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[PATV] Monday, April 16, 2012 - CheckPoint Season 1, Ep. 50: There is No Bubble
Geth
LegionPerseus VeilRegistered User, Moderator, Penny Arcade Staff, Vanilla Staff vanilla
LegionPerseus VeilRegistered User, Moderator, Penny Arcade Staff, Vanilla Staff vanilla
CheckPoint Season 1, Ep. 50: There is No Bubble
http://penny-arcade.com/patv/episode/there-is-no-bubble
http://penny-arcade.com/patv/episode/there-is-no-bubble
Kickstarter is taking over video game self-funding. But is there an end to it?
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Good job.
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Note to PA content admins: This is showing up on the site as PATS Season 3 instead of Checkpoint.
Take the boom and bust in the internet economy. People saw the popularity of several giant chains of websites and online marketplaces and began to throw money into projects with no understanding of the underlying principles that made those websites work. Initially, they saw success due to low interest prices set by the federal reserve creating a false boom. They created a company or went entirely digital with their small company and then immediately began public trading, seeing a successful profit from it due to the market interest in "e-companies". Once the Fed set increased the interest prices, the economy started to cool again, and the rampant investing seen in a boom began to dry up. Most of those companies that were built on a poor premise disappeared completely as the bubble began to deflate.
However, the Kickstarter funding isn't based on trading and third party investing, and many of the companies being funded through the program don't even have public stock options. It's actually an interesting new way of "first party investing" as I'm calling it. The customers themselves are acting as the publisher with the only return being the product. The company making the game doesn't have to even make a profit on the game so long as they don't go over-budget. They could sell a total of 0 games after funding and still be considered a success as they basically pre-sold hundreds or thousands of what are essentially regular and collectors editions. Any purchases of the game afterwords goes entirely to the developer, as they don't have to make a split with the publisher, and they get to keep their IP entirely to themselves.
So, I'm not really sure that there could be a bubble with Kickstarter. Every funded game is already a success before being made and there's no investors to pay back. Do I think interest in it will cool? Probably, but if it does, it doesn't mean the same thing as when an economic bubble bursts, it just means that those developers don't get funded through Kickstarter and have to go through regular publishers or self-fund.
Those are all good points. I'm actually concerned what will happen when someone isn't able to deliver, or money is embezzled. I think that will pop the Kickstarter "bubble" as it were.
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It'll take A LOT more than that. Embezzling and not delivering on a project comes at the personal risk of the person pitching the project, they are putting their name and face on that project, running with the money would see them hunted down and every penny given back to the backers. Failing to deliver on a product would probably result in the dev either working off his own back to fix the problem or giving back everyone's money. Either way, it's hard for the backers to lose.
We know people like Double Fine, Mike Mulvihill and other devs are trustworthy and they know they are putting a lot at stake and will most likely delivery a product that will please at least 99% of the backers. Being given free money and told to make a great product is a gigantic incentive to deliver.