Kickstarter, the good, the bad and the ugly?
I think it is no surprise these days that Kickstarter is a word we see a lot in our industry. It has become the go-to for funding for both small start-up companies and bigger more established companies. With both fish swimming in the same waters, there has been a lot of discussion as to who really belongs in a Kickstarter campaign. I am not really going to fall on the side of either, but instead, play Devil’s Advocate and attempt to present both sides for friendly debate.
First off let’s take a look at when and why Kickstarter was founded.
The rise of the little guy
Kickstarter was created on April 28, 2009, by Perry Chen, Yancey Strickler, and Charles Adler. It was the brainchild mostly of Perry Chen who wanted a way to fund ideas. His first idea was to fund a festival of sorts. More importantly, he wanted folks to be able to speak with their dollar and if enough of them spoke, bring ideas to life. Kickstarter has always said they want to help bring creative projects to life. Even though their initial start was rocky, by mid-2010 they were moving full steam ahead.
Today Kickstarter has over 389,000 successful projects to their name. Everything from coffee warmers to dice games, to roleplaying games and video games. With so much variety, one would think they would have a high success rate. But currently, their success rate is just shy of 36%. Games make up about 768 million dollars of Kickstarter money generated. Which is by no means a slouch number. Sadly, there is one facet of backing a Kickstarter everyone needs to be aware of. Kickstarter is NOT a store. You are playing the role of investor. Your return is the finished product you are hoping to get for slightly cheaper than retail. You also generally get reward incentives or add-ons which are one of a kind products.
Still, with an impressive less than 9% project failure, Kickstarter seems like a safe bet to place for most consumers. As long as you are patient and willing to wait. This means Bob, grocery store clerk with the awesome idea to make drone skins, can get his crack at showing the world what he can do. But so can Bigbook maker inc, an already established company with millions of dollars of sales to their company portfolio.
So what exactly does Kickstarter do
Kickstarter provides a marketplace for your ideas. It allows access in ways that were not options before. Gone are the days of making a mock-up and sitting in the boardroom after boardroom pitching it. It also places you within your market focus area, ensuring that folks who like the kind of product you are making are made aware. Think of it as having your own marketing team for your idea.
Kickstarter provides a way for individuals, smaller companies and even large ones to take a risk…without really taking a risk. You place your idea out there, you give your spiel about your intent, your estimated needs and creation time, as well as any risks you might feel will be present. Kickstarter makes sure your idea is seen, by doing things like suggesting it to other backers based on their past backing history. It will notify you if one of your friends backs something to see if you have interest. It even will highlight your project if enough steam is generated to garner even more prospective backers.
This is all for between 8-10% of your funds you generate if your project is funded.
Real projects headed by real people can make real problems
I would be remiss in not discussing in more depth the risks. The risks truly are there with any Kickstarter backing. Kickstarter as a company guarantees no project. You back a project at your own risk, and they do fail. I think over the years I have backed around 36 projects to date. Of those, about 6 never made it to the final funding stage. While it is sad, I did not lose a dime because Kickstarter does not collect your pledge unless the project funds. There are 4 projects however that funded and I have not seen my product. No, this will not be a rant about Kickstarter failures. More than enough folks out there do that well enough already. It is just something the potential backer needs to be aware of. You could get ripped off.
The bigger issue is when projects face delays. A lot of first-time creators fail to do their due diligence and figure out exact time estimates. They also fail to think of layout and artwork. Artwork can be very expensive, takes time to generate, and layout becomes critical as well. Especially for first time designers. Printing companies often have many runs of different products going not just yours. If your project creator does not make a preset date for publication that is hard and fast, you could be waiting quite a while as their project takes a backseat to other production runs.
Inevitably you also have the human factor. Folks get sick, family members need help, other jobs get lost. These are projects being made by sometimes just a handful of people. This can cause delays that are unforeseen, which can make backers pretty hostile pretty fast. All of these are risks any potential backer needs to be aware of before backing.
Big fish, Little fish
Lately, I have seen a lot of debate about the efficacy of Kickstarter for small companies. At first, a lot of the projects were small businesses or first-time inventors. They did not come from established companies with loyal customers. It was virtual unknowns, making their voice heard. Which made it the perfect sort of thing for RPG companies and board game companies. Roleplaying while boasting a healthy player base has a diverse spectrum of products. Some folks like Shadowrun, Some folks like 1st edition Advanced Dungeons and Dragons. Some of us are just looking for the next great system to bring to the table. With Kickstarter and the advent of the open gaming license, a lot of products can be made for systems that might not have seen a publication in decades.
I can think of several smaller RPG companies I have backed projects on. Fireborn games, The Hobby Shop Dungeon, Maximum Mayhem, to name a few. Most have gone off with no issues, with albeit smaller offerings in terms of stretch goals. The authors simply laid out their plan, the costs and said this is what we plan to do. Others have been fraught with delays and, well, excuses. I think when you deal with teams of 1-4 folks you have to take life into account. To a point.
On the other side of things, you have big companies with a proven track record. They post these gigantic Kickstarters with tons of stretch goals and add-ons that a smaller team cannot hope to match. Most folks have gaming budgets. Everyone likes a good deal. But is it truly effective for big fish to swim in the same waters as little fish? Let’s take a look at some pros and cons of both.
The Small Company Kickstarter
- Kickstarter allows them to get an idea from mockup to finished product with very little capital investment of their own
- The small companies can often times find better art and writers with the kind of budget a successful Kickstarter can give them
- Gives niche communities such as the OSR movement a viable means to continually get good quality products going
- It also garners attention to their future products and if done right, might be able to turn a hobby project into a legitimate business
- It requires a lot of investigation and work before starting a Kickstarter. Having a great idea is not enough. You need to find out ALL your costs.
- Folks today have little patience for delays. At the end of the day, they do not care that your cat has rabies and you spent 3 days at the Vet. They want what they pay for and they want it in the timeframe you originally promised. As the old saying goes, “You only get one chance to make a first impression”.
- If you truly intend this to be a launching point for a new business, you need to figure in planning for the future into your budget. A lot of Kickstarter first timers miss this part and end up barely breaking even
- It is highly unlikely you are going to gain as much traffic as a company that can afford to offer 17 stretch goals and add-ons. Which means you are a small tuna swimming in the same pool as sharks.
- A lot of Kickstarters that delayed also ended up having tax issues due to going past the point they originally intended. Worse yet this can change costs as quotes on production are usually time-dependent.
The Big Company Kickstarter
- In the roleplaying and board game industry, there are very few “Giants”. It may not seem like that, but even WotC has to carefully consider their choices unlike the days of yore. Making products to have them sit on shelves as unpurchased inventory is just not something even bigger companies can afford to do. Kickstarters allow them to avoid the risk by only making what is already paid for.
- Miniature companies can avoid paying for profit loss items such as molds. Through a Kickstarter, this is less impact to their bottom line but invests in a future cash-generating product beyond the Kickstarter itself.
- It allows for them to try out new products without risk to themselves. Staff wages for said project, production costs etc are taken care of.
- It allows for the use of many freelancers specific to the said project, reducing long-term overhead. It is amazing how many companies keep very few staff artists and sculptors on staff.
- Requires extensive juggling of freelancers which can have mixed results and sometimes variances in quality of work.
- People have even less tolerance of an established entity falling behind or getting delayed. Without naming names, of course, there have been a few big boys get some serious hate for missing deadlines.
- A failed Kickstarter can bring negative press for your company in a very bad way. Especially if the failure is not in the production of the main product but the add-ons and extras.
- Repeated Kickstarters by large companies can give the view that your business is not financially viable or is not managed well. If you are operating successfully why are you using a method perceived as being for startups and first-timers?
Now for my opinion, you did not ask for!
Look, I think it is completely inaccurate to say most RPG companies are mega-million dollar corporations. Far from it! I think even the companies we perceive as being big, in truth operate on razor-thin budgets. A lot of the folks in the industry work side jobs just to keep the bills paid. Their RPG industry job is just the side hustle that is a business built on their love of the hobby. I was at first adamantly opposed to the big dogs kickstarting. Then I did my research. Folks the profit loss reports on a lot of RPG/Board Game companies are not as expansive as you might think. Most turn enough profit to keep roofs over the heads of their employees and a car in the driveway. No one is driving around Porsches here like the days of the original TSR.
I even googled like a madman trying to confirm if the original purpose of Kickstarter was specifically targeted at first time and small business designers and owners. The fact is, Kickstarter never made that claim. I think it was just sort of assumed because those were really the first folks to embrace the idea. The Joe Blow who played D&D every weekend and had a great idea for a module. But bigger board game and RPG companies see the value in using Kickstarter as a trial market for their first runs of a product and a great way to advertise for other products they create.
In the end, I fall in the middle. I really need more data to figure out if the small guy is truly being cut off by the bigger companies or not. I was not expecting to come to that conclusion but it is true. Especially after seeing what the end profit margin ends up being. Go ahead and google profit loss reports for some of the bigger designers you see on Kickstarter. You will be surprised it is not quite as much as one would think. There are exceptions to every rule of course. But in the end, I guess I am okay with how things are going after all. I can get a great deal on products I would have bought anyway in the store, and I can get really awesome indie products in a printed format that otherwise would be a PDF from the small guy.
Interested in Kickstarting or Crowdfunding your great idea?
If you have interest in getting a crowdfunded project going I do have some recommendations for you. First, There are a few crowdfunding sites out there. Sites like Indiegogo, Kickstarter, Rockethub, and Circle Up provide multiple different avenues to getting your dream project made into a reality. Secondly, you need to pretty much have the written part of the project done. Going into a project with just a general idea is probably not the best plan for success. Having the hard part of writing it and editing it complete, allows time for working on add-ons and layout and artwork. It gives you the time to dicker with printers and ensures your project has 100% attention. It also gives you time to tour facilities that will produce your game and make sure their standards meet yours.
There are a few great advice spots on each one of the crowdfunding sites. I would also recommend reading this post in Entrepreneur. The tips are broken down nicely. Do not be afraid to reach out to the creators of a project you might have backed. We are a small community. Most of these folks are more than happy to help someone else make their dream happen with advice. I hope you enjoyed my thoughts on this topic.
Until Next Time,