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The Mobile Gaming Mavens discuss the pros and cons of Kickstarter

Cash in the hand, obligations to follow
The Mobile Gaming Mavens discuss the  pros and cons of Kickstarter

The Mobile Mavens is our panel of experts drawn from all sectors of the mobile gaming industry.

This week, we took as our theme.

Just because you can raise funds through Kickstarter doesn't mean you know how to run a business."

So following Mad Balloon's breakdown of how it used its $32,000, do you think the bubble has burst for unknown start ups looking to use Kickstarter, or does it remain as one of the funding channels developers should consider?

Tim Harrison

Tim Harrison

Vice President, Global Communications & PR at Sony Mobile Communications

Whether it is via Kickstarter or not - and going forward I suspect not - the whole crowdfunding model is an exciting area.

With creative media as a whole inevitably going more niche, it's a very good thing to have models to monetise a small number of super-keen fans without dumping crazy amounts on marketing. The bubble will only pop when 'investors' see no value in it.

Christopher Kassulke

Christopher Kassulke

CEO at HandyGames

I totally like the crowdfunding model as it provides another option to finance genres or titles which are not on the top priority list of the publishers/VCs (anymore).

It's proof that the crowd perhaps would also buy other genres or projects.

Brian Robbins

Brian Robbins

President at Riptide Games

I think we are definitely going to see some reality checks with Kickstarter-type funding both from a developer perspective, and from a consumer perspective.

For developers - the War Balloon story is something that they should learn from. This isn't a path to free money that's somehow 'better' than other sources of revenue. You have to properly account for cash flow and costs, just like you do everything else. Certainly it looks like that team should have priced some of their tiers better than they did, and hopefully others will learn.

For consumers - I think we're going to see a number of failures that will cause a bit of a bubble bursting. What happens when a company has a successful funding campaign but then fails to deliver?

Will consumers be okay with that level of risk or how will the recourse come about? Ultimately I think that's the bigger long-term issue that this space takes. I think most crowdfunding investors look at these campaigns as buying something in advance, when the reality is there's no guarantee of receiving what was promised for a given price point.

I do believe this is a great model that developers should consider, but it's still very early right now, and there will be some huge bumps along the way.

[staff id="131" name="Dan Griliopoulos"]

Is it possible that we'll see more agile publishers and consultants looking at this as an area where they can bring their organisational expertise to bear - that is, offering developers packages of pitching advice + accountants + lawyers + fulfilment experts?[/staff]

Dave Castelnuovo

Dave Castelnuovo

Owner at Bolt Creative

Actually, that's an interesting idea. 'Managed by blahblahblah' almost a kind of Kickstarter publisher that makes sure things are realistic and the money is used properly.

About the actual allocation of costs, I think it's a hard thing to judge. Sure you will find different types of teams that spend their money in different ways, but 'keeping the lights on' is a valid expense.

For a two person team, I think paying the rent and bills are a valid way to spend the money as long as it keeps you working and focused on the project at hand. I would rather have a team spend money on their rent and focus 100 percent of their time on the project than have them take side jobs to make ends meet.

And honestly, if you look at something like Double Fine, most of that money will be going to people's salaries and, in turn, to paying the rent of the developers on the project.

Now if the developers are well off like Tim Schafer or Brian Fargo, it would be ridiculous for them to use their money for their own personal needs but if they had that kind of money, they could probably self-finance a two person team.

For me, the bigger issue with Kickstarter is underfunding and taking the cost of the rewards into consideration. When I see a budget of $35,000, $5,000-$10,000 rewards will eat a bulk of that budget.

I would go so far as to say that it would be pretty damn impossible to make a game on $10,000 unless it's the simplest of ideas, you have art and programming resources on the core team and you are literally only paying for macaroni and cheese meals and minimal rent expenses.

It's easy to write down a list of rewards such as iPhone backgrounds, stickers, posters, and a trip to meet the developers, but you're going to have to pay someone to make them - even if it's a digital-only item.

I think Kickstarter will evolve in two ways.

Patrons will likely become more cautious, and not jump into bed with teams that have no real experience under their belt. And on the other side, larger more successful teams like Double Fine will take part in Kickstarter and show that real success stories are possible on the platform.

If I was a developer that was responsible for a somewhat successful game in the 1980s-90s, I would jump on this in a second. That's the real gold rush. I mean, how great is it that Brian Fargo has $3 million to play around with, with no publisher expectations or board of directors telling him how to spend the money.

He can create a great game with zero recoup of development expenses needed and 100 percent of the revenue from the game is profit. Sure he owes some people free digital copies of the game which could cannibalise PC sales, but he is also getting an iOS port for free and probably a code base that he could easily port to a traditional console if he chooses.

Volker Hirsch

Volker Hirsch

Co-Founder / Board Member at Blue Beck

Kickstarter offers an alternative finding route. What is wrong with that?

For (digital) games, it works like a factoring system: if you set, say, $75,000 as a funding goal and are prepared to give away 'X' copies of your game, some swag and a dinner with the level designer's grandma, you'll need to factor these costs in, BUT you would limit the financial risks somewhat as the funding limit would effectively work like guaranteed sales.

Grandma's dinner would then basically be the commission you would otherwise pay to a factoring provider. Your meetings with banks, factoring companies etc are being replaced by setting up a sexy page, recording some slick video, etc...

//start rant//
All the rest that is being discussed feels a little arbitrary: yes, of course do you have to track costs, cash flow, etc. Yes, of course can you not write games with a $35,000 budget ad infinitum. Yes, of course will it not work for everyone. Does anyone really have doubts about this? I mean, come on!
//end rant//

Kickstarter could evolve into something more robust (you could, for instance, provide for a funding model where people would in fact get equity).

However, under its current system, it would appear to me being more of an alternative route to get a business or even only a project off the ground rather than becoming an investment class.

John Ozimek

John Ozimek

Co-founder at Big Games Machine

I agree with all the comments so far. What's evident is that Kickstarter as an approach means different things to different people.

Some see it as a route to fan-funded games only for those who truly care; others seem to see it as a sub-VC route to project and start-up funding. Perhaps this confusion will become the biggest problem of the use of Kickstarter by games companies.

With the benefit of hindsight, Mad Balloon seem to have used the Kickstarter funds not to fund the game, but to fund the company that makes the game. It may seem like semantics, but to Brian's point, 99 percent of people funding Kickstarter projects do see them as a way to acquire a new product or to buy into something cool - in almost all cases, there's a possession or tangible benefit to giving money.

For real fans, maybe the hope of getting a favourite game franchise onto a new platform is enough to generate a donation, but the expectation is that the game will at some point arrive. I do think that companies choosing to use Kickstarter need to bear this in mind - failure to deliver on promises will snowball quickly.

[people id="11" name="Brian Baglow"]

It's another funding channel. It's an innovative one, but simply one more of many.

It will work for some projects, it won't work for others. Unknown developers, working on original new content will find it difficult, since they'll have to explain the concept to their (eventual) audience and be all eager and enthusiastic and actually sell the idea to people. Since a lot of developers can't do that with a finished game, it'll be interesting to see how they cope.

In terms of meeting the commitments and promises made to backers, that's surely common sense and good business? Work out your costs and figure out what happens if nobody commits cash to you - or if suddenly thousands of people pile in with cash. Will it cost you as massive percentage of your costs to fulfil your promises?

I've committed to a couple of projects on Kickstarter (including Leisure Suit Larry - go Paul, go!) and would definitely chip in some cash for a few of the people/companies on this list.

However, you're going to have to convince me that you will make it happen and that you really believe in your game...[/people]

Sean Taylor

Sean Taylor

Product Lead at Denki

What Brian said.

My wild prediction is that Kickstarter will become a primary sales channel for the 'post-core' gamer who doesn't really game anymore but is quite prepared to pay a premium for the odd slice of familiar fun (nostalgia + familiarity + convenience = £££).

Basically, it'll be the gaming equivalent of a modern Rolling Stones tour.

Unless you're a name or have a really emotive pitch, I think you'll struggle to fund to game on Kickstarter. However, I'm looking forward to seeing how developers and players evolve their Kickstarter usage in the next six months. The more funding channels and routes to market, the better.

Graeme Devine

Graeme Devine

CEO / Co-Founder at GRL Games

This is an interesting discussion. I've been thinking a lot about Kickstarter, although, unlike every other game developer, not actually for a game.

I think one of the real dangers of Kickstarter is that it looks easy. It's easy to post up there, ask for $250,000, get $2.3 million, and there is not as much work involved in the pitch as, say, going to a publisher? Right? Right?

I am sure (well, actually, I more really hope) Brian Fargo and Tim Schafer disagree with that sentiment. It looks to me like a ton of work to talk to tens of thousands of investors and personally connect with a large percentage of them.

I think we will see one of two Kickstarters who are in it for the easy money and go unfunded. I think a few slightly more famous people will also try for the easy money, get funded, and sour a lot of people.

I also hope Kickstarter takes over the world and someone funds a time machine.

Dave Castelnuovo

Dave Castelnuovo

Owner at Bolt Creative

Totally agree that it's not as easy as it looks. Companies are doing a huge amount of press outreach and effort in keeping the community excited enough to keep getting more people on board.

In the end, it might be different type of work than pitching a publisher but it has to be way more satisfying than having a publisher get their hands on your baby.

Speaking of which, I think a certain someone could probably do pretty well with their own Kickstarter campaign, Graeme... The 13th Door?