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The ugly side of Kickstarter: the risks in backing game dev campaigns are greater than you think

The Penny Arcade Report has an email address for story leads and tips, and a significant percentage of those “tips” are solicitations for coverage of indie game Kickstarter projects. It seems that everyone is envious of the millions being raised by high-profile game projects, and they want a taste of that sweet, sweet funding. Kickstarter isn’t just a way to find alternate funding, it’s a goldrush, with all the risk and possible reward implied by that term.

Kickstarter allows anyone to become a “backer” of game development, and the crazy thing is you effectively vote with your wallet by purchasing a game before it is finished, or even before development is launched. In one case a development team begged me to help them spread the word about a campaign to fund their presentation to major developers. Yes: the Kickstarter was for a presentation that, hopefully, would result in a publishing deal. This is not a wise use of money.

So let’s be smart about this. If we’re being asked to become backers of projects, what sort of projects should we look for? What should a Kickstarter campaign do in order to make us comfortable handing over our money? It’s time to bring in an expert.

Investing in the winners

Kevin Dent set up and ran the game studio CI Media, before the company merged with another studio and was later bought by yet another entity. Dent also advised studios as an angel investor, but has now left the world of game publishing, for various reasons. “I decided to exile myself from the world of publishing at a point in time when deals with developers became less about making a great game and more about playing a game of ‘heads I win, tails you lose’ with developers,” he said.

So what does he do now? “I mentor a lot of studios, advise investors, and help studios find capital to make their games—and I am extremely selective in this regard,” he explained. “I also help some of the board of the International Game Developers Association, I am a finalist judge for the Imagine Cup and I still invest my own money into titles.” Kevin Dent has worked in the video game industry for 13 years, and he knows what to look for in projects during each stage of development.

He also has strong feelings about Kickstarter. “I love Kickstarter, I want to marry Kickstarter and I want to curl it up and eat it,” he said. It’s another way for developers to find funding for their games, and he supports that 100 percent. The problem is that the pitches range from “fantastic to dog shit.”

“I think developers need to really treat this as a professional process, treat it like they are coming into my office and pitching me an idea, because that is EXACTLY what they are doing,” he said. “They are coming into my office via my PC and saying ‘gimme your money dude.’”

So what should developers do when starting a Kickstarter campaign? What red flags should backers look for?

Understand the budget

“I was talking to one world-class creator recently, and he told me his budget was about $1.5M. I said great, so you need to raise a little over $2M?” Dent said. The creator responded that no, $1.5M would be enough. “This guy basically did not even factor in the taxes he would have to pay on the money raised. This is a super important point because if it is going to cost X you need to raise Y to cover the taxes.”

One recent Kickstarter campaign raised almost $37,000 out of a $20,000 goal, so the team is on easy street, right? In fact, an update on the Kickstarter campaign broke down where the money went, and even explains the mistakes made in planning and execution of the team’s plan. This is an important lesson: Very few teams asking for money via Kickstarter have extensive, or even moderate, knowledge of business, taxes, or organizing the game development process in the long term.

It’s also easy to underestimate the financial and time investment the bonus structure requires. “We just didn’t fully appreciate the cost of printing 200 posters, shirts, and more than anything shipping. Shipping is a) expensive b) a pain in the ass when you have tubes and c) time consuming,” the Star Command team stated. “None of those things are productive. We don’t resent having sent that stuff off; we think the posters and shirts are awesome and we are super proud of them and it seems like everyone loved them, so that’s great. But they were a lot of work.”

Dent showed me one Kickstarter campaign that he feels is risky. “I look at this game and I feel that either they are just overwhelmingly confused about the costs involved in shipping this title or I just don’t know what it is,” he said. A team composed entirely of production people, with no “business guys,” may not fully comprehend the total costs involved in creating a game. For example, Dent is currently working on “Minecraft version of a first-person shooter” that will allow people to create their own maps. The game is privately funded, with costs of $1.2 million dollars to date.

“So if someone is trying to sell you a Porsche on Craigslist for $5,000.00 you are going to naturally feel nervous. If someone is trying to sell you that they can make an FPS for under $2M they are going to give me cause to pause,” Dent said.

He also points out the project is about to begin to need the highest level of funding. “Of course they are saying that they have been putting their own money into it so far–which I have no reason to not believe them–but they also say that they are going into full production now, and full production is where games actually cost the most money. I just can’t see how less than $300k gets them to that point.”

Experience counts

“The other thing that I would look at is what have these guys done before?” Dent said. “What street cred do they have? Do they have a track record of delivering on titles? No? OK then did any former colleagues go on record and give a reference to say these guys will work their asses off to deliver a great title?” Steve Jobs famously said that real artists ship, and the majority of smaller games that enter development never see completion; when you’re working on your first or even second game the largest danger is the fact that you often don’t know what you don’t know.

This is not a business plan.

I once asked Epic Games CEO Tim Sweeney what smaller teams should focus on during development, and he said polish. “The area where most teams fail is insufficient polish. Cliff [Bleszinksi] always says there’s the first 90 percent of the project, and then the second 90 percent. Because once your game is completely playable and it works, you’re really only halfway,” Sweeney explained. “It takes an incredible amount of tweaking to get to the level of polish where people take your game seriously.”

Most novice developers don’t understand the enormity of game development, and the act of creating a good game is herculean, no matter the size of your team or the scope of your game. If you haven’t shipped at least one or two games, or if your team lacks someone of sufficient experience, you could look like a very bad bet to the eyes of the investor—or Kickstarter backer.

“Overall, I want to ‘invest’ in a game that I want to play or made by a guy that I adore,” Dent said. “I spoke to/begged David Jaffe recently about using Kickstarter to make a game. I have no idea where he is on that or if he is going to go down that route. My point is that I love Jaffe’s games, so if I were to see that he was setting that up in Kickstarter, I would instantly support it.” This might be the best, or at least safest, use of Kickstarter: The service allows proven talent to create games with a large audience but limited appeal to traditional investors.

Let the backers inside

An often overlooked part of Double Fine’s Kickstarter success was the inclusion of a documentary crew making a film about what it takes to create a video game. People who contributed to the game aren’t just getting something new to play, they’re paying for a rare look into a major studio as it creates an adventure game. That’s a tremendous amount of value added to the campaign, even though the project will obviously be different than standard game development.

“This is not how all games get made. It’s going to be much different than how most games get made. It’s not going to be a perfect representation of the development cycle,” Paul Levering from Two Player Productions explained. “It’s definitely going to be this weird, hybrid development cycle that not many people have experienced before. It’s hard to say how similar it’s going to be to any other game that gets made. We don’t know if they are going to have the same problems. It will probably be a whole host of problems no one has experienced before.” Doesn’t that sound fascinating? Who wouldn’t want to see that?

Dent agreed that this is a great opportunity for fans to see how the sausage is made. “I dearly want to see studios approach Kickstarter in the exact same way that they would reach out to me. During the process they should be sharing the dev cycle experience with the contributors, warts and all. I want to be part of the fucking experience, I want to know when you inserted a chunk of code that would embarrass your college professors,” he said. “I want to hear about the cheers and tears. I want to feel like I am watching a reality TV show. Otherwise I can wait until the game hits Gamestop or whatever and buy it then.”

In other words, the best projects don’t just reward backers with the game and a poster. They also offer access to the development process.

Backer Beware

Studios such as EA and Activision employ people with decades of game development experience to lead their projects, and even games with multimillion dollar budgets are cancelled with alarming regularity. The odds of a two-man team with a game prototype understanding how to use their windfall efficiently while delivering a good game are not high, no matter how good the video on the site may look.

Point being: Not all Kickstarter projects will succeed. It’s inevitable that some will fail. This is one reason why Kickstarter is very particular about using the term “backer” and avoiding the term “investor.” Dent explains, “It is not actually an investment in the legal sense of the word. The contributor is actually buying something to be part of the game.” Backers get tangible rewards in exchange for their dollars: shirts, videos, forum access, and (typically) a copy of the game if and when it is completed. It’s a purchase, not an investment.

Of those projects that do manage to ship, some will be good games and some will be awful, with most winding up somewhere in the middle. This is the reality of game development in the real world, and projects funded by Kickstarter are no different. The unfortunate truth is that many backers of game projects are buying the ability to wait 18 months to play a mediocre game.

There are no assurances in this system. “It is the responsibility of the project creator to fulfill the promises of their project,” the official page states. “Kickstarter reviews projects to ensure they do not violate the Project Guidelines, however Kickstarter does not investigate a creator’s ability to complete their project.” It’s very possible that the project you’re helping to fund won’t be finished, and I’m going to go ahead and call it: We’re a few months away from the first Kickstarter scam or controversy. There is too much money at stake and too little critical thinking at the moment, and that’s an inviting situation for people looking to make a quick buck. Be skeptical of every project, as if you were investing, not just backing.

So if you want your Kickstarter covered, or you want to back a project…

Make sure you only spend money you’re willing to lose if you’re thinking about backing a game project on Kickstarter. Or put another way, realize that your contribution is a purchase for a specific thing—a poster, a t-shirt, video updates, the game—and that the intangible elements of a fun game, or the fulfillment of some scrappy team’s creative vision, is just a bonus. Features change, the original design may not work, or the prototype that looked so promising may not make for a good game upon completion.

If you are trying to get the Penny Arcade Report, or Kotaku, or Joystiq, or any other outlet to cover your Kickstarter campaign, focus on the game. Tell us the story behind your team. Hook us with the product you’re trying to sell and if it’s a good story and a promising game the links to you Kickstarter campaign will come. Your product is the game that you’re pouring yourself into, and that’s what is interesting to the press and gamers. Make that unique. The fact you have a Kickstarter campaign is likely to be the most boring aspect of your project.

Pitch accordingly.

by Ben Kuchera

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