Comment of the Week: Kickstarter — All Risk, No Control

Earlier this week, Game Front’s Ron Whitaker explained why he’s done backing projects on Kickstarter. His editorial sparked quite a bit of discussion amongst our readers, with arguments made both in favor of his argument and against it.

This week’s top comment comes from Game Front reader R.J., who expounds on how Kickstarter lets backers assume the risk of a traditional investor, without the degree of control that would normally come with it. He writes:

“What is said in this article is exactly why I haven’t contributed to any projects. I genuinely admire the attempt to fund something that might otherwise find funding, but the fact is that somebody is getting a business opportunity without having to meaningfully share in the benefits, as they would with traditional funding. You might get some swag or a copy of the game, but that is about it. Yes, a publisher or even some bank that gave a loan to an indie developer takes a risk, too, but like Ron said, they have some manner of control, and they stand to profit if the project succeeds. Some projects do a better job than others as far as keeping people in the loop, but you’re probably not going to get too much communication with that $100 pledge.

“Take the Broken Age example; if a developer said to its publisher, “We’re eight times over budget, and we still need more money in order to finish the game,” you can bet that the publisher would sit down with the dev leads for a long discussion. In fact, it never would have gotten to that point because the conversation would have occurred well before then, but the folks that pledged are supposed to just accept that somebody as experienced as Double Fine apparently had no clue how much it would cost to make the game.”

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9 Comments on Comment of the Week: Kickstarter — All Risk, No Control

Chris

On July 8, 2013 at 7:42 am

But that’s the point isn’t? This is an investment, one that you know going in will net you little in return, so you need to make sure that you KNOW what your investing in. I saw the Double Fine game and determined that either they were gonna make a mediocre game or feth it all up, so i didn’t invest. And I’ve done this with alot of investments that people say i should go with, such as the LFG game that the LFG comic guys are making. it looks like its going to just be a 4 player co-op with LFG character, but it really brings nothing new to the table, and i don’t trust the people with making a game.

To date the only game I’ve become emotionally invested in is Star Citizen, mostly because i trust Chris Roberts, i love space sims, and i want to crowd fund a game that publishers said has no chance of becoming a thing.

Michael

On July 8, 2013 at 8:43 am

@Chris:

“This is an investment, one that you know going in will net you little in return”

No, it’s NOT a freaking investment! It’s NOT going to give you a return, period, you money will not appreciate no matter how many successful projects you back. It’s a PURCHASE. You’re BUYING something. You’re buying something that you may or may not see in the future.

People need to stop describing Kickstarter as an investment platform, because that is 100% not what it is. When your $5, $10, $20… has a chance to give you a return beyond the product that you’re backing, it will be an investment.

R.J.

On July 8, 2013 at 12:53 pm

@Michael

Exactly. I said something similar to what you said just now in response to a follow up article regarding Broken Age. I completely agree that this is not an “investment,” and it is inaccurate to view it as such. Getting some swag and fuzzy feelings is about as much as you get from donating to charity, but even then you can at least get a deduction on your taxes. Just because the money happens to be going to a business doesn’t make it an investment. It’s fine if people want to give their money to these projects, but that is all it amounts to, just giving them money. Investments share in both the risks and the rewards, and usually come with the added bonus of some measure of control and/or protection for the investor. That sort of thing isn’t present with Kickstarter.

Ron Whitaker

On July 8, 2013 at 1:58 pm

@Michael – You’re not actually buying anything, either. You’re pre-ordering a game that may or may not be released in the long run. Kickstarter offers no guarantees for your money.

CatmanStu

On July 8, 2013 at 2:26 pm

I wouldn’t describe it as investing, purchasing or pre-ordering. When you look at the facts, that you give money on the CHANCE that you will get a decent return; something that you value equal or more than the original stake; it sounds far too much like gambling to me.

folklore

On July 8, 2013 at 3:58 pm

I honestly see it more as a donating more than anything. You donate to the company because you think it has a good idea, and that it can make the idea into reality. In return for supporting a company you might get a copy of the product and maybe something else. As it stands i believe in being very cautious about who your giving your money to, and doing research on the people behind the company. More than once a project i thought looked good fell through, before i even clicked on the pledge button.

Unfortunately Kickstarter is suffering from a rather large amount of controversies right now, which mostly deals with kickstarter not vetting things.

Chris

On July 8, 2013 at 9:34 pm

Maybe i misused the term investment, but I still stand by my argument. you throw money at something and then get angry that it failed. you still need to do research, like an investment, you still need to spend money on something hoping for some future return, like an investment, you can see where this is going any i used the word. So would one of you mind telling me what word describes this that isnt investment? because im not donating anything(who donates expecting something back?), and im not buying a damn thing (because it doesnt exist), so what the sam hell am i doing if not investing?

Michael

On July 9, 2013 at 12:22 am

@Chris

Who was angry? And how, exactly, can you do any real research about a Kickstarter project? I mean, I suppose for some of the larger projects you can do a bit of looking into about the people involved…but how much did that mean when it came to Double Fine?

That’s the problem. Kickstarter doesn’t demand any real sort of transparency by those looking for funding. Let me ask you this…just what research have you done when backing projects? Have you demanded a clear plan when it comes to money? I can’t see anywhere that Double Fine provided such a thing. Where were their costs? Where did they think the money needed to go? How did that compare to a typical game of a similar caliber? How much cushion did they give themselves? Heck…as I’m typing this, I can’t even get an update on their revised plan because the article that tells us that is behind a paywall. So much for transparency. Let’s also not forget that the game itself is TEN times over budget now, as they expected that they needed $100,000 to make a documentary about the making of the game.

If you think what you’re doing on Kickstarter is investing because you’re not receiving an immediate payoff, then you don’t understand Kickstarter OR investing. Investments are meant to appreciate in value. You put money into something, aquiring a risk in return, in the hopes that said money will turn into an even bigger amount. That’s not what KS is. You’re, at best, pre-ordering a game. If you walk into Wal-Mart or Best Buy, and plop down $5 bucks on a pre-order you’re not receiving anything immediately either. But that’s sure as heck not an investment.

It’s a purchase of potential. The return you’re hoping for is, generally, nothing more than what you would otherwise get if you waited and simply purchased the game on it’s release. That’s NOT investing.

chris

On July 9, 2013 at 7:36 pm

a purchase of potential….i need to use that more often.

In terms of double fine, or any kick-starter asking for more than 35K or getting far more than they wanted, i looked to see if they had any experience of producing a game without a publish, if so how recent it was and how the game was rated. When i first heard of double fines kick-starter it had already exploded, and i determined they didnt have sufficient experience for me to trust them.

Star Citizen, the kick-starter i look most forward to, had Chris Roberts, who might as well be a PC gaming God. He founded Digital Anvil which slammed out Freelancer, one of my favorite games, and Starlancer. So he knew how to work a budget for Video Games. So while he may suck at movies, he does well with games, and i gave him my money.

If someone who has no experience making games is asking for more than 35K, and they have no record i can find of budgeting other things, like movies, then i dont invest. Primary reason i havnt done anything with the LFG Comic game. Like the comic, dont trust em with my money.

Also so we can clear this up, i always defined Investment as me putting something into something else for a greater return in the future. be it money, time, or what have you. I put my money into XXX Kick-starter, expect entertainment in return that will exceed my money investment, which is determined by me.