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The Ongoing Seismic Shift in Game Funding

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(c) Kickstarter

As mentioned in the top five list of innovative games article, one of the biggest stories so far this year is not the game itself, but how it was financed.

Kickstarter.

How does Kickstarter change the playing field, possibly forever?

Double Fine Productions promoted a Kickstarter campaign with a goal of $400,000 with the goal of finding out if gamers wanted a classic point-and-click adventure game enough to pay for it. Backers pitched in 3.3+ million.

During the celebration livestream, Schafer said, "If you've ever been told you're a niche market, that if you get together and organize, you can make things happen for yourselves."

The statement sums things up well. This won't change publishing for all titles, everywhere. Microsoft, Sony, and Nintendo in particular will continue to publish first-party titles. They are also the gateway to reaching consoles, which won't be going away anytime soon. EA, Activision, etc, will publish AAA games that they think have good odds of success. The marketing budget alone for the latest Call of Duty game exceeded 100 million.

What this really changes is the chances for the small/indie studio to make a game without risking everything they have. Up until now, if a studio wanted to make a game with any significant complexity, they needed to approach a publisher. I know from speaking to other devs that many, many brilliant games were canned despite demos that impressed everyone except the publisher.

Fans have clamored for sequels to countless games, only to be told by developers that they want to, but simply cannot afford to risk making a game on their own dime that has a limited chance of success. A prime example of this is another Schaefer title, Psychonauts. The excitement surrounding Double Fine Adventure's Kickstarter campaign reinvigorated hope that Psychonauts would see a sequel. The excitement was raised to new levels when Notch, of Minecraft fame, offered to personally chip in the funds to help make that happen. Many other devs went on record as kicking in to make Adventure happen. We are now at the point where the successful devs of yesterday and today are now in the position to put money back into the system, turning it into a self-renewing cycle.

Does the Kickstarter magic extend beyond anything Schafer touches?

Signs point to "yes." Since DFA was funded, Schafer and Notch have both promoted other indie projects on Kickstarter, pushing them closer to their goals.

One of the best examples is another sequel from the misty origins of PC gaming. Wasteland, created in the early days of Interplay, was the spiritual forebear to the Fallout series. Brian Fargo, once the President of Interplay, now runs inXile Entertainment. He initiated a Kickstarter campaign, saying that a month doesn't go by without someone asking about a sequel. They approached numerous publishers, and were shot down by every one. Fargo viewed Kickstarter as the final chance for Wasteland 2 to be created. They asked for $900,000 to get the game off the ground. They had a script, some of the original talent, and a plan. They just needed the money to get it off the ground.

What happened?

Wasteland 2 exceeded its funding target in less than a week.

Why is this working now?

Kickstarter has created an environment that previously never existed. It allows developers to show their plan and give fans the chance to do something that they've said they'd do for years ("I'll give you a hundred bucks if you make a sequel!") in an organized fashion.

Social media spreads news of these projects like wildfire. Twitter and Facebook play a huge part in news travelling with the speed that it does. It takes a second to retweet/reshare a project you like, even if you can't afford to pitch in yourself. Within 24 hours, everyone has heard of it, even if they haven't contributed yet.

What are the downsides?

The rewards that backers get can be very nice, but a casual glance at some smaller Kickstarter campaigns shows that the dev isn't doing all the math on costs for some tiers.

On finances, nobody's really sure, and they're not asking too many questions either. The main concern comes in on the tax side. Larger studios will handle this appropriately, but the smaller indies don't have the financial means (usually) to have a CPA on retainer to make sure everything is handled correctly.

The biggest risk? The funding doesn't actually roll through. Kickstarter uses Amazon Payments as a back-end manager. Their current system allows you to pledge with a credit card on file. There is no pre-charge authorization check run to make sure the card is valid. Case in point: when I backed DFA, I didn't realize that I'd switched credit card numbers since my last Amazon purchase. I got a polite email when the Kickstarter ended, saying, "Your credit card didn't authorize. You have seven days to fix this."

Final words

Crowdfunding has the potential to reignite small-studio development of innovative titles deemed too risky by major publishers. With any luck, this will spark a resurgence in publisher funding for some genres currently viewed as too niche. It will be very interesting to see what the next year holds for small studios.

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