Your Move? Kickstarter and the Evolution of Game Crowdfunding

The global recession hit the game industry hard, forcing developers to find new ways to fund their games. Crowdfunding has become a viable alternative, fueling a renaissance across all forms of game development. But like other kinds of crowdsourcing, crowdfunding is only effective as long as the crowd believes in supporting it. Will Kickstarter's high profile failures cause gamers to seek new crowdfunding models?

[h=3]The Crowdfunding Landscape[/h]Kickstarter isn't the only crowdfunding platform but it's one of the most popular, particularly with game developers:

Gaming start ups receive the most money, according to GameSpot. The games category on Kickstarter is the biggest overall in terms of dollars pledged. Since launch, people have pledged $215.75 million to gaming-related Kickstarters, with $189.84 million of those dollars going to successful campaigns. Gaming projects on Kickstarter have a success rate of 35.15 percent, the fourth-worst overall, only behind technology (34.79 percent), Publishing (32.29 percent), and fashion (29.3 percent).

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Jeffrey Dufseth, one of three developers and owners at http://Houserule.com, said:

Tabletop gaming isn’t just a niche market, it’s about a dozen niche markets. Many gamers play a variety of games, but some only like dungeon crawls, story games, crunchy games, or collaborative games. Others only play one system or another. Crowdfunding is important because it matches up the products with the people interested in them. Investors will often desire a mass appeal, and crowdfunding allows truly creative and possibly experimental games to see print. This creativity is important for the players as well as the future of the hobby as a whole.

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As of September 15, Kickstarter was cresting $2 billion in dollars pledged to 92,438 successfully Kickstarted projects. 19,620 of those projects were games, with $355 million successfully pledged and $40 million unsuccessful. This puts the games category at 33 percent success, which beats out technology (20%), publishing (29%), food (26%), fashion (24%), photography (29%), journalism (23%) and crafts (24%). Of those failed 12,765 game projects, 1,535 were never funded at all.

Tabletop gaming is not immune to the fail rate that plagues the gaming category on Kickstarter. Erik Tenkar succinctly shares that the path of good intentions is littered with broken dreams:

The most famous failure that I personally backed is probably Mike Nystul's Trio - Axes & Anvils, Infinite Dungeons and Cairn. Blow the money on office space, staff and a failed con - leave none to actually fulfill the Kickstarts that were funded. Mike's communications were full of lies. Mike is far from alone.

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Tenkar references Mike Nystul's three failed Kickstarters, which BoardGameGeek summarizes:

This is really a rather old tale of how too-rapid growth can kill a company. The new twist in the crowdfunding era is that you no longer necessarily control how fast your company grows – and, for the ill-prepared, scrambling for stretch goals can leave you in the lurch when you later realize how expensive those can be.

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Tenkar's list of failed RPG Kickstarters is long: Myth & Magic, Quantum Roleplaying, and Appendix N. I can add to the list Miniature Sea Monsters, Dungeon Furniture and Big Beasts. In every one of these cases, all the Kickstarter comments section are filled with references to lawsuits and demands for money back. Some of these Kickstarters are years past their fulfillment dates.

Why are these Kickstarters failing?
[h=3]Manufacturing: It Ain't for Everybody[/h]
One of the challenges of the new crowdfunding model is how it can sometimes skip distributors and retailers, requiring project creators to work directly with manufacturers. This is a specific issue for tabletop games, as miniature and board games live and die by their components. Jonathan Wilson shared lessons learned as he fulfills two Kickstarters (I'm a backer of both Tabletop Props: Covered Wagon and Tabletop Props: Tent), and his experience is illustrative of the challenges the industry faces as a whole.

The first lesson Wilson learned was that he needed to work out gaps in communication with a factory in a different part of the world. There are language, cultural, and time zone barriers that must be overcome:

The factory and I are in opposite time zones. This means they don’t even get to work until about 8pm my time. If I’m lucky, they’ll respond to my emails as soon as they show up to work, which means I’ll get the first correspondence by 9pm. If I immediately reply, we may be able to start a conversation, via email or Skype, but that usually didn’t happen. Most often, I would wake up in the morning and hope they responded while I slept. Imagine a conversation where you can only ask one question and get one reply, once a day (if you’re lucky).

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There are also challenges with security:

Internet security overseas isn’t quite up to our standards, you have to be careful. Their email account was hacked, they watched and waited. As soon as payment was communicated, the hackers jumped in. They intercepted emails, replying to mine as the factory, using the same verbiage, same name, same email address, same signature. It all looked legit, but something just didn’t sit well with me. They messed up a few times and I called them on it, literally. I called the factory, verbally spoke with my contact, and exposed the compromise to their security. This was a minor delay, but a scary one.

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Complicating global Kickstarters is the fact that miniatures are considered toys in some parts of the world:

When I launched the Kickstarter, I was still thinking of my product as a “miniature”. When I started researching packaging, testing, tariffs and such, I learned my product is technically a “toy”. Being a toy has a lot of problems. The legal testing and packaging regulations are second only to consumables. Of course, there is no standard for any of these regulations, almost every country is different.

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Wilson's Kickstarters are progressing nicely, but the same can't be said for everyone who is far less forthcoming about their Kickstarters' progress (or lack thereof). There are plenty of other challenges too: time, management of funds, and the mental health of the creator who juggles other obligations.

A Kickstarer project that I contributed to for Jeffrey Thomas' Punktown encountered many of these same issues. The text was written by a team, including myself, but there's more to a book than just text; layout, graphics, and production require the cooperation of a lot of other folks. It's over two years late but progressing well.

Fred Hicks, Co-President and Founder and Carrie Harris, Marketing Manager, at Evil Hat Productions, said of the Kickstarter model:

It’s a model that has worked well for us. But as consumers, we’ve also been burnt by Kickstarters. They’re incredibly complicated to run, and it’s easy to stumble into problems if you’re not prepared. Since the start, we’ve made it our policy to be as transparent as possible with our crowdfunding efforts so that others can learn from our successes and our mistakes. More successful crowdfunding means we all win, so we’re in support of that.
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Perhaps the worst thing that can happen to a crowdfunded project is reaching its goals. The Doom that Came to Atlantic City is a dire story of what can happen to game developers when things go horribly awry.
[h=3]The Doom That Came to Kickstarter[/h]
The Doom that Came to Atlantic City was a Monopoly-inspired game that, like the much more popular Cthulhu Wars, put the player in the role of a Great Old One destroying the Earth. It was launched as a Kickstarter by The Forking Path on May 7, 2012 and concluded on June 6, 2012 well over its $35,000 goal, surpassing $122,000:

The Doom is a labor of love and terror from three exceptional talents. It is the brainchild of artist Lee Moyer, inspired by his love of the Cthulhu Mythos and disdain for a certain board game that shall not be named. Game designer Keith Baker is best known for the Origins Award winning card game Gloom, and he brings the same dark sense of humor to the devastation of Atlantic City. Keith and Lee have enlisted the help of their friend Paul Komoda to design some of the more eldritch visual elements of the game. His talents can be seen on-screen in the prequel to John Carpenter's The Thing and Cabin In The Woods. He brings that vision and long association with H. R. Giger to his designs of the Great Old Ones.​

The Kickstarter's promised rewards never materialized. Worse, by The Forking Path principal Eric Chevalier's own admission, the Kickstarter wasn't funding a game, it was funding the company to LAUNCH the game:

From the beginning the intention was to launch a new board game company with the Kickstarted funds, with The Doom that Came to Atlantic City as only our first of hopefully many projects. Everyone involved agreed on this. Since then rifts have formed and every error compounded the growing frustration, causing only more issues. After paying to form the company, for the miniature statues, moving back to Portland, getting software licenses and hiring artists to do things like rule book design and art conforming the money was approaching a point of no return. We had to print at that point or never. Unfortunately that wasn't in the cards for a variety of reasons.

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Keith Baker responded on his blog:

When Lee and I first heard this news from Erik, it came as a shock. We’ve been working on this game for over a decade. In 2011 we had it ready to go to the printer with Z-Man Games, until a change in ownership dropped it from production. Based on the information we’d been receiving from the Forking Path we believed that the game was in production. It’s a personal and financial blow to both of us, but what concerns Lee and I is that people who believed in our work and put their faith in this Kickstarter have been let down... Lee and I don’t know exactly how the money was spent, why the backers were misled, what challenges were faced or what drove the decisions that led to the cancellation of the game. Not only did we not make any money from the game, we have actually lost money; as soon as we learned the true state of affairs, we engaged a lawyer to compel The Forking Path to come forward to the backers and to honor its pledge to issue refunds.

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Baker made it clear that he and Lee Moyer received none of the funds raised by the Kickstarter and promised to produce a print-and-play version of the game at no cost. As for the fact that Chevalier created a company, not a game, with the funds:

The company I started was meant to provide a framework for supporting The Doom that Came to Atlantic City with how-to-play videos, supplementary add-ons, and general customer support. The software licensed was needed to process art for press and do layout of elements such as the rulebook. The laptop used to edit the original pitch video could barely handle the high resolution files from the game's creator, so I upgraded to a desktop computer that could deal with it. The move back to Portland from California was multi-pronged, but mainly in order to work in a less expensive and more supportive community that I felt would benefit the company, and by extension its customers, in time. Whether or not you think every cent should have gone to the printer and creators, and none to the publisher, it takes money just to get a project like this ready and build the framework that will keep it going after release. My hope was to one day use that framework to support additional games and allow the company to grow, just like any other business venture, but "The Doom" was first and central to the idea of the company. Without it The Forking Path ceases to exist. I put every effort into making this work and am more frustrated than anyone with its failure.

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Doom is particularly noteworthy because it's the first board game in which the Federal Trade Commission got involved:

Under the settlement order, Chevalier is prohibited from making misrepresentations about any crowdfunding campaign and from failing to honor stated refund policies. He is also barred from disclosing or otherwise benefiting from customers’ personal information, and failing to dispose of such information properly. The order imposes a $111,793.71 judgment that will be suspended due to Chevalier’s inability to pay. The full amount will become due immediately if he is found to have misrepresented his financial condition...The Commission vote authorizing the staff to file the complaint and proposed stipulated order in federal court was 5-0. The case was filed in the U.S. District Court for the District of Oregon, Portland Division.

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It's not just board games that have drawn attention from state officials. Washington State Attorney General Bob Ferguson filed a lawsuit against Ed Nash and his Nashville, Tenn.-based company, Altius Management over the company's failure to deliver on a retro-horror-themed set of playing cards titled Asylum. Of the 810 backers, 31 reported that they live in the state of Washington and the state's attorney general brought the suit on behalf of those constituents.

Chris Rowlands, host of the podcast NPC Cast, said in an interview:

Kickstarter specifically has grown up with board games and tabletop games in general have driven the evolution of the platform. It isn’t without growing pains though. An increase in backer expectations is both a symptom and a reason for the growth of Kickstarter, and I am glad that the industry is beginning to be looked at and regulated a bit more with the focus on the consumer.

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The Asylum lawsuit was the first of its kind. It certainly won't be the last.
[h=3]Spoiling the Potato Salad
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There's lots of entrepreneurs trying their hands at Kickstarter. But what happens when projects are successfully funded that shouldn't be? Two Kickstarters illustrate the fickle nature of crowdfunding: the Emperor's New Clothes and Potato Salad.

The Emperor's New Clothes by Game Salute, a tabletop game netting over $6,000 from 280 backers, was created as commentary on the flaws behind the crowdfunding process:

It was also a social experiment about Kickstarter, a collection of essays about game design, a trial-run for me in running a Kickstarter campaign and working with Game Salute, and a lesson for me in unintended consequences.

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To illustrate their point, the entire set of game components was blank. The "lesson of unintended consequences"? The game-that-wasn't-quite-a-game was late.

Potato Salad wasn't even a game. It was...a guy trying to crowdsource potato salad. It netted nearly 7,000 backers contributing over $55,000.

For a potato salad.

It was also a turning point for Kickstarter:

This, of course, is not what Kickstarter is set up to do, and until recently the company vetted campaigns, looking for rigorous, serious fund-raising projects. Some donors have used Brown’s potato-salad goof as a way of critiquing the new free-for-all feel of the platform or to mock the tone of Kickstarter campaigns in general (which have been mounted by small-timers and movie-making celebrities alike). The more famous the project became, and the more objections that were raised by those who were befuddled or miffed by its success, the more money it earned.

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Potato Salad spawned a host of imitators hoping to make a quick buck. As one commenter put it:

Isn't Kickstarter worried about credibility after a project like this. I search "potato salad" on kickstarter and came up with over 200 copy cat potato salad kickstarters... Why is there no regulating these projects? I saw a kickstarter the other day for drawing the worlds largest p***s. Cmon, it's a slap in the face for any serious creators out there and muddles up the credibility of having a Kickstarter.

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Obsidian Entertainment's Chris Avellone expressed similar concerns about Kickstarter's high profile failures to Time:

I worry about someone else failing. To quote Archer when something bad happens: “This is why we can’t have nice things.” While I’m confident in Obsidian being able to deliver a quality title, it only takes one other Kickstarter developer to ruin things for everyone else and cast doubt on the donation process going forward. We sure as hell aren’t going to drop the ball, but Kickstarter is still in its near-honeymoon period and there’s still plenty of room for failure in the future.

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Shannon Appelcline echoed Avellone's concern in Designers & Dragons:

Meanwhile, I’ve been waiting for the inevitable Kickstarter bust to follow the Kickstarter boom. I was pretty certain that it was going to hit when Kickstarters started to fail to deliver. However, we’ve now had some pretty big, openly acknowledged failures like The Forking Path’s The Doom That Came to Atlantic City! and James Maliszewski’s Dwimmermount — with many more Kickstarters like e2 and Nystul’s Infinite Dungeon hanging about in limbo … and I haven’t seen the repercussions that I expected. Mind you, the individual creators have been taken out to the woodshed, but there still seems to be faith in the Kickstarter system. This may still be a bomb waiting to explode, as Kickstarter’s requirement for creators to list “Risks & Challenges” is so toothless as to be laughable … but I have more faith in Kickstarter continuing to work than I did a year ago.

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High profile failures have become enough of a problem that Kickstarter finally responded when NPR asked what the company was doing about the high-profile cases of failed fulfillment:

We look into projects reported by our community for guidelines violations and suspicious activity, and we take action when necessary. These efforts are focused on fraud and acceptable uses of Kickstarter, not a creator's ability to complete a project and fulfill. On Kickstarter, people ultimately decide the validity and worthiness of a project by whether they decide to fund it.

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It's a good thing too, because the FTC has promised that the Doom that Came to Atlantic City case is just one of many as part of the battle to manage new financial technology:

This case is part of the FTC’s ongoing work to protect consumers taking advantage of new and emerging financial technology, also known as FinTech. As technological advances expand the ways consumers can store, share, and spend money, the FTC is working to keep consumers protected while encouraging innovation for consumers’ benefit.

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Doug Davison, President of SmiteWorks, spoke about crowdfunding risk in an interview:

What we need to filter out is people who use KS to basically defraud backers. Hopefully the regulations will stay focused on those people. I've backed a lot of Kicstarter projects personally and it's safe to say that I've been disappointed in a few of them. I would still back them if I had it to do all over again, though, because I like the idea of supporting people who are giving their best effort -- succeed or fail.

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Crowdfunding has become a lot more complicated since Kickstarter debuted, but in a new era modeled after software startups, creators sometimes launch first and figure it out as they go. This might work fine for angel investors who understand the risks, but for the tightly knit gamer community it's a model that is in danger of losing its credibility. Tim Roven of Tabletop Audio spoke of crowdfunding's gray area between pre-ordering and investing in an interview:

When you invest, it’s understood that there are inherent risks, however, people don’t associate pre-ordering with any risk at all. I think Kickstarter is making some positive moves to mitigate some of the more publicized recent failures. Crowdfunding in general is still a great tool that allows companies to afford the huge upfront costs of producing and manufacturing physical goods.

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Mike Mearls, Senior Manager for Dungeons & Dragons at Wizards of the Coast, looks at Kickstarter contributions as donations, not investments:

I think crowdfunding is a great concept, and I also think it’s good that people overall are developing a better sense for what’s realistic in terms of projects. Personally, I don’t use Kickstarter anywhere near as much as I used to. My personal approach is this – someone is asking me to invest in their startup, but without selling me an ownership stake. Instead, they’ll send me some product as a thank you for my donation. Am I OK with that?

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With over 50 Kickstarters with FTC complaints, it's perhaps no surprise that gamers are beginning to look elsewhere to fund their games.
[h=3]Crowdfunding's Next Evolution?[/h]
Some of the criticisms leveled at Kickstarter -- the failure of successfully crowdfunded projects, the lack of accountability -- are addressed by an older funding model with a new platform, Patreon:

The online service Patreon is aiming to change that by connecting fans and creators to form long-lasting relationships that are based on supporting the artist, not trying to raise funds for individual projects that may or may not get made. Patreon works sort of like Kickstarter in that fans pledge money, but they support their favourite creators rather than specific projects. Patreon users commit to monthly payments to artists or agree to help fund ongoing artistic work and in return receive various rewards. Like Kickstarter, most Patreon campaigns have different tiers of support funding and offer perks for each tier. The levels of funding vary from artist to artist, but usually there is some basic level of support, such as $1 per month, and tiers that plateau in a pricey premium level that often offers access to the artist or unique rewards. It turns out membership does have its privileges.

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Patreon minimizes risk by putting the onus on a creator to produce. Glenn Peoples at Billboard explains the shift:

Six-year-old Kickstarter, perhaps the best-known crowdfunding site, received $529 million from 3.3 million pledgers in 2014 alone. GoFundMe, IndieGoGo and other crowdfunding services have also become popular platforms for raising money for single projects like albums, tours and medical bills. Patreon is different. It lets fans provide ongoing financial support for creators of small things like songs, podcasts, videos and drawings. Patrons give money either per "thing" or per time period (a week or month).

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Benjamin Loomes, Half-elf Bard/Paladin and Creative Director of Syrinscape, supports a similar approach to crowdfunding:

Patreon is very useful as the support is continuing and people can help content creators plan for the future and deliver a continuing stream of excellent material. Patreon is something that the Dicestormers are very interested in, and Syrinscape’s own version of Patreon – the Syrinscape Subscription, is one of the best ways that Syrinscape users and fans can support our company, now and in the future, helping us to continually create amazing content, to make tabletop gaming the best experience we can possibly make it.
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Tabletop Audio has nearly 200 patrons contributing over $450 per month. Tim Roven explained:

I’m a big fan of Patreon. It’s perfect for content creators like me who don’t need to raise funds for manufacturing or production. It allows people to become patrons of creators, to support them with, in my case, monthly donations. It’s great to be able to count on these donations to defray my increasing hosting and bandwidth bills.

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Evil Hat Productions is also doing well on Patreon, with over 700 patrons contributing over $4,000 per product:

After we put Fate Core out into the world, we heard from a lot of people who wanted a little help starting campaigns and building adventures, and we’ve always been excited to show all the things this system can do. So we launched our Worlds of Adventure Patreon campaign in early 2014. We started releasing them in earnest last summer, and we were so happy with the results that we’re moving as many of them as possible into print. We don’t see that as replacing our crowdfunding efforts, though. It’s our goal to give people a variety of options to access our games and to add value to every one.

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My own Patreon enabled me to quit the Examiner content mill. And of course there's EN World, which has its Pathfinder publication, TRAILseeker (146 patrons at $377 per article) and Fifth Edition D&D publication, En5ider (825 patrons at over $2,000 per article).

Patreon's growth is startling. As of June 2015, the site averaged more than 15,000 creators signing up and 16 million pages views per month:

Google Trends shows an increasing number of people are heading to Patreon. In the last 12 months, Patreon's Google search traffic has roughly doubled and, in the United States, has gone from 77% below Indiegogo' traffic to 5% above it. Although it has made gains on Kickstarter, Patreon has only 7% of its bigger cousin's global traffic.

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Crowdfunding models leverage the strengths of the Internet: speed, access, and individuals making it big through the support of the crowd. We seem to be in a sort of grand social experiment as the crowd -- us -- learns what level of risk we're willing to tolerate in pursuit of an awesome game. Kickstarter may be here to stay, but if the growth of Patreon is any indication we can expect more contributor-to-artist models in the near future.

Mike "Talien" Tresca is a freelance game columnist, author, and communicator. You can follow him at Patreon.