Kickstarter: Corruption of Ideals?

Discussion in 'Indie Business' started by terin, Apr 4, 2012.

  1. terin

    terin
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    For those who have talked to me about it, around the time Double Fine's success was rolling forward with lightening speed, I made a prediction about Kickstarter and its future. It really didn't take long for my prediction to come true.

    I've said over and over again, kickstarter is NOT a funding platform. It's a pre-order platform. That's really it. This pie in the sky dream that you can get a good project funded and then make it is bogus. Now it's super-reduced the risk for projects to get made, and that is a good thing. However, it's quickly turning corrupt and I am going to use a specific example of how users are going to be willingly duped.

    There's a game on there now making some solid claims and references to the 'good old days' with plenty of name dropping. Hey they're going to remake a classic, give us 500,000 dollars! Except the reality is this remake they are GOING to do has been in production for half a year already. It's going to get made whether the fans reach that contribution goal or not. This super marketing spin that somehow you're supporting the creation of something that would otherwise not get made is bogus to an extreme.

    Now I don't blame them for jumping on the opportunity to eliminate some or all of the financial risk, but the item I can't seem to stomach is the politician level spin the media seems to be putting on it - as if helping a developer like this akin to donating to charity or belief.

    I'm pondering some formal article proclaiming to the gamers of the world: Kickstarter is good, it gives devs the safety they need to make awesome games, but do NOT think for a second it's anything other than a long term and highly RISKY pre-order. It's not the slightest bit different from ordering an unreleased game on Steam, with the added caveat that you won't get a refund if the game never makes it into the public's hands.

    That said I highly encourage everyone with a game, regardless of if you need the money, to have a kickstarter campaign and do it well. It's basically free money and publicity. This is the corruption of ideals I speak of, doesn't make it bad, just makes it not the original intent of the platform.

    -Joe
     
  2. Nutter2000

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    Unless you're not a US citizen http://kck.st/HcxeoE :-(

    Nice post though, I was reading an article by another dev (which I can't remember the url to now) that in summary said unless you're a brand (i.e. in this case well known team or led by a famous developer) then you have very little chance of massive success on Kickstarter like Double Fine did.
     
  3. James Coote

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    Maybe this has already been happening, but I could imagine some companies having kick-finisher campaigns. I was half way through developing my game before I heard about kickstarter and thought "Hey, that's a great way to get the money I need to pay for all the modelling and artwork I need" (I'm a programmer, so I can do everything else myself).

    Equally, people could start a project with a much larger scope than they'd otherwise be able to afford, pump all their resources into making the cool shiny stuff needed to impress people in a kickstarter campaign, and then use the kickstarter funds to actually make the game

    There are other similar sites that are international, such as indiegogo. The only difference with kickstarter is that if it fails to reach its goal, the money has return to the backers. Apparently, only amazon payments lets you do this. You can sign up for Amazon payments outside of the US, though I haven't tried it with kickstarter yet
     
  4. terin

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    If you don't see making all the cool LOOKING things first to hope your game gets funded via kickstarter a corruption of the original intent of the system... well... uh... :D
     
  5. lennard

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    It's a tricky proposition. You need to create enough of the cool stuff to have a KS marketing campaign that compels users to donate. I'll be posting my KS post-mortem later today.
     
  6. Nutter2000

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    Yes to be fair, there are others although I think Kickstarter maybe the most popular.
    I /think/ you can sign up otuside of the US but you need to be a US citizen. Could be wrong or out of date though.
     
  7. James Coote

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    Not saying I'd ever consider doing that :D

    Of course, even if you don't do a kickstarter campaign, having some cool graphics and shiny stuff to show to people right from the start (on forums like this one) helps create a 'buzz' and hype around a game long before completion. If, like me, you have a really solid game with graphics that suck because you're no artist, but still decided to make them yourself... well I guess you go hire a professional artist :p but that's not the point
     
  8. Morgan Ramsay

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    Money is finite. Just because you spend some amount to reach a halfway point does not mean that you have the money to reach the finish line. Many, many projects, including those outside of games, are cancelled due to insufficient funding. Kickstarter has always been a place where project owners can partially fund their projects, not just fund their projects in full. I'd even bet that most projects that are successfully funded end up with expenses beyond what they raised. No budget estimate is ever 100% accurate.

    Is donating to a charity akin to "donating to a charity"? There's a romance to "giving" that usually has no basis in reality. Charitable organizations are nonprofit corporations. They differ slightly from for-profit corporations; however, the differences are merely legal in nature. I won't put you through Nonprofit Management 100, so let's just leave it at this: giving makes you feel good. Video games are entertainment. There's nothing wrong with helping people to feel good about themselves.

    Why? How would your article help you achieve your goals as a marketing consultant? You might endear some conspiracy theorists to you, but are they going to pay your bills? As a former consultant, I understand that you have a burning desire to tell people they're wrong, to tell people the "truth," but you need to direct that energy toward more positive ends. For example, answer this question: how would you advise a client to improve their Kickstarter campaign? Write an article about that.
     
  9. terin

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    Bogus Morgan, pure bogus.

    Coming from me, the one who's most likely to tell people that games exist for profit and not for art, even I draw the line at stringing consumers along with a false ideal. Remember: that is the point of this thread, it's a corruption of IDEALS, not of generating profit or value. Don't mistake for a second that I have not recommended cashing in on this opportunity to every one of my clients. Just because I support my clients profiting from it doesn't make it a good thing as a whole and doesn't make it a good thing for consumers.

    There's good feeling in giving? Give me a break. If you donate to the Salvation Army and you learn they are using it to smuggle drugs and buy weapons that doesn't create a good feeling. Sure it's an exaggeration (and I sure hope they don't use the money for that), but it's the END result your donation is generating a feeling about. I'm saying the end result of for-profit high risk and high profile projects via kickstarter is going to end in a backlash from consumers when results vary from promises.

    Further I maintain that the majority of games who end half-way done because the creators lacked the experience to budget properly SHOULDN'T BE MADE. It's not that there aren't several KS campaigns who I really believe in and want to see created, and those that do probably qualify as benefiting from KS within the original ideals of the setup. It's that I am seeing more movement from people who are literally out to screw the donators and have potentially no intention of ever making the product within the scope of the promises given. You want to support that? Consent by silence is not my style.

    So why would it help me as a marketing consultant? It probably wouldn't. Doesn't have to either. I could write it anonymously, I could write it just because I think its important to say. I could write it with the intent of continuing my reputation as an honest marketing person- which by the way creates more business for me than any other trait.

    This forum is about sharing ideas and threats within the professional gaming industry as well as sharing resources of value. Just because I say I may write an article certainly doesn't mean I am going to or I think its a good idea. It may inspire someone else to write it though who may have access to information I don't.

    At any rate, I get what you're saying that by focusing my time on something that isn't profiting me directly is not really the best use of it. I have little intention of writing this article until such time as I can actually prove what I am saying anyway. Baseless accusations aren't going to get me anywhere. Lets just hope its not Shadowrun that bites the bullet and becomes the example that proves the case. (I love Shadowrun too, afterall - and it wasn't the 500,000 dollar game I was referencing for the record)

    Last - Why do people keep replying to my posts lately with the tone of "Hey new guy, here's some advice..." It isn't that I mind advice, it's just been a very strange experience that didn't used to happen. 9 years people, 9 years of listening to my rants about business :D Who here remembers the good old days? :p I don't know what brought that up, but I am pretty sure I have been seeing it for the last couple months.

    -Joe
     
  10. Scharlo

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    So, it is morally right for someone who is lazy or unable to find other source of funding
    to get his game funded by Kickstarter because otherwise the game wouldn't be made in the first place. But if someone got the ball rolling and actually did some work in order to get the funds (or part of it) - it would be wrong to ask for support.
    Brilliant.
     
  11. Morgan Ramsay

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    The solution then is to educate Kickstarter project owners on how to communicate with backers and establish reasonable expectations of return. Entertainment quality is always subjective.

    Have you read my book? There's a chapter about Troika Games. Paperback and digital editions are available through Amazon, BN.com, Walmart.com, and booksellers worldwide. You can't miss it.
     
  12. lennard

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    This is good advice: For example, answer this question: how would you advise a client to improve their Kickstarter campaign?

    I don't know why people donate more money to getting a game made than they would to go and buy games that are already finished. My internal Sheldon wants to sort them all out. But that's not the business I am in. I'm in the entertainment business and:

    a) it takes money to be in the entertainment business
    b) for whatever reason, folks are more entertained by funding KS projects than buying Pokemon cards right now. I don't understand it - if I did maybe my first Kickstarter campaign would have been successfully funded - but it's not my job to worry about that. Maybe the experience of being in on the ground floor, somehow, is more valuable than the actual game experience. A year or so ago when this started happening it was certainly a new thing and, for less than the price of a compiler, you can go and fund a dozen games. Each to their own, it's a mistake to try and tell the consumer what they can and cannot enjoy.
     
  13. Applewood

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    It's not even about genetating pre-orders. It's about getting Beta testers to pay for the privilege.

    Fair play, I have to give my games away to get them tested!
     
  14. terin

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    Scharlo, I am not sure where that message got garbled, but I am saying just the opposite. It's a violation of the ideals that kickstarter was founded on for a project with full funding to seek additional money and WAY worse for those people out there that are going to put together a bunch of vaporware in return for funding. Now I obviously don't support the vaporware idea. I do support the idea of using kickstarter as a source of beta testers and pre-orders for a game that is fully funded. However, I still say that is a violation of the IDEALS put forth. However, I am also saying if you are making a game and your plan is to make it half way and hope kickstarter will cover the rest... that isn't a professional plan. If you're 10% in that is another story. A quick prototype and utilizing kickstarter as a measure of how good the idea is... that is a possible business plan. But there's no one answer to these things, we're painting in broad brush strokes and there's going to be plenty of exceptions.

    I don't see it Morgan - I see this problem getting worse before it gets better. I see a 500,000 dollar project in the near future that will never be released and it will be a year or more before the donators realize they've been duped. How many other vaporware projects will people spend money on in that time before they wise up? The people who would take the advice of properly managing expectations aren't really my concern in the long run: It's the sharks out there that are going to steal money from developers who would otherwise need it.

    If I had the time I would put together a vapor product just to see how much cash I could get, then refund everyone the money, write a great expose on it, and laugh my ass off. Sadly I don't have the time or energy for it, but I hope someone does.

    Lennard, from the little work I have done with Kickstarter so far i say presentation is everything. Graphics, as was stated above, are essential. Some famous names doesn't hurt either. Then couple that with contacting game sites and press outlets and the community will do most of the heavy lifting. Also most successful kickstarter projects I know went to friends and family and had them start the project off on the right foot, with one client of mine raising about 8,000 odd dollars from this method. This helps separate you from the herd. So far the 'non famous' games that have done well are few and far between. I think a reasonable kickstarter goal for someone who doesn't have this advantage of name recognition is 10,000 at this time, with the hope of ending somewhere between 20 and 30k. I expect success rates like FTL are going to be pretty rare for the indies out there.
     
  15. Morgan Ramsay

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    Capital raised through Kickstarter is effectively angel money without convertible debt or equity. With any investment, there's always the risk of a failed enterprise as well as the risk of losing your money. Even preorders aren't guarantees that a product will materialize. There are no sure things, especially in this business.
     
  16. terin

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    Which in fact makes it NOT angel money, in fact, at the moment the US has a law against raising capital with equity in crowdsource format (however, there is likely to be a new law passed that allows it in some form). There's nothing angelic about angel based capital, it's just capital for equity in first stage capital raising.

    As for pre-orders not guaranteeing product materialization: This depends. If Steam has a pre-order I've never heard of it not materializing. If it didn't, Steam would refund the money. On the otherhand an independent studio may simply not have the funds available (having used them on production we hope) to refund the cash.

    By the way, if you think you can raise angel capital and simply decide to do no work and pay yourself the money given as salary you'd have another thing coming. Those investors are well protected by law from such things. Kickstarter has no such protections.

    -Joe
     
  17. Davaris

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    I read an interview with Brian Fargo and he said something about Kickstarter, holding a portion of the money in escrow, until they can demonstrate sufficient progress to the Kickstarter people.
     
  18. rioka

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    Really now? So, what happens to the money if the person isn't showing sufficient progress? Does Kickstarter keep the money or will the supporters get a partial money refund?
     
  19. terin

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    Davaris/rioka - I really didn't know that either (assuming it is true) - but that is a whole different can of worms. What DOES happen if you're showing progress but not SUFFICIENT progress? What does that even mean? That basically puts Kickstarter in the role of a publisher, doesn't it? Hey, hit milestone #2 by February or we're pulling the funding behind your project. At what income level does this start? 10,000? 30,000? 100,000? 1,000,000?

    This brings up another question that I don't know the answer to: What are the tax laws behind kickstarter 'donations' : If I am not mistaken, for instance, if someone invests money in your company (say 1,000,000 dollars) you get the full million. It isn't taxed until there's some kind of liquidity event, at which point it either becomes a gain or a loss (So if the company sells for 10 million and you get 3 million of that, you're taxed at a capital gain of 2 million, similarly you can declare a capital loss if the sale results in less than 1 million). I'm pretty sure that is how it works... BUT

    Kickstarter is not an investment. It also isn't a CHARITABLE donation (In these cases these are not non-profit organizations). So as far as I know I see two ways it could pan out and i would LOVE someone who knows the answer to reply: 1) You're taxed on the income immediately, just as you would if someone pre-orders your game. 2) You're taxed at the launch of the game, and all those sales immediately are counted. I think it would make more sense with numbers:

    Doublefine gets 3 million USD and are a C corp (I have no clue if they are, but lets just say)
    They spend 1 million developing the game and it takes exactly 1 fiscal year to make.
    Is that 3 million in income taxed immediately upon receipt (resulting in something like a net gain of only 2 million or so) and then the costs of production are weighed against the income the game generates not inclusive of kickstarter (So year 1 is a 1 million dollar loss that will be amortized over the next several years of income in the form of tax savings).

    OR do they get the 3 million in cash and as soon as the game launches the goods are considered to be 'delivered' resulting in sale on paper and so they have 3 million in income, 1 million in expenses and owe taxes on 2 million in profits?

    I'm so confused! I actually think its version #2. You're paying them for the delivery of a future good and the money isn't 'on book' until they deliver it. In which case that could be seriously dangerous for a company! Imagine if you spent all 3 million in development and suddenly have this massive tax burden upon completing the project but no actual revenue (lets say the game gets a lot of kickstarter money but then bombs on actual sales). Or maybe KS withholds the expected tax amount?
    -Joe
     
  20. Morgan Ramsay

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