Crowdfunding (Part 2 of 2)

by mcampbell on December 17, 2012


Kickstarter – Funding platform that is becoming a video game hotbed

Kickstarter was started a year after Indiegogo, in 2009. It is nominally very similar in purpose, a platform to fund creative projects, except that projects are subject to an approval process and the system concentrates on entrepreneurial endeavours. Kickstarter is not designed for charities; the project must fit their categories and the outcome must be tangible.

In terms of some rather massive fundraising campaigns that occurred in 2012, Kickstarter seems to be developing a bit of a specialization … video games.

Last October I watched, somewhat obsessively, while an established and profitable gaming company (Obsidian Entertainment) amassed millions of dollars in backing from private individuals who essentially donated their money to turn a vision into a reality. It is called Project Eternity.

The whole process was surreal … the money just rolled in. After a month of online fundraising, the final ‘telethon’ consisted of streaming video where the development staff sat around listening to music, partying, and getting inebriated. Their final figure was $3,986,929 from 73,986 backers. There were additional funds sent through PayPal bringing the total to over $4 million. Shares weren’t offered, bonds weren’t issued, there’s no chance to win a jackpot, the starving weren’t fed, and there will be no free medicine for poor Tiny Tim … just the promise to create a software product, a game. Over $4 million in funding…

Based on Project Eternity and other smash successes, the outcome of a Kickstarter investment campaign (for gaming) seems to be dependent on three things:

1)     The charisma of the investee(s) and ‘product vision’ that is presented in the campaign (naturally).

2)     The reputation of the individuals requesting financing. Celebrity is a factor that the successful campaigns seem to recognize, and well-known game designers can deliver star power.

3)     A hidden pocket of demand that marketers in large companies either do not see or disregard. Reimagining’s of old classic products generate a lot of hype. The campaigns for other Kickstarter projects (i.e. Double Fine Adventure, Wasteland 2, and Star Citizen) stand as testimony to this.

Project Eternity wasn’t the first big success nor was it the last, but it was a fascinating campaign and, for the gaming software industry, it was the largest Kickstarter breadwinner to date.

I don’t know how I feel about this. On one hand, companies such as Obsidian Entertainment are existing, successful firms. This investment money is mostly free of cost and risk; although, it does burn some sales pipeline and failure may hurt reputations. The investor loses their capital immediately (Even Kiva usually gives you back your capital … and it’s a charity!). Investing (or backing) seems a little foolish, contributing more than the value of the product you (might) get seems downright crazy.

On the other hand, it does enable the consumer to vote, through their monetary support, on the products they want to see brought into existence and how they want those products delivered to the marketplace. The middleman, namely the large software publishers, mass marketers, and venture capitalists, are left out of the equation. This may be a good thing. Consider that EA Games, a large gaming software publisher, managed to secure The Consumerist magazine’s Golden Poo award in 2012 for consumer animosity (beating out Bank of America, AT&T, Comcast, Walmart, and Citibank). That’s a lot of hate, and EA Games seems to be disregarding it (Senior, 2012).

Maybe this strange combination of capitalism and democracy is the beginning of a new economic model?



References cited:

Senior, T.. (2012) “EA wins “worst company in America” Golden Poo award”. PCGamer, April. Available online: Accessed: Dec 2012.


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