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Opinion: How long before the Kickstarter bubble bursts?
Opinion: How long before the Kickstarter bubble bursts? Exclusive
May 7, 2012 | By Nicholas Lovell

[Kickstarter's earned plenty of funding for game developers over the past several months, but will this new-found funding model last? Gamasutra contributor Nicholas Lovell provides his thoughts on the matter and outlines some imporants risks developers and backers need to be aware of.]

2012 has seen an unprecedented level of euphoria over crowdfunding sites. Regular readers of Gamasutra will know that Double Fine raised $3,335,265 in a record-breaking campaign to produce a game about which purchasers knew very little, except that it would be a point-and-click adventure created by two of the doyens of that industry: Tim Schafer and Ron Gilbert. Then InXile CEO and Interplay founder Brian Fargo followed the example, raising $2.9m to fund a sequel to 1988 game Wasteland.

Not only have two games that traditional publishers wouldn't touch now been funded by fans, but they appear to have opened the floodgates to other Kickstarter projects. In a recent blog post, Kickstarter said that blockbuster projects draw more people into the crowdfunding ecosystem. Successful, large-scale fund-raisers don't suck up all the available money; they increase the number of people funding projects, increasing the pool of potential funders for other projects. Kickstarter's key statistics:
  • In the first two years of Kickstarter, the Video Games category saw pledges of $1,776,372. In the six weeks after the Double Fine project was announced, $2,890,704 was pledged (if you added Double Fine's amount to that, you get $6,227,075.)

  • Before Double Fine, one video game project had exceeded $100,000. By March 29, 2012, nine projects had.

  • In the month before Double Fine, the Video Games category averaged 629 pledges a week; after (but excluding) Double Fine, that jumped to 9,755 pledges per week.
There are currently 314 projects live on the Video Games Channel on Kickstarter. Several are fully-funded already (like YogVentures). Others never will be (I've seen at least two massive open-world sandbox games proposed by people who have never made any games before). The ones I worry about are the ones that combine the two: fully funded projects by wildly-optimistic promoters. That is where the trouble will start.

Only 10% Spend On Development

Independent developer Warballoon raised $36,967 on Kickstarter to fund their iOS game, Star Command. Only they didn't:
  • $2,000 just didn't turn up (payments didn't transfer) and when Amazon and Kickstarter took their fees, Warballoon got $32,000.

  • Prizes cost $10,000! Much more than Warballoon was expecting. (Note to Kickstarters: do your costings carefully, and remember to include postage halfway round the globe.)

  • Then: music ($6,000), legal and accounting fees to set up the business ($4,000), poster art ($2,000), iPads ($1,000), attending PAX East ($3,000)

  • Leaving $6,000 for development. Which was taxed, leaving $4,000.
So out of $36,967, only $4,000 went on development. I'm not picking on Warballoon: I think it is great that they shared their data. More than that, they spent their Kickstarter money on things that cost money (like music and attending events), not on things like coding which doesn't (it costs their time, which is very valuable but is not cold hard cash).

The Warballoon team had a successful Kickstarter project, raised in the days before Double Fine, but they didn't raise enough money to make the game if they needed to fund the salaries of everyone involved.

The Molyneux Effect

The second issue I see is what I am terming the "Molyneux effect." Peter Molyneux is a creative game developer who inspires players and game makers the world over with his thoughts on what the games medium can deliver.

He also makes promises he can't possibly keep. In the early days of his projects, Peter used to get so excited that he would start thinking about the things he was imagining before the practicalities of technology, time and budget started to cut into his dreams. (That was before the Microsoft machine got its hooks into him. Maybe it will start again now that he is independent again). Fans would then get furious that the grand promises at the start of development did not make it into final release (as this satirical news piece shows.)

Now imagine that you paid for the game at the start of the process, because you believed in the grand claims, not at the end of the process, once you had a chance to read the reviews and see what is actually in the game. This time, fans will actually have entitlement, not just a sense of entitlement. The Internet will reverberate with their fury.

Can They Deliver?

I am convinced that Tim Schafer and his team at Double Fine know how to deliver a game (mostly) on time and (mostly) on budget. Brian Fargo too. Is that true for all 314 of the current Kickstarter projects?

What about the projects which get started but never finished? If publishers like LucasArts can cancel games that are almost finished or like Codemasters can pay for a game it never saw, what certainty do pledgers have that the game that they have paid for will ever see the light of day?

We Are Still In The Euphoric Phase

We are still in the early days of our Kickstarter relationship, the early days of falling in love. Everything our partner does is wonderful. We gloss over the risks, we ignore the downsides, because the glory of falling in love is everything.

I think we have about six months left of that period. Towards the end of this year, some Kickstarter projects are going to start slipping. Some will see their teams collapse amidst bicker recriminations. Some pledgers are going to start getting very angry.

Don't get me wrong. I love Kickstarter. I love the way it allows fans to spend as much or as little they want on supporting projects that they love (or think they will). I love the way it gives people with different spending appetites different amounts to spend. I don't think Kickstarter will replace publishers but it will enable games that appeal to niche (as defined by mega-publishers) audiences to get made and played.

Which is great. Just don't expect the ride to be smooth from here on in. Listen for the screams.

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E McNeill
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I agree. Not so much a bubble (dunno if that was your word, Nicholas), but more of a classic Hype Cycle ( I'd say we're fast entering the Trough of Disillusionment, considering the amount of backlash recently. Here's hoping we'll move past that phase quickly.

Edit: I'd also like to note that "$4,000 went on development" is a bit of an understatement; the cost of music and dev kits (here, iPads) surely counts as well. I'd almost rather see them spend their Kickstarter money on those expenses and avoid taxes than allocate it all towards living expenses.

Nicholas Lovell
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You are right, the cost of music and dev kits should be included, and it is better that the money is spent on that rather than living expenses. I drew those comments from Warballoon's own blog post with not enough of my own editorialising.

Alan Rimkeit
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This article is spot on. The kernels will get separated from the chaff as it were. Those who have great ideas that catch on will survive and the rest will not. Such is the way of any market no matter how it works.

The "Euphoric Stage". I remember that. The exact same scenario happened during the Dot Com crash in Cali back in the day. Too much hype, too much irresponsibility, too much money going to the wrong places or people. Is the Internet Industry dead because of it? Of course not. I say it is better off for having the crash while the people/companies with nothing real to offer got left behind. The same will happen with Kick Starter.

Like the article stats it is all about the actual delivery of games. Those that deliver will make their fans happy and want to give them more cash in the future. Those that waste the money will most likely never get any money again.

I also agree that the Kick Starter business model will never replace the current and traditional Corporate backed one. Does it really need too? IMHO, no it does not. It just gives those with the skills an alternative option to signing away ones ideas/IP to any Corporation. More options are always good for the market. It keeps everything healthy and competitive.

james sadler
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From the research I've done on KS over the last couple of months I'd say that eventually we will see less money going towards projects, but I think that will really depend on how many big named devs continue to use the service. Like the stats show, the more big named devs doing campaigns the more people invest in other campaigns. I think there is also this illusion that quality games don't succeed their campaigns and other, not so quality games, do succeed. From what I could tell by the many campaigns I've watched, those that don't succeed fail for pretty simple reasons. Lack of content to show, lack of interesting rewards, lack of communication with potential and existing backers, ridiculously high goals, and terrible or nonexistent pitch videos. There's also a few that just seem conceptual in scope and don't give potential backers a sense that the developer either knows what they're really doing or could accomplish it. I've seen some crazy campaigns where the devs only asked for $8k and received nearly $50k, but they had a lot to show their backers and interesting rewards. They were first time devs but were able to show they at least kind of knew what they were doing. There are exceptions to this though. We're still in a very infant stage with KS and its projects though. Only time will tell if backers will really feel their money was spent right once a lot of the campaign's projects launch.

Travis Flynn
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I predict there being some sort of meta-analyst type function that ranks kickstarter projects based on several factors, and also consultants that help devs craft their kickstarter proposal. Based on these, better projects will have things like realistic but good rewards, a thought out budget, and some experience behind them. Those will be highly rated and if people want the project they will back it.

I don't think the bubble is close to bursting. It's not even properly inflated yet. The bubble will probably burst the first time a super-funded project fails to deliver anything.

And regardless, I think it will be a great tool to fund "niche" titles. With publishers gravitating more and more to mobile/social gaming and their risk aversion to anything on the PC/Console without very high brand recognition, KS will remain important.

Alan Rimkeit
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"I don't think the bubble is close to bursting. It's not even properly inflated yet. The bubble will probably burst the first time a super-funded project fails to deliver anything"

This is an excellent point and one I agree with completely. Let's hope it does not come to pass.

Cody Scott
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If Im not mistaken though, doesnt the project have to ship before anyone is ever billed?

Nathaniel Marlow
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I think people get billed at the end of the Kickstarter campaign, assuming it reached its funding goal.

james sadler
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Nope. Once the campaign ends and if the goal as reached the backer's accounts are automatically charged. Whether the project ever ships is not a condition.

Maria Jayne
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I imagine it'll burst the momment one of the high profile Kickstarter project launches a product that all the vocal donators feel is not good enough. Since few game fans seem to have a realistic view of what a game can deliver thanks to marketing, I expect it will happen within the next year.

Alan Rimkeit
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Gamers bitch and moan and complain and whine but as soon as the new shiny awesome AAA game comes out they buy it. Watch, all the people who raged about the end of Mass Effect 3 will get the DLC the millisecond it hits. In fact, I bet that EA and Bioware could have charged a nominal fee for it and it would have sold in the millions. They caved but I think it would have worked.

If a game is good enough to sell well then it will garner support to make the sequel. And if Kick Starter funded game devs are smart they will keep the line of communication open with the gamers. They will listen to the good criticisms and keep their egos in check. Sometimes the gamers are right. ;)

Amanda Fitch
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Yeah, once a high profile individual doesn't launch a project, I believe people will be more careful with their donations.

It's too bad that these companies aren't offering shares through Kickstarter. It would be cool if small indie investors could get involved.

Travis Flynn
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Investor equity is interesting, but it creates a lot of problems from a legal perspective. It would be great if there was some 'simple' way so that backers could share in some of the profits of a successful project, but that generally also carries with it things like corporate boards, and the potential of shareholder derivative suits.

Duong Nguyen
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That's odd question, it's like asking how long until this venture capital market collapse? We'll it's gonna be awhile as long as it makes money and gives users a return on their investment..

shayne oneill
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The difference is though, is that Kickstarter really isnt venture capital. People are not offering shares in the business, and thus the "investors" dont really have a recourse to intervene if things get stupid.

I like kickstarter, my head is brimming with ideas for what I could do if I had the motivation (which I dont). But I'm worried that it could all come crashing hard if we get any high profile disasters.

Lets hope doublefine adventure is a killer game.

Nicholas Lovell
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As Shayne says, it won't make money for any one except the people running the campaign. It does worry how many people seem to think that they are "investing" in a project. It is much closer to "pre-ordering a game that hasn't been made yet"

Michael Thompson
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One of three things will ultimately cause a major correction in the Kickstarter ecosystem -- The first is a high-profile title failing to come to fruition, being low-quality, or not being what players expected; the second possibility is similar to the fall of Atari, where kickstarter becomes flooded with low-quality projects and it becomes difficult to tell who's worth funding; the third would be onerous taxation.

Neither of these things might end up happening, but if anything brings the euphoria to an end, it'll be one of the three, IMO. Luckily, moderation on Kickstarter's part, and wiki-style "wisdom of the crowd" (as we saw last week with the project that was found out to be essentially fraudulent) can help keep the first two possibilities from occurring.

The third is beyond the control of kickstarter or would-be funders, but could also cut the other direction. Currently the funds collected through kickstarter are in a pretty grey area of the tax code (Is it an investment? A pre-order? A gift?) If the government moved to tax these funds at a higher rate, it'll have a cooling effect, but on the other hand, reasonable rates with a clear stance within the tax code could be a boon.

E Zachary Knight
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I think it is pretty clear that the money earned in a Kickstarter campaign is normal business revenue. You are selling a product to the people pitching in. Since it is a product being sold, it would fall under that line of taxation. Which means that typical business deductions are allowable. The money used to pay for rewards are part of the business expenses and can be deducted.

Randell Trulson
profile image is all good though. Even it Kickstarter starts to fade....something else, maybe another form of crowd funding will pop up. People are getting tired of pitching game ideas to suits and accountants that don't care about gaming so much as they do about how your game will fit into their demographics they collected from last years sales. :)

Christopher Totten
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In the past few weeks there have been quite a few articles like this about getting funding for projects via Kickstarter. I think press like those articles and this one are a step in the right direction: they teach people seeking crowd funding how to properly put up a Kickstarter and they show backers what to look for in a project. Hopefully this helps people separate the wheat from the chaff on the game channel. Also, I agree with Randell, if Kickstarter doesn't work that doesn't mean crowd funding dies.

Forrest Smith
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Music and marketing isn't part of game development? Guess I have some bad news for several people on the team.

Chris MacDonald
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The bubble is going to burst as soon as the first game can't meet the promises the developers made.

One thing many fail to appreciate about game developers is that by nature we are procrastinators. We're the people who did the science project the day before it was due because it was half of our grade. A binding legal contract with a publisher is the kick in the pants that some teams need to keep in gear. Some teams need to have someone constantly nagging them about milestones in exchange for paychecks.

Eventually, someone is going to be unable to keep their promises. It also wont help that so many donators will have a ton of swag throwing the failure in their face and making them double think the next time they feel like donating.

Jonathan Murphy
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Whether their bubble bursts or not. Other Kickstarter types will emerge to provide funding to game devs. The box has been opened. Now someone pay me $10 for predicting the future.

Joseph Perry
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Speaking as a person running one of those 314 projects, it seems like it goes without saying that Kickstarter will be unsustainable at the pace it's at going. I'm not going to say the words "viral" or "meme", but it seems like it's spreading in a real-world socially-transmitted manner. I only started after a friend had her project successful. My project is really small-scale, but it's amazing how seductive checking that % bar has become- for both myself and the backers that I've talked to. I think that it taps into some primal need we have to be a part of some exclusive larger group. But as a lifetime commitment to continually check and fund projects? I'll actively follow them as my friends start up projects, and certainly fund ones that I find while staying up-to-date with theirs, but the wave will eventually pass us over and spread to our friends-of-friends until it's hit everybody it's going to.

I told you I wouldn't say "viral".

Now, I love Kickstarter. It provides a framework for resources to flow from where they're available to where they are needed with a minimum of fuss and a maximum of endomorphins. We're bringing games and art and music into the world that would not exist otherwise. Personally, I'm meeting and talking to interesting people, getting a lesson in writing and marketing, and am going to make a kickass game because of it. But unless the source of those resources have an durable interest in continuing to provide them up-front (like banks do with loans; they'll get paid back), it's only going to last as long as the interest does. I'm arguing that at least part of the interest right now is this emotional excitement you get while being part of a larger movement, which is why you'll pay $32 for a poster.

Vedran Klanac
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I can't see bubble burst on Kickstarter for years. Here's why. It's US only so far. If it opens world wide, then you have global platform which can transform global way of thinking on funding projects, which is already happening more or less. For example Europe is craving for a successful platform like Kickstarter, but it's still not happening. I agree with a comment it's all hype, and that is good, because the platform get's more attention in media which is also great because it can influence on masses to start thinking to support smart and cool ideas. Sooner it goes global the better, bigger pool of ideas, bigger pool of funds and also bigger pool of lame attempts as well.

Nicholas Lovell
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Thank you for all your comments. I am extremely positive about the Kickstarter and the impact that it will have on the games that we can play.

I also think there is going to be some disappointment. As an early commenter said, we are heading towards the Trough of Disillusionment. I look forward to coming out the other side.

Jim Anderson
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@Slade, I don't think you can point to one game cancellation and take it as a sign that we've hit the X of Disillusionment. I'm not saying that it's not coming, but you can't look at a single event and say "it's here".

Daye Williams
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I hope it raises the bar, pushing up&coming devs to really push the lines of production, where the detail is really on par. I believe this will create more of a core structure & teach them that not anyone could just create something & ask for money. Thats where I think what happens to a poor digital platform when too many devs think anything is acceptable, it really matters what the customer wants & I want them to be very critical.

The Le
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One of the biggest problems with kickstarter, in my opinion, is that big game developers are using it as a way to bring back old franchises from the dead. These companies have plenty of products on the shelves and plenty of capital, so it's a shame that they're using Kickstarter to get "pre orders". Seriously now, you're telling me that a powerhouse like Steve Jackson Games can't afford to relaunch Ogre themselves? That's ridiculous.

Chris Hendricks
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I don't know if it matters whether or not Steve Jackson Games CAN launch something. They want to know if they SHOULD. They want to know if their fans will put their money where there mouth is. The actual amount of money is a side issue.

Nicholas Lovell
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It's also a question of risk. If you read Steve's annual letter, you'll see that SJ Games isn't made of money. If you can get fans to confirm they want it (as Chris says) and then fund it via Kickstarter, it makes a lot of business sense.

(And tiny disclaimer: I've written one RPG supplement for SJ Games)

Harry Fields
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It all depends on what comes out of these games being funded. I know I've been a little too supportive on some of these projects-- even a couple which I deemed unlikely to succeed. If the next MineCraft or the like originates from KickStarter, it gives the platform so much more validity. Problem is, aside from a warm fuzzy inside, the only return for project backers are some cheap feelies. If you have a goal of 100G, and I chip in 5G and your game takes off, I don't want to meet you for lunch, I want 5% royalties in perpetuity. Right now, it's more of a happy-happy-joy-joy-preorder with bonus-edition-feelies funding platform. I'd like to see it evolve into more of an investment platform, complete with basic legal requirments (If you can't pony up the small cash to incorporate, you're not serious about it-- imo)

Jeffrey Crenshaw
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I don't know that I have a problem with that, but wouldn't it just turn into the mainstream industry all over again as large investors begin investing in projects and wanting creative control? And developers courting these large investors instead of the general public because they have the money? In other words, suits designing games for gamers? Still seems better than the current publisher model by virtue of giving more options to developers, but also seems to have hazards.

Bob Johnson
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I just wonder how many understand they are funding a game that may or may not get made and may or may not suck.

And I wonder how much novelty is behind KIckstarter. Many people will do anything once.

AT the same time I don't see why someone that manages the money well and releases timely quality product and builds up a track record won't continue to get some level of funding.

Tadhg Kelly
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Gartner's Hype Cycle:

Ujn Hunter
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The biggest issue here... is that most people don't realize they are spending money on "risk" and not necessarily "reward". I've had 2 projects that I've backed not follow through with what was "promised" already. There is zero recourse for people or projects that "take the money and run". No one seems to realize this though.

You aren't "buying" anything... you're "hoping" to get something for your money. Sadly this isn't spelled out anywhere. That's what will burst the bubble.

P.S. You're also just giving people money, so that they can, hopefully make even more money. You take the risk, they reap the reward. Just so you know...

Jim Anderson
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I don't think most kickstarter contributors think of it that way. If you look at it like a business transaction, it becomes ludicrous. Of course you aren't getting nearly reward value back as what you put in. In my own experience, if I fund something it's because I want to live in a world where that thing exists.

There's something to be said, too, for looking back at that thing and being able to say "I helped make that happen".

Kyle Kronyak
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I am assuming that my project "Realm Explorer" is one of the "massive open-world sandbox games proposed by people who have never made any games before" that "will never be funded". I sincerely hope this is wrong, since all of us have had a life-long dream of successfully making games. I can see the flaw in the example they provided -- giving out $10k worth of physical goods on a $30k budget is going to leave very little for actual work. That's hardly enough for even 3-4 man-months of dev time. Some may say our budget estimate is high, but it is what it will realistically take for a team of full-time software developers and artists to work for a full 6 months.

I think a lot of people may get into this from a purely art / design standpoint and don't understand the tremendous amount of programming work it can take to make such a project succeed. We are a big chunk of the way there in terms of having our code and art assets ready, but having the funds to quit our day jobs and work 100% dedicated to this project would mean we can deliver a great product that everyone will enjoy.

If anyone wants to see our project which apparently is so awful that it's not even worth mentioning by name, please check out the following links:

As a team of experienced developers with over 25 years combined experience and a great team of artists (check our our sample monster videos, more of those to come soon) not to mention life-long hardcore gamers, we have a pretty good idea of what gamers want (not going to make a Skyrim-style inventory UI for instance) and fully intend to make a game that we will enjoy and believe that other gamers will enjoy as well.

Steven Christian
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To be honest you aren't showing much but a bit of aimless running and lots of pointless digging, which seems pretty boring.
Exploring the open procedurally-generated world, however, does appeal to me, but not everyone. And you haven't actually shown anything worth exploring.

Create some art assets like monuments, ancient ruins, waterfalls obscuring secret caves and wildlife etc and pop it in just for the video. You can call it work in progress and generate it in later.

While I look forward to the game, you haven't shown anything to make me want to give you money.

David Dougher
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For the most part I think this article is an attempt by a person who has a small bias to be even handed. However, the title of the article like several others that have appeared in Gamasutra concerning Kickstarters is clearly inflammatory.

A "Bubble" really? Don't you think that is a bit overblown?

First, it looks to me like about 50% of all Kickstarter projects fail to get the necessary funds to launch. With that as a starting point it is not unreasonable to assume that a percentage of the projects that do go forward will also fail. I think you are badly underestimating the intelligence of the people who are contributing to these projects to assume they are unaware of these facts. Especially those who contribute larger amounts.

Second, the fact that no publisher would take on a sequel to a game is not surprising. If you take a game to a publisher whose work you like, chances are they already have a similar title competing in the space. So why would they endanger a running franchise for an unknown gain? So a company Like Double Fine goes to the public and surprise! The public remembers the game, likes the game, and wants to see a sequel.

Third, Kickstarters are about creativity - not about big names. Yes, a big name can get more money in this space. They are popular and people see a proven track record. But for many people this is their first outing or a serious attempt to stretch beyond the normal boundaries they have lived in. They may fail, and some people may rage at the loss, but Kickstarter is not going to crash over this.

Not unless a press hungry for a juicy story, or to be the first to say "I told you so." hypes it into a crash.

Fair disclosure, I have a Kickstarter Project running at the moment, called Oncolos. It is a stretch for me personally to be trying to make this game. It is a stretch for those who see the value in the project and are willing to take a chance on me. It is a lot of money to raise in a short amount of time and I might fail, but it won't be because I didn't dream, and plan, and try my best.

It seems to me that a lot of people here who think the only people who can succeed are those who have already succeeded. That is simply not the case. I would expect more failures from those who are trying a project for the first time, and for those who are stretching considerably out of their comfort zone. But there will be successes. Just as their will be failures among those who come to Kickstarter with a proven track record. I would expect fewer failures, but they too will be there.

Jeffrey Crenshaw
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"A "Bubble" really? Don't you think that is a bit overblown? "

I wonder when the "calling every trend a bubble for eyeshare" bubble will burst myself.

Nicholas Lovell
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Actually, I'm hugely positive about Kickstarter.

I just think that we are right at the top of the Hype Cycle (follow Tadhg's link above), and the we are about to enter the trough of disillusionment.

And yes, I do think we're approaching a bubble. The thing is: lots of good things come out of bubbles (think about the dotcom bubble), but lots of people lose money or don't get what they expect.

That's exactly what I think Kickstarter is, right now.

Soeren Lund
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Looking at the NY article about three years of Kickstarter Projects, (
ars-of-kickstarter-projects.html), it's looks like there is an exponential growth rate. History has many times shown that businesses, ecosystems etc. with exponential growth rates becomes a "bubbly" and eventually burst.

Having said that, I am excited about Kickstarter and the concept of crowdfunding. I wish it succeeds in perpetuity and if indications of a bubble formation manifests itself, that Kickstarter are able to either spin off the malignant section (like Games) and not jeopardize the other sections or make corrections to the way people pledge to let some steam out of the system.

James Coote
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I said it before, but I'd like to see more kick-finisher projects.

It helps give confidence to backers that they will see the project completed. Also you have a much better handle on the resources needed to finish

Jeffrey Crenshaw
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I like this idea. If I were to go the crowd-funding route on a game I make, I would probably prefer this myself just because I want to please customers, not cause ulcers as they wonder if their input is going to be wasted. And I frankly wouldn't feel comfortable taking money on a project I wasn't sure I could finish.

Jeff Hangartner
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I don't know, I don't really see a reason it has to burst. There's too many pros and not enough cons on either side for it to die off.

On the developer's side it's fund your project in a way that won't require you to give up a bunch of creative control or revenue. On top of that you build a fanbase of excited people who will be playing or buying your game when it launches. It's a complete win for the developer. Even if your project isn't funded, that just tells you that your idea might need some work, or that you may need to re-think your presentation or your development costs.

On the backer's side there's not a lot of risk. You can donate as little as you can afford to, so if you're not comfortable risking losing $100 if the game isn't finished, donate $1 and Tweet it to 100 people (for free, and instantly). And your money isn't actually taken unless the goal is achieved, so it's not like you're just throwing money away on something no one else is supporting. Plus you usually get some cool reward stuff for your investment.

I think if anything, a large number of failed projects and an abundance of crappy projects will just create a situation where backers will become smarter about investing and start to demand more concrete information, timelines, milestones, etc. for their backing, and developers will be forced to do more pre-planning and present more detailed information, timelines, milestones, etc. about their game, as well as provide more detailed updates on its progress.

Quite frankly, I think that's a great situation. It'll force indie developers to learn better business skills and force them to learn to manage their time, resources, etc. more accurately as well as put more work into researching realistic development costs. I don't know many indie devs, including myself, who wouldn't benefit from developing those skills a little better. :)