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[PATV] Thursday, April 19, 2012 - Extra Credits Season 4, Ep. 10: Crowdfunding

GethGeth LegionPerseus VeilRegistered User, Moderator, Penny Arcade Staff, Vanilla Staff vanilla
edited April 2012 in The Penny Arcade Hub
Extra Credits Season 4, Ep. 10: Crowdfunding
http://penny-arcade.com/patv/episode/crowdfunding
This week, we discuss the exciting possibilities of crowd-funded games.

Come discuss this topic in the forums!

Geth on

Posts

  • NergyNergy Registered User regular
    It's awesome to see someone positive about Crowdfunding. I have come across so many negative nancies lately i started to think this little gem in gaming history would get buried.

  • SnapDraconSnapDracon Registered User
    No surprise to see these guys who passed the hat for one of the cast's surgery throw in for "crowd funding," in a big way. The part about the whole system coming down like a house of cards when crowd fund raisers start "defaulting" on their pledge to develop something and walk with the cash is pretty blithely glossed over.

    Without some checks in place, along the lines of the development milestones demanded by those evil publishers, this "little gem" will go down as just another fad breed of scam, like Nigerian unclaimed bank accounts.

  • AurichAurich Registered User regular
    I think one of the key points that stops it from being a real bubble or house of cards or whatever is the fact that it isn't a really great way to make money. From the perspective of the developer, you're raising money just to make the game; the profits come later. At the exact same time, donors aren't hoping to get any returns. We're not going to get a bunch of investors who bail when they aren't turning a buck. No one is turning a buck. The invested money is for something specific that does not need to be financially successful.

  • KingofMadCowsKingofMadCows Registered User regular
    I think that eventually more checks and balances will be put in place.

    I think that a milestone type system will develop where instead of getting all the funds upfront, only portions of the funds are released at specific periods. If the donors do not like what the developer is doing, they can withdraw what remains of their donation.

    So for example, if you donate $100, $25 or $50 immediately goes to the developer. After that, $5 goes to the developer every week. If you don't like what the developer is doing, you can reduce or withdraw your donation. On the other hand, if you do like what you're doing, you can increase your donation.

  • El SkidEl Skid The frozen white northRegistered User regular
    edited April 2012
    I don't think there will ever be a way for you to get crowdsourcing money back from the developer once it's given. It would mean that if some people got unhappy with the way a game was developing the project would get bankrupted and never finish. Or in your specific example, people might decide they need money (lost their job etc) and willy nilly say they don't like the way things are going to get their money back... That would not be a useful way to get games developed.

    It WOULD be possible to set things up similar to shares, I guess, so that the developer keeps their cash, but you can try to get money back from other investors. Each share is worth $5 when you buy it, and when the game is done you go to apply the donation level bonuses based on how many shares you have at launch, rather than the amount you donate originally. So if things go poorly and people want to get money back, they could sell shares of the game for $3 (taking a $2/share loss but still getting SOME money back), and the person who buys the shares might be able to get some more cool stuff when the game launches (a signed copy of the collector's edition and a hat for having 50 shares instead of the basic "you get a copy of the game" for having 5 shares)... or just get in on the crowdsourcing thing late (after the game is funded).

    But keeping track of shares sounds like a lot of work. You'd have to have a lot of infrastructure in place to manage that.

    El Skid on
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  • ZeraphaelZeraphael PDXRegistered User regular
    I believe it's more a case of caveat emptor.

    For the small amounts that the majority of people are donating it really isn't worth it to try and recover lost funds. Also, most projects that are crowdfunded aren't going to raise all that much money.

    The notable ones such as Double Fine/Wastelands 2/Shadowrun Returns in the gaming area are fairly rare.

    If a pitch is good and in an area I want to help out I'll dole out some cash to see it done. If it doesn't get done I'll be disappointed but wouldn't have lost a whole lot of money over it in the end.

    Most people aren't going to just throw cash at random things for no reason and especially if the pitch itself sucks.

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  • marsiliesmarsilies Registered User regular
    El Skid wrote: »
    It WOULD be possible to set things up similar to shares, I guess, so that the developer keeps their cash, but you can try to get money back from other investors. Each share is worth $5 when you buy it, and when the game is done you go to apply the donation level bonuses based on how many shares you have at launch, rather than the amount you donate originally...

    I think this sounds too close to a security, which would get the SEC involved. Definitely calling them "shares" is a bad idea. There's also the possibility that the shares could increase in price, which means that they'd work like a security, which is bad for crowdfunding (due to SEC restrictions).

    Aside from that, the problem with issuing rewards at the end is that it'd seriously mess with the budget. A $15 digital download costs a developer nearly nothing to offer, while a $60 boxed copy maybe costs $20 in manufacturing and shipping. The developers budget the game based on what they got minus fees and costs of the bonuses. So for someone to take 4 pledges of $15 and combine them to make a single $60 pledge at the end, means that the developers are in the hole for $20, since they weren't planning for that extra boxed copy. Spread that over many backers and many pledges, and you'd have a real problem at the end.

    Also, with bonuses agreed to upfront, some of the bonuses are able to be made ahead of time. This wouldn't be possible if the bonuses weren't set until the end, which means that either the bonuses would be delayed until after the game was finished, or the developer would have to guess at quantities, and possibly over or under order certain bonus items.

    I do agree that allowing for partial refunds isn't a likely scenario either. In the end, croudsourcing projects and services like Kickstarter are inherently risky. I think that if too many projects fail (either outright or just fail to live up to their potential), the result will be demand by the backers for more transparency upfront. We get a vague notion now of "we need X amount of $ to do this," but that could be broken down into exactly what it all goes towards, such an employee salaries (and number of employees), office rental costs, equipment costs, travel expenses, etc.

    There's also the possibility of a class action lawsuit on a bigger kickstarter that doesn't deliver. After all, the backers were promised a product, which puts them on the hook for delivering something. If they don't deliver at all, or if they deliver something markedly different from what was promised, the developer could have serious legal troubles to deal with.

  • KingofMadCowsKingofMadCows Registered User regular
    El Skid wrote: »
    I don't think there will ever be a way for you to get crowdsourcing money back from the developer once it's given. It would mean that if some people got unhappy with the way a game was developing the project would get bankrupted and never finish. Or in your specific example, people might decide they need money (lost their job etc) and willy nilly say they don't like the way things are going to get their money back... That would not be a useful way to get games developed.

    It's really not that different from the milestone system that's already in place. It's not like publishers always have a good reason for cutting funding.

  • fortyforty Registered User regular
    I remember "crowdfunding" Project Majestic Mix over a decade ago, long before there was a word for such a thing.

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