s also easy to overpromise in a campaign. Some developers rather famously have more ideas than they have ability to implement those ideas. It’s easy to want to say whatever will get support, then realize it’s impossible to do so later. So, be wary if the campaign seems a bit too good to be true.

Finally, be careful about putting too much stock in a name. Reputation is undoubtedly important, but even an experienced developer can overpromise in a campaign. Don’t ignore other warning signs just because you recognize a name.

Don’t be Afraid to Commit

For Kickstarter campaigns, your money is only taken if the game makes its goal. This is intended to prevent a campaign organizer from getting less money than needed to accomplish their stated goal.

I’ve seen many people say that they were hesitant to support a campaign if it was not going to be successful. This is silly! The way to make a campaign successful is to support it. Obviously you need to stay within your budget, but don’t hesitate to support a game you think is awesome.

Plus, a game that reaches $400,000 out of $500,000 is different than a game that only raised $150,000 with that same goal. Your support, even of an unsuccessful campaign, can send a powerful message, and the person that raised $400,000 might figure out a way to run another campaign with a more modest goal, or figure out a way to bridge that gap.

Be Wary of Pre-Orders

There has been a trend where campaigns feel more like pre-orders than actually supporting the developer to make something cool. The reward levels feel more like shopping than backing something that wouldn’t happen otherwise. This is especially true when the campaign offers little beyond the game and a few digital tie-ins.

Not that there’s anything wrong with pre-orders, but I tend to be hesitant about supporting campaigns like this. In most cases, the game will be available for sale after development is complete, and you can get a better idea of what the game will be like then. There’s a significant chance that the game will change during development, and not be quite what was promised.

Of course, if you would normally pre-order the game at a shop, then you should probably not hesitate to pre-order it via crowdfunding. Also, if you think the game is seriously awesome, then supporting it with a pre-order is the right move.

Enjoy the Games You Made Possible!

As I said, it’s easy to see that crowdfunding is here to stay. This is a great new avenue for gamers to have a say in what games get made. So, budget a bit of money and have your say!







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