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October 21, 2017
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The problems of crowdfunding for games are solved by using cryptocurrency

by Anti Danilevski on 07/20/17 10:11:00 am

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

I work at the intersection of two industries: game development and crowdfunding. Since 2011, I worked closely with Kickstarter and other platforms (and was the first who has launched a crowdfunding campaign on Kickstarter in Russia). I, then still working in Dodo Games, together with Artyom Zemtsov (now holding the post of president in the company Destiny.Games), collected for the mobile mid-core game Divine Space with a free-to-play monetization model. I think, it is not necessary to say that it was an epic fail: they did not believe in the mass-culture of mid-core games on the mobile, and they hated free-to-play on Kickstarter. My vision of the fact that the mid-core at the time of the release of the game will become a popular genre in the mobile wasn’t share. Since then, a lot has changed. More precisely, it completely met my expectations: mobile free-to-play games in the mid-core genre are one of the most profitable now. However, at Kickstarter itself, almost nothing has changed: it seems to be stuck somewhere in 2013-2014, together with its audience and free-to-play games there still have the lowest chances of funding. "Why like this?", As they say in India..

Firstly because over the years Kickstarter has formed a community of "real" players who support "real" games. That is Clash of Clans - the game is "not real". In general, a mobile game can not be good, and if it is good, then there is definitely some kind of set-up. If without jokes: I'm more than confident that if the creators of Clash of Clans launched a campaign on Kickstarter, they would not have collected even 100 thousand dollars.

Secondly, free-to-play. Except that this all "fraud and deceit," so even more such games earn more money than "real" games. In general, earlier free-to-play projects on Kickstarter were fiercely hated, and now - just do not like. Injustice!

But this is not the most important thing. The key question is "why should I pay this game if it's free-to-play." "Let Vasya pay, but I'll play later if it ever comes out. I'd rather pay for another project, which will have to buy a copy, because then it will cost twice as much. " As a result, quite good, interesting games can not raise the necessary amount simply because the economic model of Kickstarter works against them.

How much does it cost to go to Kickstarter if you are not a happy resident of the United States, the United Kingdom, New Zealand, Australia or another country with which the platform wants to work? Someone is lucky - he has relatives with SSN (social security number), and the launch itself will be free. Who does not - will have to look for a local resident and give him 300-2000 dollars for the provision of his passport and representation of your interests. And then - taxes. In the USA, they are usually twice as much as a physical entity, rather than a legal entity. You can get around this in few ways, for example, by entering into an intermediary contract between you or your local legal entity and representative who will launch your campaign on Kickstarter. I will not give a lecture about the campaign launching - there are already enough of such articles. On average, in my experience, it takes 2-3 months, about 800 dollars and a lot of nerves. And that is not all.

The most interesting I left for later: public relations, promotion and marketing. You are Russian (an ordinary US backer does not matter that you are from Ukraine or Belarus). "You drink vodka, ride bears and can’t do anything sensible, you'll still steal everything."

Although no one speaks aloud, but we are perceived as savages. If you are a well-known company, it is easier for you to get large investments, up to 500-600 thousand dollars and more. But no more.  And what about the fact that you invested 300 thousand dollars in traffic, and spend 100 thousand dollars on T-shirts, magnets, artbooks and forwarding?

Forget about organic traffic, if you are a mere mortal. Forget the fees, if you do not have a huge community and money for PR, advertising from Facebook and posting articles on relevant resources. You have about 2% chance that your game will suddenly "shoot", will be like by the audience and get a virus spread.

Journalists also love us. If you are indie, then you won’t be written about at all. Unless some small blog out of pity will write a couple of lines while drinking morning coffee and looking for a more interesting topic on TechCrunch. The so-called "Kickstarter fatigue" began with journalists in 2014 and then has turned into "Kickstarter disgust" . Filters immediately send all emails with the platform name in spam. But if there is a symbol of "$" in the body of the letter, they can accept it, because journalists are also business people and 10-25 thousand dollars are not superfluous.

Over the past couple of years, I've been helping more authors with crowdfunding, more than two hundred people have contacted us (those that I have kept in contacts), maybe even more than three hundred. It started no more than twenty, successfully collected money only a few. Because it's expensive, risky, long and difficult, and there are no guarantees that you will pay several thousand dollars and collect the right amount. To the representative and / or to the legal entity - need to pay. Or fly to one of the "right" countries by yourself - it means you have to pay. Consultants - pay. For advertising and articles - pay. And spend it a huge amount of time for which you could make your game three times.

Someone will remember Indiegogo with PayPal, where one does not need to be a US citizen. Yes, but as soon as you invest about $ 10,000 in advertising, PayPal will freeze your account for suspicious transfers and require additional verification. All this will take a week, for which your advertising will fail, and the articles you managed to do will be forgotten. This is not something invented - this is how PayPal works with Indiegogo. There also are big and loud campaigns (it was 3-4 in nine years), but this is not about you.

In general, in the old crowdfunding, "crowdfunding 1.0" is all bad. In Forbes, I talked about the problems of this market in general (it’s on Russian now, sorry, I’ll translate and post it somewhere soon). And this article is written specifically for us, game developers, about our difficulties. My goal is not only to show how much everything is really lousy, but also to tell you that at some point all this got me. Specifically - in 2014.

Then I realized where the crowdfunding was going, and we began to make our platform, with blackjack and all relying. The idea was this: a platform for authors who are ready to support other authors.If you want to raise money for your campaign - support others.If I have supported it for a thousand dollars, I will collect for ten thousand. All this was built on the trend Pay it Forward. The project was called Back it Forward - "support forward". In general, the system could have made money, but we faced bureaucratic obstacles and difficulties.

A prototype of BackItForward campaigns queue. Upper is the "Active Zone".

We registered a legal entity in Cyprus, opened an account in Latvia (the only bank that did not escape after the word "crowdfunding") and found an acquirer who would be ready to take money from Russian gangsters for laundering through video games (if you do not know yet, crowdfunding campaign - the easiest way to launder money).

While we negotiated with the payment, the bank decided not to work with small business, especially with crowdfunding, and closed our account. If we were incorporated in the US, everything would be simpler, but then our business model stopped working and a number of other problems arose. In general, the bureaucracy almost won us - but not completely, because agile, digital, blockchain.

This spring we started digging in that direction. We flew to Beijing on GMGC, agreed on the publication of our game in China. It was then that they noticed the first signs of the coming excitement. After analyzing all the information received and what we saw, we realized that we were doing wrong all this time: we wanted to build something new, bright, strong on the old foundation of the paper waste of a bureaucratic machine. Therefore, everything disintegrated, as if hinting: "it's not you guys doing, you do not need it."

Now I can only sincerely thank all those who refused us - payment systems, banks, acquirers and others - they did not allow us to launch what is now obsolete. Thanks to them, we headed to the only right direction - blockchain

So, what we now have. The platform that we created, improved and caressed from 2015 (when it began to develop). A well-thought-out set of functions and seven-year experience in crowdfunding from all sides - the author, the backer, the consulting agency and, now, - the platform. I know all the painful places of authors, all their complexities and mistakes, which they always admit. And, most importantly, how to solve the problem of crowdfunding of free-to-play games.

In fact, we did Kickstarter on the blockchain and cryptocurrencies. Therefore, we do not care where you are in any country, city or any other planet. It does not matter where you get money from. Now we accept the Ether (ETH), Bitcoin (BTC) will be accepted in the near future, further there will be other cryptocurrencies, and reception of fiat money. It's more complicated, but we already have options. The author receives money in Ether at his wallet and decides where to pay taxes (hint: for example, for 500 dollars, you can remotely register a company in Hong Kong, as business in Hong Kong is not being conducted, pay exactly 0% of taxes). You can collect as an individual and withdraw through exchanges. But since regulation is not yet - it's generally a dark forest and is unknown, what is fraught with.

You can pay anywhere, wherever there is Internet. We take 4% from the received crypto currency and only after the successful completion of the campaign. No 5% platform plus 5% payment, 20% taxes, two thousand dollars to intermediaries, taxes on currency, tickets and so on (figures are conditional, but the order is close). 4%, and no additional costs.

Now the most interesting question for me: Why we will have a free-to-play fee? Because every backer who pays you money during your crowdfunding campaign will receive from our platform our own cryptocurrency - KickCoins (KC). At the market rate, in full. If 1 ETH is equal to two thousand KC, then paying 1 ETH (about 160 dollars at the time of writing this article), the baker will receive two thousand KC.

What to do with them then? You can sell, maybe with a profit. And you can use it in the same game that you supported, if it will accept the KC for payment (will). Or go to another game that has raised funds from us and also accepts the KC. Or go to some other project that does not have anything to do with us, but accepts the KC - they all do it, why wouldn’t another game get free traffic to paying players?

Why do developers take the KC? This is not only free traffic of paying players who can come from anywhere, but, for example, featuring. We are much more willing to campaign that develops our ecosystem than anyone else. Next, we plan a separate platform dedicated to such projects and the formation of a whole community. We don’t have a plan "we will make a currency that will be accepted by the games and will earn all the millions of the world." It is the reverse - we will create games (and other projects: services, businesses, services, offline) that will accept our currency. We create the economy under the KC, not the cryptocurrency is unknown for whom and for what, the sole purpose of which is to be sold as soon as the exchanges will begin to trade it.

So, when this communism comes. The schedule of "revolutions" looks like this: July 28 - preICO, August 29th - ICO. Launch for all and the opportunity to start their campaigns - September-October.

Immediately bullet in the forehead of the amateurs to consider other people's money: yes, we collect a lot. Perhaps we will collect too much. And yes, we need. But not because we are so greedy, but because your games, which we will have posted, will receive traffic, PR, journalists and help in achieving success. Because your success is our success. So if we collect a lot on the rounds, there will be a lot of games that we invest in until еhe budget allocated for this won’t end. If we collect a little - it will be less, but it will be. Like the team involved in pumping and promoting your games (especially, or only if they take our coins). And it won’t cost much.

Already now we are looking for excellent projects. Made qualitatively and stylishly, at a commercial level. To which you look and see: this is the work of professionals. The budget of the games themselves is not important, what matters is what they are. If you have such a project - come, while the queue is small. We need loud successes and cool cases, and for this we will fight together to achieve your goal. If you have an indie-steam style, come too, but a little later.

What we don’t accept: obviously, everything that is illegal. Trash, low quality, campaigns for just a plain idea of the game. We will accept and work with something already existing and a team that is able to implement it. If you have only an idea and nothing more - use Kickstarter.

In general, we are waiting for you on the 28th of July 2017. I hope you will support us and together we will make such a platform where everyone can participate. If there is no possibility to support financially - make a noise, tell all about our idea. If anyone hasn’t understood yet, we plan to turn everything in crowdfunding upside down, shake out all the dust and sucking parasites. We will blow up this market and make it not only for those who have already everything well. We will make a convenient place, which will help us to realize our ideas and dreams together in reality. With your help and support, it will be much easier for us, and universal happiness can come much faster.

Hope to see you and your game soon on KICKICO!


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