Kickstarter Pledges Are Risky Investments, Not Purchases

By John Walker on January 21st, 2014 at 5:00 pm.

2014 is going to be the real Year Of Kickstarter. While the phenomenon became enormous in 2012, and saw continued enormous successes in 2013, it’s this year that’s really going to count. This is the year that so many of those multi-million dollar projects are due to appear. It’s going to prove, I would like to argue, the year that we are going to change our understanding of what a Kickstarter pledge really is.

Here’s an important thing about games: sometimes they’re terrible. Mostly they’re average. Quite often they’re good. That’s how “average” works. What people don’t appear to be ready for is the possibility that these rules will apply to games that have been Kickstarted. Some of the games, from the indie projects raising $10,000, to the big-names-going-indie gathering millions, aren’t going to be very good. And others are going to be alright. And here’s the thing: that’s okay.

Clearly there’s some quality bias when it comes to the bigger name KS projects. There’s a far greater chance of greatness, when the money’s been raised on the back of its being pledged to developers with proven track records. There’s a reason people are willing to hand over such copious amounts of cash to Chris Roberts to make Star Citizen – dude made Wing Commander. There’s not only a far higher expectation on the game to eventually be good, but there’s also a greater chance it will be. Thing is, it could still be just about good enough. It’s still possible. And that’s just fine.

January’s seen a couple of high profile Kickstarter games appear. The highest profile of them all, Double Fine’s Adventure – eventually named Broken Age – has released its first half. And it’s pretty good, but not incredible. And The Banner Saga has appeared from the ex-BioWare team who saw both enormous fundraising and alpha success, and it’s, well, mostly good. Neither has changed the world of gaming. And of course, that’s just fine.

Then there’s, say, GODUS. Over half a million raised, and, well, it’s for sale and so far it’s not very good at all. And of course, that’s just fine.

At a farther extreme, there’s examples like Unwritten. Months after being successfully Kickstarted, Roxlou Games realised the game simply wasn’t going to get made, due to family problems, issues with the project, and so on. There will likely never be an Unwritten. And of course, that’s just fine.

What all this points toward is the reality of Kickstarter that has always been the case, but almost everyone has refused to acknowledge. As much as it may feel like it, pledging to a Kickstarter (or Indiegogo, or whatever else) is not pre-ordering. It’s funding. And we have to grasp this.

It’s certainly not helpful that the entry point tier for almost every Kickstarter is that which will secure you a copy of the finished game. It’s doubly unhelpful that if this weren’t there – if funding the project were separate from buying a copy when it’s finished – then they would likely receive far fewer backers. But as counter-intuitive as it seems, what we’re actually doing is giving the project the amount of money a copy will cost when it’s done, in the hope that one day it will be done. Rather than in expectation of it.

Because that’s the reality of game development. Lots of games get stuck in development hell, or simply run out of funds and can no longer be supported. Others get canned because it becomes apparent that it’s never going to come together. Some are given up upon because they’re terrible, and they can find no way to fix it. And none of this is changed with the funding method. Whether privately, publisher or crowd-funded, these risks are still very much in place, and they’re risks Kickstarter backers need to take on board before putting in their wedge of cash.

I think it’s so sad to see people claiming refunds from Unwritten. It demonstrates just how little understanding there is of the process for someone to demand their $20 back because the game didn’t get finished – $20 that will have been spent already, on not being able to make a game. That money was invested in a project that didn’t work out. It wasn’t leant. And it wasn’t a purchase. It absolutely does not merit a refund.

There are of course exceptions to this. If a pile of money is raised, and then not used for the purposes stated, that’s fraud. If someone asks for £50,000 and then goes off on a world cruise, and never attempts to develop a game, there’s a legal dispute in hand. (Although this isn’t so clear cut. If I asked for £50,000 to fund my making a game for a year, that money would be partly for tools and staff, but partly to pay my salary. If backers give me £150,000 in response to my appeal, that extra £100,000 really is mine to spend how I see fit, and if that’s to increase my salary, that’s a valid use of it.) But we’re not talking about cases of fraud here – we’re talking about cases where the game just simply doesn’t come together, or is perhaps a dreadful game on release.

And yes, as you pick at these threads, all manner of things start unravelling. But this all starts to lead to a clarity of what a Kickstarter pledge really is. What about if someone asks for £25,000 to make their game, but it becomes clear after spending that and being nowhere near done, that this was never going to be enough? Well, again, it’s tough to the pledger. That’s part of the risk of investing in such a project, and it’s absolutely why people should withhold pledges when they suspect the target isn’t going to be enough.

If people started to view their pledge as an prospective investment in that project, rather than a very early pre-order for a game they like the sound of, there would be far more scrutiny before money was put down. Someone announcing they’re going to make an MMO for $5,000 isn’t going to make an MMO for $5,000. Putting in $25 because you like the sound of the finished game is a naivety on your part. You’re a bad investor. We have to start weighing up what the chances are of making good on our investment – am I likely to get a game that is worth this cash if I give it? What are the chances of that successfully happening? And most importantly of all: being aware of the risks and challenges of making games, and the possibility of failure, am I willing to risk this money on not getting a return?

Tim Schafer did something very smart, and weirdly forgotten, when he launched the Double Fine Kickstarter. He said, “Whether it goes well, or whether it all goes to hell, we’re going to show everything.” He then adds, “Either the game will be great, or it will be a spectacular failure.” There was no pretence that the money he was asking for ($400,000, of course) was going to guarantee a finished product to play. That they were going to film it, for a quarter of the budget, meant that either way there would be something at the other end of the process, admittedly. But the game, the other three quarters, was never a promise. And that, really, is how it should always be.

So the next time we go to pledge on Kickstarter, we have to let those words ring in our ears. “Either the game will be great, or it will be a spectacular failure,” then adding, “Or it’ll be just fine.” And then put forth our money with this in mind.

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202 Comments »

  1. stupid_mcgee says:

    I’m sorry , but the vast majority of these conversations are like trying to discuss gravity with a room full of 8-year old children. The vast majority of you have no idea what you’re talking about and are using highly specified terms in very awkward and incorrect ways.

  2. teamcharlie says:

    Can we at least use the right word here?
    investment – the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.

    donation – an act or instance of presenting something as a gift, grant, or contribution.

    Kickstarter pledges are donations. Sometimes you get tote bags, sometimes you get video games, sometimes you get that warm feeling in your heart of helping out a worthy cause. Sometimes you feel cheated. Anybody who thinks these pledges are an investment either does not know what that word means or has a Beany Baby mentality about kickstarter swag and an incredibly poor understanding of how likely it is for that stuff to ultimately be worth anything.

  3. malkav11 says:

    I think it’s very important for people to go into Kickstarter knowing that things happen and a project funding doesn’t mean that project will succeed or deliver on the originally estimated timeframe. But I also don’t think it’s accurate or helpful to talk about it being an investment in more than the broadest sense. You’re not buying a stake in the game (or other project deliverable(s)), you’re making a speculative preorder on something that may never exist.

  4. Don Reba says:

    Here’s an important thing about games: sometimes they’re terrible. Mostly they’re average. Quite often they’re good. That’s how “average” works.

    No, this is not how average works. Hypothetically, there could well be a situation, where games were either good or bad and none average. With people, something interesting occurs: when you take a lot of faces — ugly, normal, gorgeous — and average them, the resulting face is among the best-looking ones. Most of us are non-average and suffer for it. :)

  5. frightlever says:

    “I think it’s so sad to see people claiming refunds from Unwritten”

    Sad, insofar as the guy doesn’t need more problems and charity is a good thing. But there’s nothing wrong with people making a financial decision to ask for their money back. You agree to deliver the goods that are promised in your Kickstarter rewards, so backers ARE owed what they were promised – so what other recourse do they have but to ask for their money back or look at it as a charitable donation to a hard luck case?

    I wish this article had been written a year ago and drummed into the RPS writers, Nathan in particular who has been breathless in his hurry to get people to back certain projects.

  6. Nonoga says:

    The article pinpoint a rather valid point covering a part of the negativity from some disappointing players, ie the KS released isn’t a classic. But the most troubles come from many players with expectation of AAA games, I clearly saw it for The Banner Saga. I think Bioware name brought players mainly playing only AAA games and they think a 1M budget is more than enough to build a large well polished AAA game. They compare with what they know, ie only AAA games and for sure it can only be a disappointment.

    But what those players don’t realize is it’s the genre, the approach, the uncommon design base, are the real reason to buy or pledge such game. They buy such game for wrong reasons, expect some AAA stuff and disappointed they create a lot of negativity around such games. At reverse some players are more open, and either expect some come back to genres forgotten, either except an original approach, in that contexts the flaws are more acceptable because the choice is between nothing and something with good and bad points.

  7. Dobleclick says:

    The intro to this article is kind of misleading IMHO. I was expecting a list of kickstarted games to be released in 2014, but not a single one got mentioned. Shame…

  8. DatonKallandor says:

    Oh look an entire article that is patently, objectively false in an effort to make developers they like but who failed for one reason or another feel better.

    No Kickstarter is not an “investment”. READ THE KICKSTARTER RULES. A DEVELOPER IS REQUIRED TO DELIVER.

    You are not allowed to go “oh shucks, too bad” and not deliver. No amount of editorializing is going to change that basic FACT.
    You are wrong RPS – factually WRONG.

  9. Ninja Foodstuff says:

    FYI that’s not how average works. That’s how Gaussian distribution works.

  10. Keithustus says:

    Any other legal-minded folks on here? I wonder whether the most appropriate Restatement (2nd) of Contracts section would be 154 (b): “A party bears the risk of a mistake when he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient.” In other words, whether backers who have reason to know that projects can fail, yet proceed anyway, would be a voluntary assumption of that risk? Or is this inapplicable since it is not a basic assumption of the contract that the project will be finished? Any takers?