75% or more of game Kickstarters fail

In our last feature, I talked about how video games operate as a business.  During the financing phase of development, a game can be financed in a new, innovative way called crowd funding or crowd investing.  These are methods of raising cash that can be highly enabling to independent producers or newcomers to the industry.

But just because they’re there doesn’t mean they are a guarantee.  The failure rate for crowd funded game proposals is very high – higher than most other crowd funded items on popular sites like Kickstarter, though not as high as, say, your chances of landing a starter position in the NBA for millions a year.

What’s Kickstarter?

Kickstarter is the largest and most well-known of the crowd funding websites that connect those who want to make something with those who’re willing to finance it.  It works simply and with just about anything from movies to music to website ideas to video games.  Here’s how an example game would get funded via Kickstarter:

1. The game maker/designer/producer or (it often turns out) just someone with an idea creates an account at Kickstarter and creates a post explaining their idea through words, video, or whatever.
2. That person then sets a budget and how much they want to initially raise via this Kickstarter campaign (called the “funding goal”).
3. The idea goes “live” and the public can now see the proposal.
4. People who like the idea and the proposal can pledge to donate a specific amount of money towards its funding goal ($10, $100, $10,000.. whatever).
5. If the funding goal is met, then everyone who promised funds pays in.  If the goal is not met, nobody pays in anything.  Kickstarter gets a fee and a piece of the donations for facilitating the setup.

The idea behind Kickstarter is sound and has had some great successes.  Famously, game creator Tim Schafer of Grim Fandango raised $3 million for the game through Kickstarter.  Stories like that make crowd funding sound like the next, greatest thing.

The reality is, most people never see their goals met and end up going unfunded.

25% versus 45%

According to a report on Kotaku, only about 25% of all video game projects reach their funding goals.  This is in contrast to the whopping 45% of all other projects reaching their goals on the site.

Looking at it with a different point of view than Kotaku took, however, 25% is still pretty damn good.  Consider this: before crowd funding, how many of those projects listed would ever have even left the brain of the creator, let alone been funded?

Probably next to none of them.

Further, a 45% success rate in funding is very, very awesome.  For any genre.  For independent films, seeing funding of any kind is often a breakthrough for the producers.  Seeing nearly half their projects get funding?  Mind boggling.

So Is This a Revolution in Gaming?

That, I guess, depends on your definition of “revolution.”  Will it destroy the current model of production-distribution for gaming?  Not likely.  Is it a big paradigm changer for the industry?  Kind of.

What sites like Kickstarter and other crowd funding sources do is enable those who may not have the connections or money to shop their idea around and find a publisher and investor to find funding anyway.  What it does not appear to be doing is destroying the gaming industry as it is now nor is it funding a lot of “dead beat wannabes” who dream of making a game while they munch Cheetos and play the latest F2P MMO.

Going through Kickstarter, the more successful game proposals are those which already have graphics, PowerPoing presentations, charts and layouts for game mechanics, etc. already in place.  In other words: the game idea has been taken beyond a bar room napkin and been fleshed out enough that people can see the person behind it is serious about making the game a reality.

By contrast, proposals that center around a video of some overweight guy with long hair talking about how “cool” and “fun” and “revolutionary” his idea would be, but without any proof or showing of his ability to pull off that idea, tend to fail.  Nothing against long-haired overweight guys, but the stereotype fits.

On the other hand, people also seem to have a good idea of what is pure dreamy speculation that $50,000 in seed funding is definitely not going to pull off.  For those proposals where the dreamy-eyed (often Manga-styled) proposer puts up an idea so far fetched that it’s impossible with current technology, funding is also rarely forthcoming in either the normal industry or via Kickstarter.

Where the Real Game-Changer Is

So what will crowd funding to to gaming in terms of game-changing?  Two things:

1. The occasional discovery of the next big thing will come about thanks to crowd funding.  Grim Fandango is an example of that.  It’s a game that might have eventually seen the light of day under a studio and publisher, but will now see it independently.
2. Established studios and game makers will be able to leverage their fan bases to produce smaller, less commercially appealing games without taking huge losses to do so.

It’s the second thought that will really make changes in the industry.  Face it, building a game from scratch involves more than just hiring a couple of graphic artists and a core programmer or two to throw together some code and pixels to make a great game.  Games require teams of people with specialties and abilities and then the people to manage and oversee those people.  In other words: it’s a big undertaking.

Sure, if your plan is to make the next Frogger, maybe you don’t need more than someone to draw some pictures and someone else to program the arrow keys to make the frog move.  But if you’re working on something more substantial.. it’s an undertaking, not a weekend gig.

So established studios have a big advantage in game building.  They already have the team needed and a proven track record that shows that it can produce.  So all they need is the funding to make something happen.  For smaller projects that may not be financially awarding, using fan-sourced funding is a win-win all the way around.

The developers get to make the game they’ve always wanted to make or are really passionate about making, but which otherwise would only have been a dream because the game probably has a limited market.  The fans fund the game and in return get to see something that otherwise never would have been made for them to play.  Publishers (if they get involved) get to be seen supporting games that are “niche” or unprofitable and thus be seen as philanthropic for doing so.

It’s an excellent scenario that makes crowd funding much more viable.

But What About the Little Guy?

The enabling portion of crowd funding is that sometimes, a little guy will make good thanks to it.  We all love rooting for the underdog and when a little guy comes out on top, we cheer.  But the reality is, even in gaming, it’s a rare occurrence.

Most people who hope to make it big in game making either already work in the industry and have the connections to possibly get an idea off the ground or are everyone else.  It’s exceedingly rare, in any industry, for someone who’s outside of it and only dreaming of getting in to get in and make it big.  Not without a lot of work and sacrifice.

The good news is that sites like Kickstarter keep people dreaming.  Even if their chances of getting their dream game funded and built are slim, the website gives them a chance to try anyway.  Who knows?  Your idea may be the next multi-million dollar franchise.  If you don’t try, you won’t find out.  Kickstarter and sites like it give you the chance to try.

That’s the real game-changer.