Crowdfunding isn’t fatigued — it’s growing up. For years platforms like Kickstarter have made it possible for projects to be funded directly by friends, fans, and other communities. In return those backers often received rewards, a token that symbolizes their generosity and belief in the project.
The backers of crowdfunded projects also assume a lot of risk, sometimes losing all their money in exchange for nothing if a successful crowdfunding campaign project is later cancelled. But even as some crowdfunded projects have gone on to become hugely successful products, would-be future backers are starting to realize that their early contributions could be investments.Imagine if you could pool all the potential money that could be raised through crowdfunding. It’s more or less a finite resource because, understandably, most folks will only ever give so much of their own money away. So as the number of crowdfunded projects pile on, this pool slowly begins to drain. The problem with crowdfunding is a sustainability problem.
Emerging from the decline of crowdfunding is the prospect of “crowdpublishing.” Loosely defined, it’s where fans of projects also get the option to become investors, choosing the projects they want to support, much like traditional publishers, and then sharing in the revenues from market performance. And while the risk is still there if a project were to later be cancelled, the reward potential far outweighs the token promises of a typical crowdfunded campaign. This process also allows for new funds to be reintroduced into the crowdfunding pool.
The video game industry is ahead of the curve
There’s no denying the stomach-churning drop in the amount of money pledged on Kickstarter for video game projects in 2016. Last year’s haul of $16.2 million was down 61 percent from the year before, a five-year low for the video games category. An analysis from Thomas Bidaux of ICO Partners attributed the decline to the absence of large video game projects on the platform.
So what is going on here?
Two examples of current Kickstarter projects that may prove to be the proverbial canaries in the coal mine for the impending industry wide change are Apocalypse Now and Banner Saga 3. Both of these titles have a lot going for them: each has a highly experienced development team, proven franchises, gorgeous artwork and seriously fan-approved gameplay.
With Apocalypse Now, the campaign had the added benefit of being featured on the front page of Kickstarter, along with full endorsement from the movie’s legendary director, Francis Ford Coppola. Three weeks into the anemic campaign, developers pulled the plug on Feb. 14, opting instead to appeal directly to investors.
And the campaign for Banner Saga 3, while successfully completed, raised a little under $417,000—about 42 percent less than what its developer, Stoic, raised five years ago for the original Banner Saga.
The steep decline of funding on Kickstarter, along with the recent struggles of these two top tier titles, underscores the change in the relationship between fans and the titles. While previously it was enough for fans to receive a token of appreciation from the game developers – like early access, a copy of the game, or in-game perks – now that this model of fundraising has proved successful, fans want in on the real rewards: revenue.
The Jumpstart Our Business Act, or JOBS Act, changed everything
Until recently, this option wasn’t open to average game fans. You had to be a relatively wealthy…
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