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The Cost of Kickstarter in Gaming

Gamers love kickstarters.  There have been no bigger opportunity for games in decades to get cool new stuff than the hundreds of gaming related kickstarters that have emerged in the past few years. I have backed quite a few myself -- some of them have been phenomenal; some have been total disasters. Unfortunately, kickstarters have hidden costs for our hobby that often go unnoticed on both sides.

Kickstarters basically allow anyone to post an idea online to get money to produce it.  In return, those pledging towards the production get something in return, usually at a reduced price point.  By ensuring enough customers come together to fund the initial production, no financing is required.  It also ensures that there is a market for the product before the product is produced, giving the producers a much lower risk.

There are a number of problems with this model.  First, all of the risk doesn't just get eliminated.  Instead of the producer taking the risk of getting the financing and producing the product, the customers are taking on the risk that the product will be produced.  Numerous cases exist where kickstarters produced nothing; other cases exist where multiple chained kickstarters produced nothing. Kickstarter generally does not get involved, acting as only the middleman.  Unfortunately, kickstarter does little to provide or manage a real assessment of these projects and whether or not they can actually be produced.

A recent kickstarter I backed is failing. Why?  Because they didn't get a contractual price on production.  Once the kickstarter succeeded, the third party company refused to produce at the price quoted.  With much of kickstarter production located in other countries, the legal repercussions are too much to be handled on a kickstarter budget.  The backers had no idea the production quote was no good, something a good businessperson would have solidified from the beginning when inspecting this deal for investment.  Kickstarter backers are simply investing blindly.

Kickstarters are also notorious for being poorly planned and poorly executed. Late has become the expectation for kickstarters.  Too often, when projects fall behind, the producers just simply stop posting updates and lose contact with their backers.

It took very few million dollars kickstarters before companies started realizing the deal to be had in using kickstarter to fund their projects.  By running a kickstarter, they could effectively make huge investments in non-recurring capital with no real risk.  Miniature molds started being made.  Production capabilities were being brought online.  The problem, in these cases, were that pledges were no longer the good deal they could have been.  The costs passed along to the backers were much closer to retail than they should have been, because they were now investing in the company. Kickstarter was becoming stock for capital investment with no stockholders.

The pledger paradox became apparent to me at Gencon one year.  I had stopped off to pick up a new release of an item not offered by the kickstarter.  There in line, waiting, I watched non-backers buying the same products I had kickstarted for nearly the same price, before mine had even arrived.  I was no longer a special backer. I was just another exploited customer.  The kickstarter producer didn't give me anything special in the end.  That, to me, was unforgivable.

The next part of the paradox came later.  I had found some great new content on kickstarters that I wanted to use in my games.  Unfortunately, because of the processing feeds, even increasing shipping costs, and increased production costs, only backer rewards were produced.  This happens a good bit of the time, often costing the producer money beyond the kickstarter. What this ultimately meant is that the product died at production. I had a book in my collection I could never use, because none of my players could ever hope to get a copy.  Kickstarter had effectively killed the product. I had just an orphaned work that I could never use.  The idea was so dead with the creator's bad experience that not even a PDF was released.

The bottom line is that kickstarter, despite bringing cool new products into existence, finds its success at a cost to customers and small producers.  It has altered the economy of production to move the risk to the wrong side of the table without any tools to properly assess these risks.  Until kickstarter changes this dynamic, I think it is important that we all carefully consider this situation before we back kickstarter projects, no matter what products are offered. It doesn't mean I won't pledge again, but I heed the warning that pledgers beware.

Comments

  1. Ponyfinder will never fail to deliver, on this I swear.

    ReplyDelete
  2. No worries, David. Your kickstarters have been shining stars from the start.

    ReplyDelete

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