Crowdfunding in video games

Video game development has typically been funded by large publishing companies or are alternatively paid for mostly by the developers themselves as independent titles. Other funding may come from government incentives or from private funding.

Crowdfunding, where the players of the video games pay to back the development efforts of a game, has become a popular means of finding alternate investment routes. As a way of game monetization, the use of crowdfunding in video games has had a history for several years prior to 2012, but was not seen as viable and limited to small-scale games. The crowdfunding mechanism for video games received significant attention in February 2012 due to the success of Double Fine Adventure (later renamed as Broken Age), a point-and-click adventure game which raised more than $3 million through the Kickstarter service, greatly exceeding the initial $400,000 request. Later the same year, in October 2012, Pillars of Eternity raised $3,986,929 from an initial objective of $1.1 M, thus becoming the highest funded video game project through Kickstarter at that time, and yet beaten a few years later by other projects like Shenmue III (more than $6 M), Bloodstained: Ritual of the Night (more than $5.5 M), or Torment: Tides Of Numenera (more than $4 M). A further boost to the model was seen in July 2012 when the Ouya, a low-cost video game console to be built on the open Android system and designed to take advantage of the mobile video game trend, surpassed $8 million in funding. By mid-2016, more than $186 million has been pledged to video game-related projects through Kickstarter alone.

Less than half of video game crowd-funded projects successfully raise their target funds.^{[citation needed]}

Crowdfunding is a means to raise money for a project by eliciting funds from potential users of the completed project.^[1] While no third party is required for crowdfunding to occur, web sites like Kickstarter have been created to act as an intermediate in the process: they create space for project creators to share their project, provide ways for users to pledge their funds, and then supply the pledged funds to the creators for those projects that are successfully funded.

Projects using the Kickstarter model generally create multiple tiers of support. A minimum pledge assures that the funder will get the product in some form, but higher pledges will include additional benefits. In the case of video game-related works, this commonly can include being credited in the final work, receiving promotional items like T-shirts, obtaining early access to the game, or meeting the developers in person.

The earliest game to have utilized crowdfunding may have been Mount & Blade. As the developers had trouble finding backing from traditional publishers, they instead chose to ask for funding directly from interested individuals.^[2] Mount & Blade was funded, developed and released before the popularization of purpose-built online crowdfunding platforms.

Prior to 2012, small independent video game developers had used Kickstarter and other crowdfunding services to generate capital for developing games.^[3] However, most of these were funded at small levels, typically no more than $10,000; the largest prior to 2012 was Brandon Boyer's Venus Patrol in October 2011 which gained over $100,000 in funds. Shortly before the announcement of Double Fine Adventure, another game, Code Hero, was able to secure more than $100,000 in funding through a last-minute push by word-of-mouth.^[4]

In 2012, 43% of game projects (including tabletop games) on Kickstarter successfully completed their funding, which was slightly above the average success rate for all projects on the platform during that year. ^[21] According to Kickstarter's 2012 statistics, more than 900 of about 2,800 video game-related projects were funded during 2012. Games (including tabletop games) were Kickstarter's most popular and successful category in 2012; successful gaming projects generated over $83M in funding across 1.38M pledges.^[22] Despite reports of "Kickstarter fatigue" - a sense of community apathy towards the platform, Kickstarter revealed that as of August 1, 2013, $64.7M had been pledged towards games project that year, showing growth over 2012 figures.^[23] In March 2014, Kickstarter announced it had achieved over $1 billion in pledges, with more than $215 million of that dedicated for video gaming and tabletop gaming projects.^[24] By mid-2016, Kickstarter reported over $186 million in video game-related pledges with over $500 million for all game-related projects.^[25]

A survey conducted by a research team at the University of Cologne examined the motivations of Kickstarter backers who pledged for video game projects in 2014.^[26] It found that the prime motive of a vast majority of respondents was to encourage creation of games in genres the backers perceived as under-supplied, and warned game developers against "following the bandwagon" by trying to fill the niches that have already been saturated by earlier crowdfunded projects. Beyond that, the study grouped backers into three categories, based on other motivations they displayed (from most to least numerous):

• "Supporters" were driven by the desire to help a particular video game developer produce games without external constraints.
• "Buyers" were mainly interested in receiving finished games.
• "Influencers" saw crowdfunding as a way to affect change within the video game industry as a whole.

Both "supporters" and "influencers" perceived video game developers as being "strangled" by the established conventions of the industry and the mainstream market (such as video game publishers), and while most backers wanted to be kept up to date about the development and features of the games they backed, few were interested in directly influencing them. The researchers concluded that "backers are first and foremost consumers, and the main effect of reward-based crowdfunding is that it closes the information gap between the developer and the customer."

The study also examined what influenced a backer's decision to pledge more or less money to a particular project, and found that "supporters" generally tend to pledge smaller amounts of money to fewer projects than both "buyers" and "influencers".^[26] It identified three factors that influenced the pledged amount:

• Overlap between the backer's perception of a particular project and their personal investment preference. If the backer believed that backing a project was in line with their general investment motivation (reflected by one of three categories above), they would pledge more money to it.
• Trust between the developer and their backers. The survey responders did not differentiate between competence-based trust (whether the developer can produce a high-quality game) and trust in the developer's integrity (whether they will put all the resources they received into making it). Furthermore, trust was only a factor if the deviations between the project and the backer's investment preferences (see above) were minimal; otherwise, it was irrelevant.
• The funding goal. The study found a correlation between higher project goals and higher pledges, but abstained from making any conclusions about it, citing unaccounted for external factors, to be examined in later studies.

Crowd funding also allow supporters get more valuable open source games with public domain, GPL, MIT, or Apache license, they can reuse for make new games and remixes, modifications, hacks. Since crowd pay for development, no need hide source code or have copyright against supporters.

There are risks of such crowd-funded games, including the inability to complete the funding successfully. In one example, the development of the game Alpha Colony fell short of its $50,000 goal by $28, rendering the project unfunded as per Kickstarter's regulations.^[27] In other cases, the delivery of the product after a successful fundraising campaign may be left unfulfilled. A notable case is that of Code Hero, which had secured $170,000 during its Kickstarter in early 2012, had initially expected to be shown at the August 2012 PAX convention but failed to materialize. Further lack of updates through December led some of the Kickstarter backers to investigate the state of the project, finding that Primer Labs had apparently used up the funding and had yet to finish the game. Primer Labs' Alex Peake had stated that they are looking for more investments to continue developing the game and still commits to releasing the game in the future.^[28] However, due to lack of communication and failure to provide any of the claimed rewards, backers are looking towards legal options to recover their funding, though are limited by some of the terms of agreements set in place by Kickstarter.^[29] An update in early February 2013 included a message from Peake, breaking down the use of the Kickstarter funds and promise to provide refunds and back pay to his developers once the game was released, and took responsibility for the failure to meet the stated goals.^[30] The game hasn't been released.

Another example of such risks is Godus, a god game developed by 22cans, with the genre's pioneer Peter Molyneux at the lead. The game was successfully funded in a 2012 Kickstarter campaign for about $800,000, and the team delivered a mobile version for iOS systems, and a Windows version that was developed through Steam's Early Access program. However, in early 2015, many supporters began to doubt if 22cans was going to finish the title and complete the additional Kickstarter stretch goals such as a Linux version, as Molyneux had begun talking about the next game his studio would produce. In response, Molyneux stated that they were moving on from Godus and turned over most of the development to one of the campaign's backers while Molyneux and 22cans will still provide overarching guidance. Supporters expressed concern in that they had bought into the Kickstarter based on Molyneux's creditials towards the god game genre, and as such the final game may not reflect the product they actually had expected.^[31]

• List of video game crowdfunding projects