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How Long Before the Kickstarter Bubble Bursts? 192

Posted by Soulskill
from the when-people-realize-they-don't-have-that-much-patience dept.
An opinion piece at Gamasutra takes a look at the recent success of Kickstarter campaigns for video game projectsDouble Fine's adventure game and a sequel to Wasteland each raised around $3 million. Hundreds of other projects have sprung up, hoping to replicate that success — but will it last? From the article: "I am convinced that Tim Schafer and his team at Double Fine know how to deliver a game (mostly) on time and (mostly) on budget. Brian Fargo too. Is that true for all 314 of the current Kickstarter projects? What about the projects which get started but never finished? If publishers like LucasArts can cancel games that are almost finished or like Codemasters can pay for a game it never saw, what certainty do pledgers have that the game that they have paid for will ever see the light of day? We are still in the early days of our Kickstarter relationship, the early days of falling in love. Everything our partner does is wonderful. We gloss over the risks, we ignore the downsides, because the glory of falling in love is everything. I think we have about six months left of that period. Towards the end of this year, some Kickstarter projects are going to start slipping. Some will see their teams collapse amidst bicker recriminations. Some pledgers are going to start getting very angry."
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How Long Before the Kickstarter Bubble Bursts?

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  • No bubble. (Score:5, Insightful)

    by RyuuzakiTetsuya (195424) <taiki&cox,net> on Monday May 07, 2012 @05:29PM (#39920985)

    Might see a drop off, and a leveling off, but a bubble burst?

    That implies there's a bubble. Direct financing of projects is the future, not a fad.

  • by multiben (1916126) on Monday May 07, 2012 @05:32PM (#39921035)
    One of the things that makes this sort of funding different is that a vast majority of pledgers are contributing very modest sums of money. Can you really get pissed off if you lose $50 in a venture? For a lot of people this sort of funding gives them the chance to participate in something they would otherwise have never got an opportunity to be involved in. I think that what we will see is a refinement of the system and people maybe being a little more selective and those who are seeking funding becoming more professional. I do believe that in some form or another it is here to stay.
  • Re:No bubble. (Score:5, Insightful)

    by Anonymous Coward on Monday May 07, 2012 @05:40PM (#39921155)

    Pretty much this. "Bubbles" are what happen when too many people start investing in something (homes, dot.coms), then pull out during a panic, causing a spiral of decreasing value and investors losing their shirts.

    You can't "pull out" of a Kickstarter for a loss; it's not an investor relationship. Sure, you can decide to pay them, then decide not to pay them (but only if the project is ongoing), but once the Kickstarter ends, it's done: you've paid them, they get your money, and you have to trust them to deliver the goods.

    If there's a "panic" and people start pulling out of Kickstarters know what happens? Nobody loses any money because the project doesn't get funded and the creatives just don't do the project. You can't put in $100, then decide later you don't want to do it and only get back $20. Kickstarter is the check and balance system that the dot.com era needed to prevent a bursting bubble.

  • right now kickstarter is in the idealistic phase. you give money to people you don't know with great expectations. it doesn't take many silver tongued con artists to put a dent in those expectations. then the cynicism kicks in (no pun intended)

    don't get me wrong, i love kickstarter, but this is the romance period, and after awhile people might become more jaded

    i hope not, really, i hope not. and maybe eventually we can invent extra trust building methodologies to give people more confidence when they give

  • by Heliosphere1 (2620037) on Monday May 07, 2012 @05:44PM (#39921205)
    A while ago I started developing an indie Elite-like game (yes, it runs on Linux...). I'm funding it out of my personal savings (scary...) but I've had Kickstarter recommended to me by a number of people as a funding alternative. I know very little about it. The indie oriented spirit of the place looked nice enough. I've seen other projects in the genre I'm developing that aren't as far along as mine raise significant funding on Kickstarter, but I've held off because of a few things that are unclear to me. For one, if I funded the development of my project in this way, what happens if something prevents the project from being completed? The Kickstarter info says there is no guarantee that a finished product will be produced, so nominally "nothing happens", but there are large risks involved with developing an indie game with its own custom engine from scratch. Many start, few succeed. I think I would find it quite ethically difficult to live with if I accepted people's money to make something, and for whatever reason wasn't able to complete the project to my or their satisfaction. Even if it is only a small amount from each person, I'd end up feeling pretty miserable if they paid it expecting a finished project which never came to pass. I was never able to find any info about whether a mechanism exists to return funding if projects cannot be completed.
  • by blahplusplus (757119) on Monday May 07, 2012 @05:49PM (#39921271)

    ... projects were successful to begin with. There is a lot of negative gamer sentiment that many beloved older games and genre's stopped being produced by big publishers because the publishers deemed they were 'dead' or they just wouldn't yield the kinds of profits they want to keep shareholders happy.

    It doesn't help that many modern games have been butchered (in terms of functionality, LAN, etc) or chained to DRM and always online connections.

  • by DragonWriter (970822) on Monday May 07, 2012 @06:00PM (#39921453)

    That implies there's a bubble. Direct financing of projects is the future, not a fad.

    Future vs. fad is irrelevant. You can't have a bubble burst because Kickstarter sponsorships aren't a tradeable commodity, so people turning off of the Kickstarter model won't burst anything. There's no market for there to be a bubble in.

    If people stop sponsoring through Kickstarter, you'll just have a reversion to people actually having to take a business plan to people who will most likely demand debt or equity stakes in the business to raise capital to launch a new consumer product business (or to expand an existing business to a new consumer product using funds other than the profit of the existing business.)

  • Ogre! (Score:4, Insightful)

    by khasim (1285) <brandioch.conner@gmail.com> on Monday May 07, 2012 @06:14PM (#39921645)

    About the only thing I can see is someone else coming along to steal Kickstarter's thunder, but the idea behind Kickstarter isn't going anywhere in the foreseeable future.

    I hope it doesn't go anywhere because it is a great idea.

    http://www.kickstarter.com/projects/847271320/ogre-designers-edition [kickstarter.com]

    Kickstarter allows the developer to get in direct contact with the people who are willing to commit to his/her project. Which is GREAT in cases like the above example. Things that were abandoned long ago can be revived without having to secure millions of dollars of investment cash.

  • Re:No bubble. (Score:4, Insightful)

    by jkgamer (179833) on Monday May 07, 2012 @06:34PM (#39921855)

    You can't "pull out" of a Kickstarter for a loss; it's not an investor relationship. Sure, you can decide to pay them, then decide not to pay them (but only if the project is ongoing), but once the Kickstarter ends, it's done: you've paid them, they get your money, and you have to trust them to deliver the goods.

    ... You can't put in $100, then decide later you don't want to do it and only get back $20. Kickstarter is the check and balance system that the dot.com era needed to prevent a bursting bubble.

    While you and I might not see this as an investment, I suspect many people will. Yes, they may not be investing in a piece of the company, however, they are expecting to get something back for their money. (Is it possible to offer a portion of future profits through Kickstarter as a reward?) Kickstarter is a great idea, but I don't have faith that the general public will see it for what it really is, a good faith gamble that your project will come to fruition. How long before the media starts hyping it up and it gets perceived as the next big investment wave? How long before lawyers get involved and starting suing to get that $100 back when the promise isn't delivered? How long before the spammers/scammers/incompetents start loading it up with bogus projects? I may well be wrong, and truly I hope that I am, but I have to side with the overall point of the article and state that I believe this will be a short-lived fad.

  • Re:Insanity (Score:5, Insightful)

    by multiben (1916126) on Monday May 07, 2012 @06:36PM (#39921883)
    Some people do not ascribe a monetary value to every action they make. For instance, the other day I gave money to a charity. My ROI is 0%, but I still enjoyed doing it.
  • by Zeussy (868062) on Monday May 07, 2012 @06:39PM (#39921913) Homepage
    I got my game initially crowd funded. If you are worried about something happening to you and being unable to finish a project, that just says to me: "I am not really committed". If this game is your love and your passion, the money is to help you concentrate on this passion, and you will finish it. If it is just something you like doing, it is not really enough. If your worry is about being hit by a bus, shit happens, deal with it.

    Next up, if you are serious about crowd funding, and want to get a large amount of money (i.e enough to live on for a year or 2, hire some contractors for work outside your skill set). My 2 bits of simple advice are, build a community. Crowd funding is about getting the community to help you make a game that they want (both you and your community should be wanting the same game). Don't just put it on kickstarter I hope they come. You need a community first. My second bit of advice, is if you are an unproven games developer, build some sort of vertical slice of the game, to a high standard. (E.g. a demo of just ship to ship combat, nothing more.). This is to show case you and your team (if applicable) skills, to help build trust that you can produce this game.
  • Re:No bubble. (Score:5, Insightful)

    by nine-times (778537) <nine.times@gmail.com> on Monday May 07, 2012 @06:51PM (#39922013) Homepage

    Yeah, this premise seems biased and kind of... leading. I've seen lots of posting in the past 6 months that seems to be rooting for people to be disappointed by Kickstarter projects and for the whole Kickstarter system to fall apart. What's the deal here? Is it just someone setting themselves up to say "I told you so!" later, so that they can seem smart? Is it some kind of astroturfing?

    We've had investment firms and real-estate agents and game publishers and everyone else scamming our money for years. We keep giving them money. Game publishers put out bad games, and we waste money buying them, but that doesn't make us question whether the retail model "bubble" is going to burst. We don't say, "There are a lot of investors losing money in the stock market, and a lot of investors are getting angry. When is the stock market fad going to end?" The big difference with Kickstarter is that it's not all about giving money and control to people who are already rich and powerful.

    There isn't *that much* of a difference if I buy the latest Tim Schafer game from a major publisher and it turns out to stink, or if I fund Tim Schafer's Kickstarter campaign and get the game "for free" and the game turns out to stink. Really, there are 2 differences: (a) if the publisher makes the game first, I can read the review before I buy; and (b) in the kickstarter model, Tim Schafer probably has more creative control. Therefore, the whole thing comes down to the question, "Do I generally trust Tim Schafer to make a good game?"

  • Re:No bubble. (Score:4, Insightful)

    by Jessified (1150003) on Monday May 07, 2012 @06:58PM (#39922085)

    I think a more formal reputation system to use Kickstarter will become necessary (think Ebay).

    Similar problems happen with any online transaction. There needs to be some way to ascertain the likelihood that you will get screwed.

    Kickstarter should require verified identification for project starters, and there should be a reputation system, where people get to look at the "feedback" of previous projects (i.e. did the project live up to expectations?)

  • by lgw (121541) on Monday May 07, 2012 @07:22PM (#39922315) Journal

    I think this is the model that will survive: folks with a track record of delivering good stuff looking for funding to do something new. This gives funders both an expectation of quality, and of the history of making it on scedule (in Rich's case, well, let's just say no one will be too surprised or upset if it's very late - but that expetcation was set going in).

  • Guarantee? None. (Score:5, Insightful)

    by Bieeanda (961632) on Monday May 07, 2012 @07:24PM (#39922333)
    That's right. There is no guarantee that you will get anything out of a project you've pledged money to, even if they go fifty times over their minimum and they've promised you your choice of knit keyboard cozies when they roll off the machines. And you know what? That's how Kickstarter's designed. You're not buying anything-- you've made a pledge, a donation toward getting the project staffed and completed. Promises of goods are 100% on the project team to deliver-- Kickstarter is totally, completely unrelated to fulfillment in any way, shape or form... which is going to cause some squawking when the first big project fails after it's been funded. There has already been at least one fraudulent computer game project, with pledge levels lifted entirely from another project, and photographs of the developers' HQ stolen from an unrelated company, that has fortunately been eliminated by the Kickstarter staff.

    Bottom line is, Kickstarter isn't a storefront. If you're going to pledge money to a project, don't drop more on it than you're comfortable giving away to a school fundraiser, or a local charity.

  • re: general public (Score:4, Insightful)

    by King_TJ (85913) on Monday May 07, 2012 @08:43PM (#39923001) Journal

    Well, for one thing? I think most big investors are more demanding and meticulous with their spending/investing. They're not interested in making a big cash outlay into a Kickstarter project - because they're already funding similar things using a more time-tested, traditional model; venture capital firms. They want you to come to THEM with a solid business plan in hand, and sell them on it. They don't want to spend time on a web page, poring over all the little projects people proposed to work on.

    Kickstarter is to VC what Prosper.com is to traditional bank loans. It's an alternative way to try to round up some money.

    As for lawyers? This may upset/insult some of them to say it, but basically? Lawyers are parasites -- a necessary evil in a dishonest world, perhaps. But parasites nonetheless. Eventually, they get involved in pretty much *every* business or legal transaction individuals in society can conduct. So sure, there will be lawsuits someday related to Kickstarter projects. Will it destroy the whole concept though? I don't see why it should, any more than personal injury law destroyed businesses hiring workers to perform physical labor, or any more than divorce lawyers destroyed the concept of marriage?

  • Re:No bubble. (Score:4, Insightful)

    by tlhIngan (30335) <.slashdot. .at. .worf.net.> on Tuesday May 08, 2012 @10:19AM (#39928371)

    But that only works for repeated transactions. Due to the types of projects Kickstarter is trying to fund, I person will probably only have a few projects in their lifetime. I do agree with the verified identity though.

    Perhaps what people need to do is realize what kickstarter is - it's crowdsourced VC funding, effectively. Except the investment you make (the kickstarter backing amount) gets you whatever is posted as the reward (or the satisfaction of knowing you contributed to society).

    Like all VC investment - companies can and do fail, or the technology just doesn't work out. It's a risk all kickstarter backers have to examine and decide for themselves if it's worth it. Though, at the very worst, all that happens is you're out the money.

    Good projects will do a whole investor prospectus as if they were soliciting VC funding. The only difference is, after a project has raised enough funds, kickstarter still lets you contribute. It's a good time then to talk to the people behind it - if they're responsible, they'll reply back. If they decided to run away with the money, they won't.

    Anyhow, kickstarter pretty much requires a verified identity - they have to send the money somewhere! When you're soliciting many tens of thousands of dollars, that sort of thing is also scrutinized by the feds - money laundering and the like.

    Perhaps a different way would be for kickstarter to offer the money with milestones like traditional funding sources - you get a chunk of change to get started, then meet a milestone and people can decide if they've met it and release the money for that milestone, etc.

"If that makes any sense to you, you have a big problem." -- C. Durance, Computer Science 234

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