Crowdfunding and the Indie Video Game Revolution

Indie Gaming is a big freekin’ deal right now.  Popular games are being developed by hobbyists and small shops now more than ever.  iOS and Android are ubiquitous and provide a pretty low barrier to entry for anyone interested in developing games.  Major games are making their way onto the App Store in droves.  Even the consoles are becoming more developer-friendly, as Xbox’s Indie Games marketplace suggests.

Many games are free or very low-cost, a welcome change of pace for an industry that typically charges $60 and up for discs.

Crowdfunding has already been a big player in the gaming space.  Ouya raised $8.6 million for what is essentially a large form factor, gamer specific Android device.  It wasn’t the first big crowdfunding success for gamers, but it is by far the biggest to date.  Kickstarter has  been good to game developers, too.  Lyneka Little @ Young Entrepreneur probably said it best: “Want to raise $1 million overnight? Post a new videogame project on Kickstarter.”

Enter Gambitious, a crowdfunding platform for video game developers based in Europe.  Gambitious made waves this week when it announced that Firefly Studios was going to be using their platform to crowdfund Stronghold: Crusader II.  They hope to release the new game in the second half of 2013.  RTS fans rejoice!

As of right now the Gambitious page for the project is “coming soon,” but it should launch later this month.  Lead Designer Simon Bradbury had interesting things to say regarding Firefly’s selection of Gambitious for the Stronghold: Crusader II Project, including why they passed on Kickstarter and Indiegogo:

When the suggestion of crowdfunding was made, the first thing we did was look for a European platform to host the project. The Stronghold games have always been popular in Europe, particularly in Germany where the original game outsold Grand Theft Auto 3 over the Christmas period in 2001. So when Gambitious was suggested to us by some old friends it seemed like a perfect fit.

The design of the Gambitious crowdfunding campaign also suits us better. We’re a small developer without the resources or funds to give away huge numbers of physical rewards for pledges – We certainly can’t afford to give away as much as Double Fine! But that’s alright because we’re more focused on digital rewards and community stuff, so the limit of five rewards tiers works well. The ability to extend the campaign beyond one month is also great, given that we’re a small outfit that takes a bit longer to spread the news. We did consider websites like Kickstarter and Indiegogo, but I think these are going to be the first of many such platforms.

The questions remains whether or not equity crowdfunding and video games will be mutually beneficial.  There is no doubt that game copies and game swag have been a driving force behind offerings in the space so far.  Will video game enthusiasts pledge money to video game projects in exchange for a cut of the profits?  Gaming is set to be a $70 billion industry by 2015, so an astute investor should probably keep an eye on it.  Profit margins for successful games can be huge.

Indie game devs aren’t the only ones dipping toes in the pool.  Even Electronic Arts is in on the hype.  If you can crowdfund a video game and have it ready to ship, EA is going to give you 3 months of free distribution on their platform, Origin.  Smart marketing, no doubt, but we expect nothing less from EA.  That is to say nothing of how it is received by the gaming community.  EA isn’t the most loved developer on earth.  Exhibit A: Google Image Search.  (Not really suitable for work, but hilarious nonetheless.)

EA’s approach highlights a greater debate brewing in the space.  Piracy is a pain in the ass for game developers, but to be fair purchasing games is a pain in the ass for gamers as well.  Xbox Live Arcade may be the best example of a happy medium.  Xbox charges a yearly subscription of $55 plus $12 per title.  Payment is handled through Xbox Live accounts.  The simple pricing structure and checkout has worked well for Xbox and many of their developers.  Some competing platforms require constant internet access to verify ownership or require the player to enter a 24 digit code, which isn’t a fun task on a standard game controller.

The way games are bought and sold may be a prime target of both equity and non-equity crowdfunding going forward.

What do you expect from the gaming industry?  Will they be successful?

Other sources:
http://www.gamepolitics.com/2012/04/20/gambitious-crowdfunding-games-dividends-investors
http://arstechnica.com/gaming/2012/05/how-is-crowd-funding-shaping-the-gaming-ecosystem-ars-communities-discuss/
http://www.strategyinformer.com/news/19658/firefly-studios-announces-stronghold-crusader-ii-for-pc-in-late-2013


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