Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
October 23, 2014
arrowPress Releases
October 23, 2014
PR Newswire
View All





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


Valve's Newell: How About Community Financing For Games?
Valve's Newell: How About Community Financing For Games?
July 20, 2009 | By Staff

July 20, 2009 | By Staff
Comments
    23 comments
More: Console/PC



Valve boss Gabe Newell has been discussing ideas for alternative game funding, suggesting that "financing from the community" to make games is something he's "super interested in" right now.

Talking to Australian TV show Good Game, as passed on by game site Destructoid, Newell, who is co-founder and CEO of the Half-Life creator and Steam service provider, discussed the concept of community financing.

He noted: "Right now, what typically happens is you have this budget -- it needs to be huge, it has to be $10m - $30m, and it has to be all available at the beginning of the project. There's a huge amount of risk associated with those dollars and decisions have to be incredibly conservative.:

Newell continued: "What I think would be much better would be if the community could finance the games. In other words, 'Hey, I really like this idea you have. I'll be an early investor in that and, as a result, at a later point I may make a return on that product, but I'll also get a copy of that game.'"

The Valve boss concluded: "So move financing from something that occurs between a publisher and a developer... Instead, have it be something where funding is coming out of [a] community for games and game concepts they really like."

Such concepts are starting to mature in the game space. In particular, Gamasutra recently interviewed Perry Chen about his firm Kickstarter, which provides an easy to use, formalized structure for donation-based art projects of all kinds, including games.

In addition, indie game developer Daniel Benmergui (Today I Die) "is pursuing a variable patronage model for his next game" on his website -- with different amounts of donations giving rewards spanning from a mention in the game's credits to a customized version of Daniel's previous games.


Related Jobs

Nexon America, Inc.
Nexon America, Inc. — El Segundo, California, United States
[10.22.14]

Localization Coordinator
Petroglyph Games
Petroglyph Games — Las Vegas, Nevada, United States
[10.22.14]

Producer
University of Texas at Dallas
University of Texas at Dallas — Richardson, Texas, United States
[10.22.14]

Assistant/Associate Prof of Game Studies
Wargaming.net
Wargaming.net — Hunt Valley, Maryland, United States
[10.22.14]

Lead UI Engineer










Comments


Benjamin Quintero
profile image
This is an interesting prospect, but I can't imagine anyone willing to invest more than $100 on the hope to make their money back. At worst-case they will have paid $100 for a really crappy game, if it is ever completed.



I will say that it is something I'd consider for more established studios like Valve, or id Software, or Epic, etc. I wouldn't dream to give money to an unproven company or even to a product that I knew nothing about. It would require releasing intimate details of the game, which may cheapen the final experience since games rarely actually follow their design documents as planned =).



This plan may work for sequels to popular games but I can't see it for original IP. With a sequel, it's fairly easy to see the progression of the gameplay and story elements and would make that $100 investment easier to swallow. Of course at $100 per player, this would involve an investment of around 300k individuals to hit the $30M mark.



Now that I think about it, a share based approach could allow wealthier and/or more interested parties to purchase multiple shares at $100 each. Larger shares means larger return on risk...



Hmm...

Amir Sharar
profile image
Benjamin Quintero said: "This plan may work for sequels to popular games but I can't see it for original IP."



That, and perhaps games built on existing franchises. For example, there are many hoping for another great Shadowrun RPG, and many craving a Shadowrun MMORPG. This fanbase can be utilized.



If this idea was ever entertained, I would think the first sort of games that would be prime for such a setup would be Japanese games that are under consideration for a North American port. In this case, the game is largely finished, and all that is left is the localization process (I'm including the entire process, not just translation).



Some great Japanese games do not hit North America because they are seen to have niche appeal here, and are considered a big risk. As Newell said, you can transfer the risk to those most forward looking forward to that title.



Localization costs aren't as much as game development costs, which is why I think it would be the best "trial" case if someone wanted to attempt to do what Newell has suggested.



Too bad this wasn't done in the past, I would have totally invested in Konami porting over Guitar Freaks to the North American market. :)

steve roger
profile image
If the community members are financing the game doesn't that cut into the number of available purchasers? You need good numbers to drive sales. Also, how many copies of the game do you get for your investment? If I paid $200 do I get two copies? If I paid $500 do I get three?



How am I going to be certain that this company will deliver the game? How can we trust the accounting? What will constitute net or gross profit return from which I am to be paid back?



I hear Gabe saying his interested, but why would he want the head ache of managing the multitude of micro investors? Just the accounting costs would be astronomical.

Eric Clark Su
profile image
this is a stupid idea, that happened to bypass the stupid filter of Gabe's brilliant mind. He can invest his own money or the company if the idea is good. Why put your community's money at risk?



if no one is funding it then its not good (in a business sense).



What he can do is to build a community where innovative games (like he is hinting at) will be sustainable. The steam platform is a good start. OR he can use their IP (HL, PORTAL, CS, TF) to help their more risky projects. (ala crackdown/Halo2).

James Cooley
profile image
I would be willing to pop in a buck or two in advance to see either classic games redone using modern game engines or to allow console ports to be redone as legal (and prettier) versions for the PC.



I plan on buying the newly redone Monkey Island via STEAM, as it looks great and should play well on modern systems. It would also be fun to see what Deus Ex would look like on a modern engine which would permit enough character polygons for J. C. Denton to actually have ears.



My grandson has a number of great console games for older consoles that really cry out for release on the PC, like Legend of Zelda: Ocarina of Time for the N64.



Perhaps allowing fans to put down a deposit to be able to finance a conversion of an older PC or console. I would advance a couple of bucks to see the Elder Scrolls series redone with a modern engine that allowed me to either avoid the hardware and software hassles of trying to get an old game to run.



Just a thought.

Jordan Schiller
profile image
I agree, there are too many problems with this model for anyone but Valve and a select other few. When Gabe is suggesting financing from the community he can't be talking about for everyone. As someone trying to break into the gaming industry, outside financing from a group of individuals would be amazing to recieve, but as Benjamin Quintero pointed out that sheer number of people needed to invest would be entirely unmanagable. Furtherly what do you do first? Wait for the money then form the team, or start everyone working and hope to money comes in later. Either way you will be set up for an eventual disaster. Moreover, how do you get people interested in your game without giving away a full GDD to the public for rivals, with proper funding, to skim through and pick apart; I'm sure things may be a bit more honourable then that, but I'm a skeptic.





However, if we look at Valve's situation, this might actually be an ideal situation for them. As a game developer they have consistantly delivered high quality games; arguably some of the best first person shooter games available come from them. With Left 4 Dead they proved that they can deliver more high quality and engaging IPs, and finally they have the Steam network. With only a very small tweak they could turn Steam into a full on bank where they can let Steam members invest in future Valve games and it would be automatically tracked. Who wouldn't invest $100 bucks in Half-Life Episode 3 or Left 4 Dead 2 if they were going to get a return?



So, when Gabe is talking about financing from the community he must only really be talking about Valve not as a general means to replace the major financers in the future.

John Petersen
profile image
Oh yeah, I've seen this before in a lottery pool. To many people invested, a lowly 3 numbers hit and it disappears. Not enough to go around.



I paid a dollar, $6 is won and is split between 10 people.



If the game doesn't sell well, they still get there money but investors are out.



It's a double edged sword, the majority wants to play shooters. I want to play a modern day Davy Crockett, fishing, hunting, racing game. However... It may be the only way I get my game.



But truthfully, the way games are going nowadays, it really don't matter anymore. Do whatever you want, your minions will follow.

James Hofmann
profile image
This is effectively a stock market for game projects, which isn't incredibly far-fetched. When people lay down money, they aren't just making talk, they're making a bet and they'll do their homework to bet on something people want.



However, the underlying problem is that (most) game projects are more like options than common stock or commodities - the game exists in a vacuum. At some given date, the game is released and within a short period of time it makes most of its money. At that date, the investment is over and it's on to the next project. That arrangement makes the market too speculative for most people.



But there is another way. You can use a product model that retains continuous development, like an MMO, social, or episodic game. In those markets, people already buy into subscription models, and extending the model to support investments as well isn't a stretch - in fact, you can do this without any sophisticated setup at all! You simply have to introduce some kind of scrip or coupon that buyers can purchase and use for discounts at a future date - for example, in an episodic series, offering a discount for buying the whole season at the outset gives you this effect. This lets you push the cost of development forward in time, which is exactly what lending is supposed to do.

Horaw W.
profile image
(announced on the 20th of July)



It seems as though Valve has stolen the idea from a smaller Indie project which is launching in a few weeks and has been receiving press lately:



http://www.zombieexperiment.com (started in May of this year, just started taking donations last week)



However The Zombie Game Experiment is donating a large percentage of the donations/investment to the Michael J. Fox Foundation for Parkinson’s Research.



Big time industry developers are getting on board for this indie project as well as some popular rock bands for music.



I suppose that now that The Zombie Game Experiment is getting press and good attention (they just started taking donations the other day and are up to $1,000.20), it's time for the hundred million dollar corps to try to march in and stomp, stomp, stomp.



They are attempting to steal "new blood developer", Will Weaver's idea for their own gain. Sure, the idea may not be THAT original, but is it not strange that Valve announces this three weeks before The Zombie Game Experiment is launching their community site? And after they started getting good press?

Chris Remo
profile image
Horaw:



The interview was conducted during E3, not today, and I suspect that Newell didn't simply decide he was interested in it off the top of his head right as the interview was being conducted. He said it's something he's been interested in.



And this model is not unique to any particular game. As mentioned in this article, Kickstarter is an existing business already facilitating this for many types of projects. In addition to the above-linked interview, here is the official site: http://www.kickstarter.com/



Furthermore, how would Valve's usage of this business model in any way "stomp, stomp, stomp" on somebody else doing it? Are you claiming somebody should have "dibs"? If so, what about the Kickstarter people? Is The Zombie Game Experiment stomp, stomp, stomping on their already-implemented idea?

Jason Avent
profile image
Valve is one of the best developers in the world. With Steam they are pioneering new business models. Fans of their games love them. I'd venture a few dollars on their next game. Maybe even a hundred. This isn't a silly idea by any means. It's another brave and interesting concept that could well work for them. I'm not sure anyone else is in a position to do this though. They're great, independent, have the infrastructure, the fan base and are many times proven.

Rob Schatz
profile image
I think the community needs to gain a stake of ownership, not just a copy of the game. That's like getting my name on the credits of a movie just because I went to go see it at the premiere. I talk about more effective ways here: missingbullet.wordpress.com

Giordano Contestabile
profile image
@steve roger I think one of Gabe's points was that in this way people that really want to see a game that would not otherwise be made could pool resources and have it made, so the thrill of actually owning and playing the game supersedes the financial return consideration, and your accurate observation that you would be cutting into the pool of potential purchasers



I think it could be an interesting proposition, but if you are looking to individuals to finance, it would have to be on indie-like budgets, and more for the fun of it than for a financial return. AAA titles would need institutions or corporations to put up the money, unless you can find 1 million people putting 30 bucks each. There could be a runaway indie hit or two making money for investors, at the end

Horaw W.
profile image
Chris Remo:



Good points. Recanted.

Kouga Saejima
profile image
A strange idea...

I think that the moment you turn "fans" into "investors" they will not only cry for influence but also for profit hence they will turn into publishers ;)

Richard Cody
profile image
There needs to be tons of influence form "investors" and there needs to be a whole division of Valve ready to ship the game to retail unless XBLA, PSN, Steam, and WiiWare are your target release platforms. Otherwise you're asking a hell of a lot from your own development team.

Adam Saltsman
profile image
Surprised that no one has mentioned Cortex Command yet! Cortex Command IS community funded, and it works great. Case closed?

Kevin Reese
profile image
I think some commentators are perhaps jumping to conclusions as to how this possible system could work. It certainly could work for some projects.



Mount and Blade is a great example of a similar idea. The small team started making the game, and offered public demo builds from a very early point in the development cycle. As the game matured (after a few years), and as the game started to become more and more fun, they offered a deal to anyone who would 'finance' the game: if they registered the product early on, for a very low amount of money (say 5 or 10 bucks), the user would be registered for life, all the way up to the final build of the game.



Through this process, a devoted fan-base arose, and the dev team used them as an asset in play testing, and improvement of the game.



In this method, the ones that bought the game early benefited from the lower cost they had to pay for the game, while Taleworlds Entertainment was greatly helped by steady trickle of initial investment money.



Innovative consumer-designer relationships such as this certainly should be explored -- sure they are probably more well suited to smaller projects -- but in any endeavor, we should constantly question ourselves as to the efficacy of the situation: are we doing something as it always done because it is the best method, or merely because we have always done it this way?

Amir Sharar
profile image
Tim Carter said: "Why do you people keep trying to reinvent the wheel? There are techniques out there. Just research them."



Well, could you imagine going back in time and questioning Google on their decision to make a search engine when there were more than plenty already available?



The fact is that the cost of developing games have skyrocketed and any source of funds to help develop these titles should be welcomed. Any additional strategies to accomplish this shouldn't be dismissed because there are other tried and true methods.



Another thing to consider that I didn't mention in my previous post is that many new games are coming out with higher priced limited editions, and these are being pre-ordered by loyal fans. This money sits with companies like GameStop or EB Games, and this pool of money accumulates interest over a period of time (typically pre-orders are taken 6 months in advance). While it's true that some pre-orders are held for as little as $5, I'm sure a good percentage of people wouldn't mind paying it in full. A game like Killzone 2 apparently had over a million pre-orders in Europe. Had the number of those who paid in full have been half that amount, that's $30 million right there.



Sure, I'm pulling these numbers out of the air (percentage of those who paid in full could be much less than half). But I think the potential for an additional source of funding is apparent when you factor the above in.



Downloadable titles found on PSN or XBLA have much smaller budgets, from $300,000 to $1mil. Using fans to fund such titles may not be a far-fetched idea.

John Petersen
profile image
It's a vanity press

Arjen Meijer
profile image
cool, I think most won't understand his vision but I did some research for another project and I think its pretty possible to doits a step between mod makers and the industry proffesionals. In terms its his new Blue Ocean project. Good luck Gabe! ill see you in Germany I think.

Richard Kay
profile image
What would be a solution, when the company/game collapes? Where is your money then? Ok. It's a risk. Or the company runs away with huge amount of investment ('cos mismanagement or just a scam)



There must be some sort of transparancy via good communication to give clear insight?



ps. Involving the community isn't new. Example http://www.sellaband.com/ - Fans donate money, getting to a minimum amnount. When that is reached their band can get a professional recording + deal.

Ryan Bloom
profile image
It's really amazing coming back to this article in a post-Kickstarter world.


none
 
Comment: