Crowdfunding has so much potential. Niche products can get developed outside of traditional funding sources. Games, movies, and technology have all been successfully funded. Here is a video about a few successes. Games aren't just limited to video games. Board games are also having a resurgence, partially due to Kickstarter.
There have also been a number of scams and failures. This only makes sense. Professional investors tend to be professionals for a reason. They do research before making investments. If they see red flags, then they don't invest. The "crowd" often doesn't have this experience. This can lead to failures. Here is an example video of some notable failures and why they failed.
The real moral of the story is that one must be careful when investing in a Kickstarter. Just because a project has a a pretty webpage, doesn't mean that it is guaranteed. The result is far from it. Kickstarter only works when people believe that it will. Two-thirds of projects on Kickstarter are not successful. (Kickstarter Stats has some interesting data.)
This blog lists 6 tips to help avoid getting scammed on crowdfunding sites. Most are pretty common sense, but the biggest message is that you need to do more research on the people behind the project. "Real" investors would do the same.
Hey Bruce I agree with your thoughts on crowdfunding. I seen too often a lot of kickstarter projects that have very few pledges and the starters basically get free money since they did not have to invest in anything due to the lack of internet. Im also surprised that your video of kick starter successes didnt include Mighty No. 9 since that ended up making 3 million dollars for a game with a much smaller budget than that.
ReplyDeleteMighty No. 9 is an interesting case. Financially it was successful, but one could say its critical response was much more mixed. It also took a lot longer to develop than originally anticipated. I would suspect that those might be reasons that the video's creator did not include it.
DeleteI also like that crowdfunding success has lead to big budget studios imitating successful Kickstarters. I am a fan of 2d platformers, so their resurgence has been great for me. I can find no shortage of quality new games on Steam now.
Hi Bruce,
ReplyDeleteThanks for posting this awesome topic. Crowdfunding is very far from my prior experiences, so I sometimes wondered whether there have been some failures. It's so interesting that two-third on the projects were not successful.
I have never actually paid any money on Kickstarter for anything. I have pledged a small amount of money for a project or two, but they didn't meet the minimum funding threshold so I didn't have to pay anything.
DeleteI have friends who actively fund Kickstarters for video games. For them, it is a way to be involved in the process. I have played some amazing video games that were developed from funding through Kickstarter (Shovel Knight, Undertale).
I personally like that Kickstarter exists and I think it is great for other people, but I don't really use it. I am fairly risk averse when it comes to spending money. I am happy to let strangers risk their money for my benefit though! :o)