Let's Not Jump To Conclusions About Kickstarter-Funded Games Just Yet

Has Tim Schafer changed the gaming industry? It's a question I've seen on more than a few message boards and Twitter feeds over the past 24 hours, following the Grim Fandango creator's announcement that his company Double Fine will use crowdfunding website Kickstarter to finance a new point-and-click adventure game.

The project has found astronomical success, shattering several Kickstarter records and earning roughly a bazillion dollars in less than a day. Since the money comes from fans, not investors, Schafer and Double Fine retain creative control. They don't have to answer to a publisher. It's the type of position that developers daydream about, the type of success that many other game designers would presumably love to emulate.

So will other studios follow suit? Is this really a game-changer? I spoke to Darius Kezami, a developer who has been working in the gaming industry since 2005, to clear up some of the smoke and help erase some misconceptions about game funding.

"This kind of thing is only going to be a game-changer for a specific kind of project for a specific kind of studio," Kazemi said in an e-mail. "The Kickstarter model is going to be a game-changer for established studios with a huge fanbase who want to move to smaller projects and break out of the publisher/developer cycle. But it's not going to change the world for everyone."

Not everybody has the type of brand power associated with somebody like Tim Schafer, Kazemi points out. As the mind behind beloved games like Grim Fandango and Day of the Tentacle, Schafer has already established his clout as a designer of point-and-click adventure games. Plenty of fans were willing to put their faith in his name (and the name of Monkey Island creator Ron Gilbert) alone. For indie developers or even bigger companies without Schafer's track record, this kind of success would be impossible.

Which leads into another question that gamers have been tossing around: Why would somebody as established as Schafer have to use Kickstarter in the first place?

"One of the main misconceptions that I've seen on Twitter today is: 'Well, if you're an established game company, the revenues from previous games should fund your next game,'" Kezami said. "The thing is, that's the exact opposite of how it works in real life."

"That's the exact opposite of how it works in real life."

In order to make a big game, Kezami says, a developer needs to raise funding. To do this, a development studio will typically pitch ideas to a publisher, which will then front the money in hopes of making it back through sales. Once the publisher has earned back all of the money it invested, the developer starts getting a cut of the profit -- a very small cut.

"There are dozens of variations on this, but that's the basic setup -- a deal that vastly favours the publishers," Kezami said. "And any publisher would argue that it makes sense, since the publisher is the one taking on all of the risk."

So even if a company like Double Fine hit huge numbers on games like Stacking and Costume Quest (both published by THQ), it wouldn't make much of a profit. Certainly not enough of a profit to fund its next game.

"The point is that even if a game from an established developer sells respectably well, the developer usually does not see any money at all beyond the money they got to develop the game," Kazemi said. "In other words, they made a game, and it's out there, and perhaps a million people are playing it -- but they have very little money in the bank, and very little money coming in, and a huge staff that they have to pay somehow.

"This is why devs often work on two or more games at a time so that while one is ramping down, the other is ramping up, and you don't have people twiddling their thumbs."

It's also why we always seem to hear about layoffs and studio closures after game launches, even when those games are successful. Kazemi says free-to-play models and downloadable content are methods that developers have used in order to try to break out of this cycle. With revenue from those sources, developers can earn money that they don't have to pay back.

"People don't realise how broken the traditional developer/publisher model is," Kazemi said. "And I don't blame them for assuming it would operate in a way that makes common sense."

Though it's premature to say Double Fine's Kickstarter adventure won't be a game-changer, it's hard to see it working for many other companies. And even successful game studios are almost always going to be reliant on deep-pocketed publishers to help pay their bills -- unless they have brands like Tim Schafer.


Comments

    Yeah, essentially publishers can't allow the developers to amass anything like capital, otherwise the publisher would be out of business basically. So they carefully enable the developer to create the one game, but not create another one. That way, the developer has to sign a new loan contract for the second game, as if they hadn't made that first, profitable, game.

    Excellent article, covered all the bases.

      With that said, I wonder what Steam (the platform which it's being released) thinks of this? Effectively, DoubleFine are selling their game completely outside of Steam, while still using Steam services to distribute, and Steam aren't getting a cut...

        Maybe Steam will get all sales not made on Kickstarter?

          Obviously Valve are OK with this. They are the ones who distribute Steam keys, after all.

          The Humble Bundles have been handing out Steam keys for a while now.

            Kickstarter is for fundraising in order to create the game, not for selling the game directly to customers.

    The points this guy is making are all very obvious, of course it's only going to work for people with a fanbase.

      Reminds me of a music critic on The A.V. Club who was talking about self-publishing music on the internet.

      Rule #1 for internet self publishing: Be Radiohead!

    The article only seems to take the viewpoint of whether this is a game changer for established companies looking to free themselves from the money vacuum of a publisher. What it doesn't seem to cover is what this means for those who are new to the industry and are trying to crowdsource their first project.

    Will we see new studios be crowded out of the ring by the heavyweights with established followings and an industry name behind them? Kickstarter allows us, the fans, the ability to play investor and decide where to put our money. If we're faced with a choice between industry legend and unproven amateurs, we're more likely to go with the established group because we feel it's safer than investing on a potential failure.

    Granted, Kickstarter's model is designed to prevent this, but I'm wondering whether anyone else sees potential problems or if this is going to actually aid people because a few celebrities are bringing the spotlight on the site and increase the number of people looking at their projects.

    It strikes me that publishers all across the board are pretty crummy - we've all heard about the contracts they have in the music industry - where you're advanced a sum of money to make your album and have to recoup the cost of that from your sales before you see any money back (a feat which must be nigh on impossible in this day and age)

    I know for a fact if you're looking to be rich don't write a book - Royalty rates are not what they're cracked up to be - if you have a mega-hit maybe but most books might make the Author 15% if they're lucky, and like the record industry there's a lot of costs the publisher wants to recoup first.

    The game industry seems even worse in that there doesn't seem to be a lot of profit-sharing going on with the studios at all - sure the publisher takes a risk funding a project but video games seems to be one of the few industries where the authors have very little rights over their work.

Join the discussion!