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Would Oculus have caught Facebook's eye without the Kickstarter kick?

Would Oculus have caught Facebook's eye without the Kickstarter kick?

The top story on PocketGamer.biz a couple of weeks ago was Carter Dotson's assessment of falling faith in Kickstarter and crowdfunding in general.

Though plenty disagreed with him, he argued that the misnomer that backers are 'investors' leads to a backlash when companies who previously used Kickstarter later get bought out, such as Oculus VR.

Carter claimed falling faith in crowdfunding because of the actions of the big boys could mean consumers lose faith in it as a whole, hurting the little boys.

So, we asked our Mavens:

Has crowdfunding as a model peaked too soon? Are consumers losing faith it in as a vehicle and, if so, what does this mean for the smaller developers that rely on it?

 

Harry Holmwood European CEO Marvelous Entertainment

A 20-year veteran of video games and online space, Harry is European CEO of Marvelous AQL, a Japanese developer and publisher of social, mobile and console games, known for console games like No More Heroes and Harvest Moon, but now highly successful in the free-to-play mobile and web space in Japan and Asia.

A games programmer before joining Sony’s early PlayStation team in 1994, he then founded developer Pure Entertainment, which IPO’d and launched a free-to-play online gaming service way back in 1999.

He was also a director of pioneering motion gaming startup In2Games, which was sold to a US group in 2008.

Along the way, he’s been a corporate VP, troubleshooter, and non-exec to a variety of companies and investors in and around the games sector.

 

Crowdfunding is a wonderful thing in that it allows creators to cut out all the middlemen between them and their audience, and to finance things that more risk-averse funders might baulk at.

But, one thing that has been hidden from customers before now is the huge risk that game (or indeed film) development entails.

Development is difficult. Customers are used to playing finished games - even the worst ones have made it all the way through development (no easy task) and the developers will have overcome a whole bunch of hurdles to get to market. Many great programmers, artists, designers and whole teams have worked on games which haven't ended up great, or were cancelled before they hit the shelves.

Sometimes problems are caused by a game's funder or publisher, other times the team just doesn't gel right and the magic doesn't happen.

In a world where publishers tended to fund development, not only were customers protected from this, but developers were relatively insulated too. When teams were relatively small, developers could often fund themselves between projects, and even a cancelled project wasn't the end of the world. With huge teams, this became impossible, and we've seen a great decline in the number of big independent studios as a result.

Customers are used to playing finished games and were protected from games being cancelled when publishers tended to fund development.
Harry Holmwood

Digital distribution has cut out the middleman, and developers can get straight to players without publisher, distributor or retail help, if they take on the financial risk themselves. The huge number of titles in the app stores shows this in action.

Now, developers can pass that financial risk onto the end user via Kickstarter, end users are getting exposed to the huge risks involved in game development. Historically, most games got cancelled at concept or prototype stage, and whoever's funding the game would continue to evaluate the project throughout development, and, if things were looking grim, would have to pull the plug or face increasing losses. That's not an option with crowdfunding - the customer's money is spent and there's no way to cut their losses.

I think the natural evolution of this is that 'the audience' will get a better understanding of the risks involved, and will start to make the kind of judgement calls that a publisher would historically make. However good the pitch and intentions, someone claiming to be able to build a World of Warcraft beater for $50,000 (or 100 times that) isn't credible, and potential crowdfunders will start to understand when to smell a rat.

On a positive note, I'm sure teams or individuals that prove they can deliver great games, for the money and time they claimed, will be able to come back and get future projects funded.

So, is crowdfunding over? Not at all. I think we're just at the start. In time, I hope the audience gets more educated and selective, and developers get more realistic in their plans. There will always be games that let their backers down, but hopefully the number of those will decrease and the crowdfunding ecosystem will grow and thrive.

Dave Castelnuovo Owner Bolt Creative

This is such a lame discussion.

Kickstarter is a site that allows people to contribute funds to a project in exchange for some benefit. The benefit might be as small as a mention in a credits, an early copy of a game or other good the project is making, access to the development process or the ability to meet the key people involved in the project.

Kickstarter does not offer equity, it never has, this is well understood by the people who choose to contribute.

It's only when industry people decide to create controversy that they try to create friction by telling people that they really should be getting equity for their contributions.

It's perfectly valid to use crowdfunding as a PR mechanism even though you have more than enough funding for your project. Why wouldn't it be?

Because of some sense of honour amongst developers? Because of a sense of masochism at wanting everyone to continue to do things the hard way? Because everyone has taken the hard road in the past and sweated over a multi-year project not having any idea whether there is any real interest for it? Because they used to play the publisher game and had to give up more control than they wanted?

There is a legitimate discussion about whether or not a Kickstarter team has what it takes to follow through and what can be done to mitigate risk or at least properly inform potential contributors to that risk. It's just that when industry insiders start inventing problems and with that discussion limit the potential directions that one can make with a new paradigm that it does way more harm than good.

Keith Andrew With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.

You're perfectly entitled to dub it a "lame discussion" if you like, Dave, but I think you've inadvertently highlighted one of the concerns.

While I can see the appeal of using Kickstarter as a PR exercise rather than purely for funding, I actually think this is the approach that's doing crowdfunding most damage - people don't like the idea of being asked to fund something that the developer could actually afford to it itself.

You can suggest that anger is misplaced, of course - if you think of Kickstarter as a pre-order system, then such discontent melts away - but to dismiss it off hand as lame is ill advised, I think.

Dave Castelnuovo Owner Bolt Creative

That's exactly my point. It seems like only non-contributors are having that issue.

It's extremely obvious what Kickstarer is all about. If you wish, you can contribute funds to a project that you like. No one is putting a gun to your head. It's very obvious what you are getting out of it. And most Kickstarter projects give you something in return for your contribution.

So if someone wants to give someone else money, and they are getting something in return, what's the problem?

Keith Andrew With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.

Because I don't think its detractors would say it is clear. I think they would say that Kickstarter and others rode the false assumption that backers were investors, when they weren't, they were simply making a donation.

You can say that's the consumer's fault, and you might be right, but I think it's certainly had an impact on the perception consumers now have of Kickstarter campaigns, and it's not a positive one.

It definitely isn't non-contributors who have had the issue.

Dave Castelnuovo Owner Bolt Creative

Does anyone actually have any resources that show that users have been unwittingly duped into thinking they own a part of the company or project they are contributing to?

And who says most people are not positive about Kickstarter? What research do you have other that the typical internet crying foul because they are anonymous and love to make a racket? Kickstarters are still getting funded.

If anything the media backlash has probably scared more name developers away from crowd funding. Not because there isn't a demand, but there is a perception that people are angry.

Of course, my choice for an opening statement was a little incendiary, but I feel this debate has happened over and over again in different forms and it all comes down to certain people not approving of what other consenting adults choose to do in their private time. I just don't see the harm.

Let's take the worst case example. Say Activision does a Kickstarter for Call of Duty. Where is the harm? It puts a Kickstarter up, give people early access to the beta, allow them to be in the game and get a bunch of exclusive swag. If it wasn't called a Kickstarter it would look like a great deal - in fact it's not much different than a pre-order exclusive.

I would suggest the only harm being done is that some people think this just doesn't feel right. In fact, there is probably less harm than the typical Kickstarter because if Activision has the money to do make the project, then it is much more likely to follow through on their promises where a team who is solely dependent on crowdfunding will be in a much more precarious position.

Harry Holmwood European CEO Marvelous Entertainment

A 20-year veteran of video games and online space, Harry is European CEO of Marvelous AQL, a Japanese developer and publisher of social, mobile and console games, known for console games like No More Heroes and Harvest Moon, but now highly successful in the free-to-play mobile and web space in Japan and Asia.

A games programmer before joining Sony’s early PlayStation team in 1994, he then founded developer Pure Entertainment, which IPO’d and launched a free-to-play online gaming service way back in 1999.

He was also a director of pioneering motion gaming startup In2Games, which was sold to a US group in 2008.

Along the way, he’s been a corporate VP, troubleshooter, and non-exec to a variety of companies and investors in and around the games sector.

I think the issue here has arisen because nearly all the backers of Oculus Rift were 'industry people'. I don't buy the argument that anyone thinks they were buying a bit of equity. They were either donating for nothing, or getting themselves a really neat dev kit.

Everyone got what they wanted. A handful of developers on Twitter complained briefly that they didn't like the idea of it now being owned by Facebook. So what? They've sold 75,000 devkits - there are plenty more developers excited enough by the potential not to throw a hissy fit because it's cool to hate Facebook.

I was at Sony when we launched the original PlayStation. We sold a few hundred devkits pre-launch if memory serves and that all worked out nicely.

Jani Kahrama Founder Secret Exit

Dave, you are oversimplifying things.

There's more to supporting a Kickstarter project than just buying the perks - you are showing your goodwill to help a project and a small company get started. The whole premise of Kickstarter is that companies can get funding without losing their independence like they would when being funded by venture capital. In short, it's the indie funding opportunity.

The indie principle behind Kickstarter was wounded by the Oculus purchase, and to dismiss the feelings of disappointment is missing the point.
Jani Kahrama

To clarify: many who contribute to Kickstarter projects do so because they love the idea that a small talented team can take an idea and turn it into something great on their own. These contributors don't do it simply to get a t-shirt, access to a beta version, or a pair of fancy goggles. They certainly don't do it to subsidize Facebook's R&D.

This indie principle was wounded by the Oculus purchase, and to dismiss the genuine feelings of disappointment of those who were rooting for Oculus to take the world by storm as something that's merely fabricated by the media (or the industry) is surely missing the point.

No, I don't think this will lead to any dramatic downfall of crowdfunding, but it does increase skepticism toward future Kickstarter projects. I doubt as many people are willing to throw their money at increasing Facebook's (or any other corporation's) stock price, now that the scenario has become something real to watch out for.

Personally I'd love to see Kickstarter rules clarified and focused toward the indie funding purpose, and to include clauses that take into account the exit scenario.

Dave Castelnuovo Owner Bolt Creative

Negative opinion over Oculus getting VC funding or being acquired in addition to crowdfunding has more to do with entitlement than honestly thinking they were somehow owed extra or had a say in their business because they were an investor in the product.

It's a similar reaction to fans of an underground band being upset when their band tries to reach a bigger audience. "We supported this from the beginning so it should be ours forever and we should have a say in how it evolves in the future."

It's like some backers want Oculus to do well but not do too where they are no longer dependent on them. They want to be special, they want Oculus' success to be because of them. After Facebook purchases Oculus or after they receive VC funds, the backer is no longer as crucial as they used to be and this causes resentment.

Every Kickstarter backer goes into it knowing they will be contributing funds in exchange for something that is clearly defined. That's it. It's entitlement to think that somehow gives you a say in how they run their business . It's a bit hypocritical to think that you were a generous benefactor investing in something you believe in only to change your tune because it got acquired by Facebook.

I wasn't suggesting that people are in it just for the swag. Of course there is a feeling of changing the future and supporting someone's vision. I would agree that Kickstarter is more about contributing to a vision than about getting a t-shirt.

And of course people have the right to be disappointed by the Facebook acquisition. I am not thrilled by it - I think it's a huge mistake. But I don't feel like I am owed a say in that decision because I was a backer. I don't feel like there is a problem with crowd funding because backers thought their contribution was an agreement to stay indie.

David MacQueen Executive Director Strategy Analytics

To me, it's quite obvious that Kickstarter isn't equity, but clearly that wasn't the case with everyone that has pledged funds. Just as a quick exercise, I took a wee look at the Kickstarter website and I have to say that the language it uses is quite opaque.

  • On this page it does say "Creators keep 100 percent ownership of their work", which means that you are not buying equity, but it's an indirect way of saying that and if you're not very financially literate then this may not be very clear.
  • On the FAQ, there is basically the same phrase "Project creators keep 100 percent ownership of their work, and Kickstarter cannot be used to offer equity, financial returns, or to solicit loans." While it at least specifically mentions equity, again I would say this is quite opaque, and once again phrases it from a project creator point of view, rather than explaining what this means from a backer's perspective (quite odd since I would assume there are a multiple of hundreds, if not thousands, more backers than there are creators, otherwise Kickstarter wouldn't function)

So, I don't doubt that some people pledge funds without realizing that all they are really buying is whatever the creator is going to give them as a gift for that pledge. Yes, it's obvious to me, and it's obviously obvious to Dave Castelnuovo, but this to me is the equivalent of badly worded small text at the bottom of a contract. There could be a LOT more clarity from Kickstarter.

I have less understanding for people pledging who have this knowledge, and are doing it to support the indie scene, and then get cheesed off when the company is acquired. If you had bought equity, then you'd be entitled to (possibly) a say in whether or not the company was sold, or at least some return on your investment. But you didn't, so you're not, and if you knew that, well, it's a case of buyer's remorse, really.

Unfortunately I can't really see what can be done to overcome this issue, because the solution already exists (which is actually issuing shares). But that's NOT what Kickstarter is, and for lots of good reasons, which can benefit both the creator and the backer.

Both these issues could do with a bit more clarity from Kickstarter, not just a rather throwaway, opaque phrase like "Creators keep 100 percent ownership of their work" which only implies these things to a backer, but doesn't even attempt to make the implications clear.

A bit more clarity would go a long way to solving these issues, I feel.

Jani Kahrama Founder Secret Exit

You're ignoring that "Creators keep 100 percent ownership of their work" not only implies that backers don't get equity, but also that it's a desirable goal for the creators to maintain their independence.

If the pattern of start-ups using Kickstarter to raise a free round of funding in order to support a quick exit starts becoming the norm, people are perfectly in their right to be outraged, and it will erode the goodwill that currently surrounds crowdfunding.

The purpose of Kickstarter is definitely not in creating lucrative acquisition targets for big corporations, and while it may be all right concerning the rules of crowdfunding, it certainly goes against its spirit.

For companies with acquisition intentions it would show a lot more backbone to gather their crowdfunding round in exchange for equity. Perhaps indeed there should be a website like Kickstarter that facilitates such an option.

Thomas Nielsen Osao Games

As I see it, Kickstarter works well as a pre-ordering system. It's great for anything consumer-oriented, because you can sell it before you make it. The opportunity to go viral (and capitalise) on your idea is greater here than it is anywhere, and I don't think there is any immediate threat to that concept.

Kickstarter has established themselves as the primary service provider in this space, and as long as people get great ideas, there will be great opportunities here.

Sure, we'll see some projects collapse, and we'll see geek royalty feeling backstabbed by corporate sellouts, but as long as Kickstarter "stays out of it" and remain just a platform you can trust, they will be fine.

I think there's a bright future in equity marketplaces too, but the target audience is going to be very different from Kickstarter - Making an actual investment is never going to be as lightweight, in any respect, as just pre-ordering a product.

Oscar Clark Consultant, Co-Founder Fundamentally Games

Oscar Clark has been a pioneer in online, mobile, and console social games services since 1998. He is also author of the book, Games As A Service – How Free To Play Design Can Make Better Games.

Special clauses seems wrong for Kickstarter to me. Although there are alternatives crowdfunding approaches such as Crowdcube (which deals with equity) or Gambitious (which has different stages of crowdfunding to angel investors). But they don't have the brand associations that Kickstarter has built up (yet?).

The whole reason I back projects is because I want to make a statement of the kind of games I'd like to see made or projects I'd like to show support for (largely where I know the teams). I willingly participate in the social media promotion of the projects and delight if they reach their targets. But I have no expectation whether they are delivered in the end or not.

Those that do however hold a special place in my heart as I helped…even if superficially. I feel a sense of ownership of that project or perhaps a better description is 'complicity'? I don't think I'm alone. But then I only tend to back very small amounts ($15-$30). Perhaps its different for some of the people who invest £000's

What's fascinating is that crowdfunding for me is an audience response to the appalling funding systems available for projects. The UK Investment situation seems pretty limited. There remains a dependency on "friends, family and fools" to set off a project.

Many of the SEIS funds charge disproportionate fees and act in an almost VC-like risk averse manner (despite only 13.5p actually being at risk) and without significant numbers of publishers/angel investors which mean many excellent and ground breaking projects could never make it off the ground without something like Kickstarter. Its like a kind of pay-it forward from the audience to pre-qualify projects that deserve investment and which perhaps also opens up opportunities for grants and other sources of matched funding.

Of course the reality is that is imperfect. It's fickle and the Kickstarter audience have their own prejudices and sensibilities. Too many developers ask for too much (well more than Kickstarter can offer) and too many ask for too little (well vastly less than they need to make the project). But I guess we are still learning.

John Ozimek Co-founder Big Ideas Machine

John is co-founder of PR and marketing company Big Ideas Machine. Also an all-round nice guy...

 

I don't think that Occulus is a typical Kickstarter campaign, so a lot of the emotions generated by its success (I think it's still the most successful Kickstarter campaign ever?) and then the sale to Facebook are extremely abnormal compared to pretty much everything else on there.

Oculus didn't need Kickstarter funding; the names associated with it would have had any VC salivating, and they could have probably self-funded anyway. What Kickstarter did was de-risk the initial production run and act as a great marketing tool to generate a developer community without months of travelling round events and doing demos.

Kickstarter is not a consumer destination - it's a place where ideas, and dedicated fans of those ideas, can meet.
John Ozimek

The danger is that other companies see what Occulus achieved and assume that it's down to the power of Kickstarter, rather than the product or company itself. Kickstarter is simply an enabler. I see some great ideas on Kickstarter, and as has been mentioned, it's a great way to gauge interest and get a prototype funded.

I also see some terrible ideas, and it does seem like many of them are games or game-related. I have no problem with the fact that many will fail, as that is what happens in business; what is more of an issue is the indignation from backers when they don't get what they feel they are owed. And although I agree completely with David, I don't think that any amount of clarity of Ts &Cs will change the sense of entitlement and moral outrage that social media seems to encourage from a vocal minority.

Kickstarter is not a consumer destination - it's a place where ideas, and dedicated fans of those ideas, can meet. Just as in mobile we don't consider 'whales' to be typical consumers, I think the same is exactly true of people willing to fund ideas via Kickstarter. That's why there is often a blurred line between its ability to act as a funding platform and a marketing tool.

And finally, you insult my profession by saying that it's all part of a PR exercise. Heh.

Jas Purewal Lawyer & Partner Purewal & Partners

What if Kickstarter DID permit equity ownership in crowdfunding project companies? And if enough interesting creative or tech companies were willing to share a slice of the business, or at least its profits, in return for crowdfunding?

Technically ‘investment crowdfunding’ is banned or restricted in the great majority of countries (including the US, despite the fanfare that accompanied the JOBS Act in 2012). You can’t even publicly solicit for smallscale equity investment without the proper legal approvals.

Nonetheless, there are an increasing number of players trying to explore different ways of meeting the perceived demand for investment crowdfunding - check out for example CrowdCube, Seedrs, or ofc Gambitious for games investment crowdfunding.

There is still of course some big questions to be answered: are consumers and investors interested in investment crowdfunding? And if they are, are they interested in it for games? How does an investment crowdfunding platform combine the enthusiasm of the masses with financial appeal to the few? The jury is still out but I’m sure we’re going to see some real innovation in the next few years. It might even, one day, result in Kickstarter itself introducing new models…

Scott Foe Chief Product Officer Ignited Artists

Kickstarter is not going anywhere. Thank God for that, as the economic theory of resource-dependence espouses that, however indirectly, it is customers that manage companies with voting money, and that corporate managers are nothing more than campaign managers, seeking to garner those voting dollars.

According to Suroweki, experts are only right 60 percent of the time. Think about that: Experts are only right 60 percent of the time; that's damn-near the mathematical equivalent of a coin flip.

For any game developer over the course of industry history who has sat in squirmy anticipation of a "publishing expert's" green light decision: "Will that suit green light my game for production? Or will that suit crush my dreams and leave my team unemployed?" Whether that game was funded for production or not came down to damn-near the mathematical equivalent of a coin flip.

Kickstarter provides essential market validation for game developers working in the personal computer market, bringing developers closer to their consumers' voting money than ever before in the history of entertainment software development. In this day and age, if you can't sell a Kickstarter, you can't sell a game; no PC game developer should ever develop further than a vertical slice without validating market demand via Kickstarter.

Hear me? If you can't sell a Kickstarter, either your game, or your marketing, or both your game and your marketing are broken. Business is marketing and innovation; everything else is cost. If you can't sell a Kickstarter, you can't sell a game.

Kickstarter isn't killing game publishing: Kickstarter is moving game publishing desks onto the game development studio floor.

In this day and age, if you can't sell a point-two click-through-rate-tested advertisement, you can't sell a Kickstarter; if you can't sell a Kickstarter, you can't sell a game. Once your Kickstarter ends, you should continue pre-selling on your game's website. Once your game hits alpha, you should be selling early access on Steam.

No. More. Fucking. Coin. Flips.

The economic theory of resource-dependence espouses that, however indirectly, it is customers that manage companies, not corporate managers. However clear this may be to the Oculus backers at the moment, those backers are largely responsible for Facebook's acquisition of Oculus through their overwhelming support of the platform.

It takes billions - BILLIONS - of dollars to launch and support a consumer hardware platform in the vein of the Oculus vision. And, until billion-dollar Kickstarter campaigns become a reality, acquisition was, largely, the only way for Oculus to survive.

Jani Kahrama Founder Secret Exit

Scott's post about Kickstarter's role in launching a game project, it's pure gold.

However I'd like to understand better (if it is within the scope of this discussion) how launching hardware would require billions, as we have seen hardware projects ship respectable volumes of units with far smaller budgets.

Pebble has sold 400,000 units with apparently around $25 million in funding, and Raspberry Pi foundation has sold fewer than 2 million units so far with both online sales and a network of local retailers.

We also have the CEO of Oculus stating it is able to take their final steps to its goal with the additional $75 million investment it received in December last year, so the leap to billions does seem like an exaggeration to the uninitiated.

Scott Foe Chief Product Officer Ignited Artists

Jani asks a fair question: Why would it take BILLIONS for Oculus to succeed in the vision of becoming the first widely adopted consumer virtual reality platform? Well, seeing as I am the one that asserted that it would take BILLIONS, please allow me to expound on that thinking...

We can all agree that Oculus cannot afford to sell its product at cost, otherwise it would go out of business. From there the back-of-the-envelope math becomes more tricky: What is the bill of materials on Oculus rift and at what scale does that bill of materials decline? What are the total operational costs of Oculus business? What is the distribution markup? What is the retail markup? What makes for a good Manufacturer's Suggested Retail Price?

What is the cost of acquiring an Oculus customer? What other economies of scale can be leveraged over time?

How many sales qualify as "widely adopted?" Lifetime sales of PlayStation 3 and Xbox 360 were both roughly 80 million a piece, while Apple will be selling that many or more iPads on an annual basis. How much working capital is needed and how much product inventory is kept on-hand?

These are all questions that only those inside of Oculus can answer, and guessing here would be pointless: The slightest miscalculation in one variable could butterfly wing flap our whole model into crazy town.

However, we can find a clarion signal through this noise when it comes to working capital: We know the development kits for Oculus Rift retail for $350. Let's make a bullshit assumption and say that there is a 100 percent mark-up on the development kits, and that the dev kits cost 175 dollars to produce.

Let's get even morecuckooand say that everybody at Oculus works for absolutely free, the office rents in California are zero, and, the amazing people at Taco Bell have decided to atone for discontinuing the Volcano Menu by offering free food forever to all residents: Every last penny of that $75 million is available to Oculus as working capital.

Oculus can produce roughly 400,000 units. Not exactly a springboard for "widely adopted," is it? In fact, under this model, to ship one million units in a quarter would require $175 million in working capital - and keep in mind that most sell-though retail pay-out is on a net-ninety schedule - before any other cost, including marketing. Good thing Nachos Bell Grande are free, right?!

Would Oculus have garnered such great institutional investment had Kickstarter backers not voted with their money?
Scott Foe

But what if you have a bad quarter? What if there is market competition?

Pebble watches and RaspberryPis are not affected by Metcalfe's law; Virtual reality platforms are affected by Metcalfe's law: The value of the network increases with the number of nodes in the network, which is to say, the more people that own the platform, the more content that will be developed for that platform, the more that one platform will eclipse other platforms, all in virtuous cycle.

And, oh yeah, Sony, a company with a market capitalisation in the tens of billions of dollars – and globally established sourcing, logistics, distribution, and retail channels - is going to be competing with Oculus.

Empirically, speaking as somebody who has been involved in the launch of two consumer hardware platforms, the worldwide Sega Dreamcast launch in 1999 cost billions of dollars, and a dollar in 1999 was worth more than a dollar in 2014. To be snide, I wish there were Kickstarter campaigns during the time of Nokia N-Gage, as the excruciatingly obvious void of validation there would have saved Nokia a whole lot of euros, as well as a whole lot of side-talking embarrassment.

All of my above bullshit numbers are bullshit in service of a point: $75 million is near enough to nothing when it comes to consumer hardware launches. Which is why institutional investors prefer software product to hardware product, or any business with large working capital requirements to gaining market traction.

Which brings me back to the question of whether Oculus, Sony, and others would be so keen on investing in the future of virtual reality technologies if those same Kickstarter backers who are pissed off now had not voted with their dollars in the first place?

Any time a company takes institutional investment, there is almost invariably an implied mandate to sell that company to a larger acquirer; limited partners investing in funds want to see gains on their investments. Would Oculus have garnered such great institutional investment had Kickstarter backers not voted with their money?

Kickstarter backers have the right to feel outraged, about whatever, whenever. We are all entitled to our feelings, and it's not clear to most people what institutional investment is, nor what institutional investment implies.

My feeling remains that institutional investment, Kickstarter backing, and acquisition were all required for Oculus to hope to fulfill the promise of at-home virtual reality.


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With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.

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