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Giving Kickstarter the kick: The great crowdfunding crash is upon us

How Oculus f*cked it up for everyone else
Giving Kickstarter the kick: The great crowdfunding crash is upon us

Crowdfunding needs a shift in attitude, and it needs to come from the companies who use services like Kickstarter to bring in large amounts of money that is not necessarily in good faith.

It was the Oculus buyout by Facebook that served as a powerful reminder: it's possible to misuse the system - and the ones hurt by this misuse are smaller companies who need the full benefit of crowdfunding.

See, for users, the perception is that crowdfunding brings projects to life that otherwise would not have existed. Essentially, a company seeking to crowdfund has to prove that there is a need for the money. So, they have to sell that this project can't exist without people giving them their money in some form. It's about fulfilling a crazy dream.

So, when Oculus sells to Facebook - which is not especially highly-regarded amongst the exact 'core' audience Oculus Rift seemed to be pitched at - backlash seems inevitable. After all, that money, while used to pay for posters, t-shirts, and the dev kits that got sent out, effectively afforded no further interest to the people who made Oculus what it was today.

After Oculus

But here's the thing: Oculus had multiple funding rounds from more traditional sources for startups. Essentially, all Kickstarer wound up being was a PR campaign that more than paid for itself.

When push came to shove, the company made a self-serving move because it could afford to: Kickstarter proffers no equity.

This isn't to say that those behind the company made the wrong move. The challenges that come with life as a startup combined with the threat of Sony's Project Morpheus mean a move to secure its long term future might have been a necessity.

And Facebook may truly offer Oculus the best opportunities. The acquisition may have been unexpected, but Mark Zuckerberg has been aggressive in ensuring that Facebook will go broke before it becomes irrelevant. Indeed, previous acquisition Instagram is yet to be 'ruined' by Facebook as many predicted just yet.

Previous acquisition Instagram is yet to be 'ruined' by Facebook as many predicted just yet.

But still, why does this sort of thing feel like a violation to users? Because it impacts their trust. Essentially, Oculus' promises came off as empty promises. Is it irrational? Sure. But giving money to a project months or years ahead of its eventual completion is not necessarily a prudent thing, either.

Companies that want to take advantage of crowdfunding need to keep this in mind: they don't have to necessarily play to reality, but rather to the expectations that their audience will have.

When a company decides to effectively just use crowdfunding as nothing but free PR, people are going to start to recognise this. It's something that threatens the future of crowdfunding as a legitimate funding tool, even if – on a case-by-case basis – it doesn't hurt the next glitz and glamorous startup like Oculus.

It's the smaller developers who need both the tangible and intangible benefits of crowdfunding that it will hit hardest.

What do you want?

See, there are plenty of projects from upstarts and small teams that legitimately need money from users to fund their projects. And they need users to trust that they're making an impossible dream come true - they need it to be fostered, because they need the intangible benefits of promotion and outreach that large companies can misuse.

Megan Fox of Glass Bottom Games pointed this out in a recent tweet:

Granted, the more than $25,000 she raised for Hot Tin Roof's Kickstarter helps too, but the campaign served as invaluable PR that she and her team were able to use to build up future hype for the game that could help its chances of being a success.

For independent developers, these resources that crowdfunding can provide are invaluable. And they shouldn't go away because others can exploit them for their own gain.

And it's not just large companies that run the risk of exploiting the benefits of crowdfunding. Plenty of smaller titles are put on Kickstarter and the like not because they necessarily need the money to exist, but because they serve the more nebulous goal of improving an unfinished product. This can even happen shortly before a release, when the money has no effective purpose beyond just being a glorified preorder campaign and opportunities to get PR.

Heck, with Patreon, now anyone, from developers to unscrupulous journalists can raise money for nebulous purposes, not even for the promotion of a particular project. Heck, just say you need help paying off your debts, or you'd like to carry on living in one of the world's most expensive cities, and money can come your way.

This era where anyone can ask for free money devalues those who could make the most use out of crowdfunding.

The end is nigh?

The end result? I think that there's a fatigue with crowdfunding. The PR benefits are shrinking, because who doesn't have a campaign to promote? And if the attitude among the ones holding the purse strings becomes one of scepticism, then crowdfunding has a bleak future.

It's also why two of my favourite projects are Dino Run 2 and the Ubuntu Edge. Both raised relatively-large sums of money that others would kill to have, especially in the case of the Ubuntu Edge, which is one of the biggest crowdfunding projects of all time. But because they fell short of what they needed, the projects never came to fruition.

Misuse breeds scepticism, and scepticism hurts those who really need crowdfunding.

They prove that crowdfunding can live up to the perception: that the creators really do need the money they're asking for.

And really, crowdfunding can do with realism on the part of backers, too: Double Fine was criticised by many, including me, for its Broken Age release plans, but its two-part release strategy has worked

No one complained about how Double Fine was raising money, given the positive critical reaction to the first act. Plus, another one of its games, Spacebase DF-9 - controversially funded through Indie Fund - has already recouped its investment.

Who knows, maybe Facebook will cause Oculus to live up to the very potential its Kickstarter campaign was sold on - and the anger over the buyout will just be a distant memory.

Still, I think those who partake in crowdfunding need to take their backers seriously, and realise that consumer perception of the way crowdfunding has gone needs to guide how they operate if they choose to use this funding model.

Misuse breeds scepticism, and scepticism hurts those who really need crowdfunding.

Chicago-based Carter Dotson is a senior writer at, which was acquired by publisher Steel Media in 2012.