12 January 2014
One of the ongoing debates about Kickstarter is the increasing number of big companies using Kickstarter as a platform to launch products. I wanted to see what the average Kickstarter backer thinks about this subject, so that’s the topic for this week’s Kickstarter Face-Off.
I live in Madison, WI, where I am a financial analyst for a software company. In my free time, I am an avid board gamer, sci-fi writer, and aspiring game designer. The most recent Kickstarter I backed was Coin Age by Adam McIver and Tasty Minstrel Games. I can be found at aegisys.blogspot.com and on Twitter @AdamBuckingham.
As a backer, do you like the idea of big companies using Kickstarter?
Yes. I think that any and all companies should feel free to use Kickstarter to launch projects. The size of a company isn’t important. Rather, the value of the project is the most important thing.
1. It’s not about the money. Ok, it’s a little about the money, but only a very little. The full potential of Kickstarter is as a marketing and sales forecasting platform. Kickstarter allows a company to predict the sales of a product prior to actually putting it on store shelves, and helps build excitement and buzz. This is something that any company, large or small, can benefit from.
Imagine if Columbia Records was considering producing a Kevin Federline album. They could use traditional means to determine whether that was a good idea, but ultimately, the truest test of sales would be to produce the album, and get it on store shelves. With Kickstarter, they could put the project out there to determine if sales would be large enough to make it worthwhile. If the project fails, then they have saved themselves and K-Fed a lot of work that would have netted minimal gain, and wouldn’t have benefited the music industry as a whole.
On the flip-side, what about K-Fed’s loyal fans? If they can rally together and pledge enough money to the campaign, they can enjoy a new record from their favorite artist that might not have otherwise been made.
2. Large companies produce products by ordinary people. It is easy to say that a large company has the resources to produce a product without using Kickstarter funding. This is certainly true, but it’s important to know that the ability to do so does not always translate to the will to do so. Producing a product from a first-time designer or artist is a huge risk for a company when they don’t know what the response will be.
In the board game community, it’s often said that every gamer is designing a game. In my experience, this is actually not far off the mark. Everybody has a dream of having their idea published. However, in terms of sales volume, much of the industry is dominated by a few larger publishers. Producing a game is expensive, and for a major publisher (and smaller publishers too), they have certain numbers they need to sell in order to make it worthwhile to publish a game. It is much less risky to produce a game by an established designer or within an established franchise.
However, a larger company may be willing to take a chance on a new designer or concept if they know that they can meet their minimum sales quota. With Kickstarter, they can guarantee that prior to taking the risk. If the community gets behind the project, then the company will benefit, and the designer will have his or her project made.
3. Kickstarter enables better products. As a backer, I want the best product possible. For me, if I’m backing a board game, that means better components, more content, better packaging. These things cost money for a publisher, especially at small volumes when they are unsure whether a game will sell out and see a second printing. More often than not, a company will choose to forego the upgrades and just produce a small number of products that are “good enough.” If they knew they could sell twice as many games on the first printing, they would be able to upgrade components at a much lower per-unit cost. That means a better product for the backers, but also a better product on retail shelves.
Kickstarter allows them to offer the basic product and if support is bigger than expected, upgrade via stretch goals. With the expanded Kickstarter support, they can also make larger orders for retail copies. That means that more games can be on shelves at the game’s public release and fewer people having to wait out a long lead time when the hot new game sells out of stock.
In conclusion, Kickstarter is an invaluable tool for companies of any size. As a sales forecasting and marketing tool, it can provide large and small companies with the confidence to produce better products for backers and traditional consumers alike.
Counterpoint from the Con
Running a business is full of risks. Predicting sales of a new product is just one of them. A big company, aware of the markets where it operates, needs to know how to do it. I agree that any mechanism that would allow it to mitigate this risk would be highly beneficial to the company but Kickstarter might not even be a reliable platform for forecasting demand. Its users are in no way representative of the mainstream market, and predicting post-Kickstarter sales remains a foggy business. Let’s take the K-Fed example. If his loyal fans all “rally together and pledge enough money to the campaign” does this mean that the album is going to be a success after Kickstarter?
The reason why big companies want to be in Kickstarter is to pre-sell their products at no risk. This is extremely valuable to them, but that’s not the issue. The question we should be asking is whether big companies using Kickstarter is also beneficial to the ecosystem, which involves its competitors, big or small, and consumers. My opinion is that it is not. Not only it goes against Kickstarter’s core principals, but it also impacts negatively on small creators. Recently, Kickstarter helped triggering a revolution in the board gaming community by allowing small independent publishers and game designers to launch extremely successful and high quality games. In theory, big companies could also participate in this revolution by bringing new designers on board to launch their projects. But only in theory because this is not what we have been seeing.
In the end it’s all about the games and gamers. It is true that Kickstarter enables better products for companies of any size. However, if big companies start using it more and more often, there is a price to pay. Small creators are the ones who are are truly taking the industry to a whole new level and bringing new gaming experiences. If big companies flood Kickstarter with their new product releases (or in same cases re-releases), the visibility and chances of success of smaller projects will be greatly affected. This will have severe consequences for independent publishers and new game designers, for the gamers and, finally, for the games we play!
My name is Tiago Marques and I’m a Kickstarter believer. I was born 28 years ago in beautiful and sunny Lisbon, Portugal. I’m a physics engineer turned neuroscientist, after a brief experience in management consulting.
When I am not in the lab studying how the brain builds sensory perceptions, you’ll find me running, cycling and swimming, as I train for an Ironman in May, or playing card, board and video games with my friends. My latest Kickstarter backing was Villages: a Construct and Conquer Card Game, that I can’t wait to add to my gaming evenings.
For me, big companies clearly don’t belong in Kickstarter and here’s why:
1. It completely misses Kickstarter mission
Although, Kickstarter’s main goal is to help bring creative projects to life, it goes much further than that. According to the “What is Kickstarter?” page on its website, backing a project is more than just giving someone money, it’s supporting their dream to create something that they want to see exist in the world.
Big companies don’t need this kind of support. Big companies don’t need Kickstarter. They’re basically exploiting the hype that it has generated to free fund their ventures. In some cases it’s even worse, with companies using it as a straight pre-order platform for their products.
No, Kickstarter exists for people like Jaron Frost, the creator of Villages, who describes his goal quite nicely in his project video, “I would like to bring the game to as many people as possible and that’s why I am here on Kickstarter”.
2. It impacts negatively on smaller creators
It does. In several ways. The most obvious one is competition for funding. Money is a limited resource and backer’s money is no different. In fact, due to the nature of how patronising projects works and the fact that it might take several months to receive the rewards, the psychological effect of spending money on Kickstarter is very different from buying something of the streets. So less money in circulation means less funding for smaller creators which means that fewer dreams are supported.
Additionally, the resources that these companies have are orders of magnitude higher than those of indies. They may invest more in a project video than what a small creator is asking for his total funding. This will accustom backers to a level of polishing in projects that might be out of range for a typical small creator. This situation has even bigger consequences when a big company launches a megalomaniac project that directly competes with the one of your average Joe. It really is an unfair fight.
Finally, one of the reasons for Kickstarter’s earlier success was how easy it was to submit a project for funding. Everyone there was, to a certain degree, on par with each other, and therefore the decision to launch a project could be taken relatively lightly (as long as the project was well-grounded). As more and more huge projects appear on Kickstarter, small creators will start feeling overwhelmed by them and question their decision to advance. Quoting Kickstarter’s co-founder Yancey Strickler from an interview about a year ago: “The thing is, if Michael Bay came along and wanted to do a Kickstarter we’d probably tell him, please don’t. I would never want to scare the girl who wants to do a $500 lithography project, ’cause that’s why we started this thing. We think we have a moral obligation to her.”
3. It will eventually corrupt the platform
Supporting big companies in funding their ventures is not Kickstarter’s mission. I will even say that it goes directly against its mission. It will make funding for smaller creators even harder that what it is, and for what? So that big companies can save some pennies in interest rates? Is it really worth it?
In my opinion, in the long run, this will ultimately destroy Kickstarter. Creators will either flee to other platforms or give up on their dreams. Original backers will see Kickstarter as just another online store and will spend their money somewhere else. Maybe I am sounding too dramatic and pessimistic. Maybe I’m just being realistic.
A few years ago an online platform was created to facilitate consumer-to-consumer commerce. It was the equivalent of a gigantic online garage sale. From there it became the storefront for small and local businesses. Nowadays it is flooded with low-cost overseas manufacturers selling products of dubious quality. Can you guess the name of this website (hint: it starts with an “e” and its name represents a large body of water connected to the sea).
Counterpoint from the Pro
I agree completely that Kickstarter provides a fantastic platform for independent people and small companies to do something they might not otherwise be able to do. It’s a great place for that. The fact that an average person with a great idea can create a page and get support for his or her idea is fantastic. But my question would be, “Where do you draw the line?” Who fits into the category of “small enough” for Kickstarter? What about a mid-sized indie book publisher that has published dozens of books in the past? Or a software company who is running their second kickstarter after their first raised a million dollars? How about a game publisher with a handful of games that were successful on Kickstarter or retail in the past? I’m not sure how you say that a company is just a little too “big” for the platform, while another company competing in the same space is ok. It creates an unfair competitive advantage to the smaller company, based on an artificial distinction of “need.”
The argument against large companies seems to assume that they are cynical and heartless, faceless companies. I think that’s an unfair depiction of these companies. As I said in my main points, these are people creating projects. The products they produce are often the dream of a small-time author, artist, or designer. The fact that the company is large doesn’t mean that there aren’t people involved who are passionate about making their dream a reality. To imply that the passion project of a so-called “indie” producer is more worthy than that of an established producer is creating a distinction that ultimately does not exist in the marketplace. Why should I be able to use the platform to create my passion project, but if I take that exact same project to a large company, they can’t do the same thing?
Large companies won’t destroy Kickstarter, as long as good projects are being created. The thing that will destroy Kickstarter is if backers feel like they aren’t getting what they expect to from projects. Backers fund projects that they feel are worthwhile. Whether that project comes from a large company or small, the most important thing is that the creators deliver on their promises. There are small companies doing great things on Kickstarter. There are also large companies that can do equally great things. Likewise, small companies fail to deliver quality products just as often as large ones. Kickstarter is a business, and they run the site for other businesses. When you acknowledge that Kickstarter has never been about charity, it’s hard to argue that a one-person business is more deserving than a 100 person business.
First, I want to say that both Adam and Tiago presented excellent arguments (as did the first two participants in last week’s KS Face-Off). I found myself agreeing with both of them, and I don’t think there’s one correct answer here.
As the co-founder of a very small publisher that I hope will grow into a slightly bigger publisher, this is a topic I think about a lot. I love Kickstarter as a platform because it allows me to directly connect with backers and even let them shape certain aspects of our games.
The question for me is: Can I mimic the Kickstarter experience on my own website? One example that came to mind as I was writing this entry was Plaid Hat Games, which often offers pre-orders for their games at a healthy discount. They even create a small amount of involvement by posting a question for customers to answer when they place their pre-order. I asked Colby at Plaid Hat if he would mind sharing the number of pre-orders they’ve received during the first month that their new game, Dead of Winter, has been available for pre-order. Colby divulged that they’ve received about 650 pre-orders (651 after I placed my order a few minutes ago) during that time. So, a fairly large number based almost purely on Plaid Hat’s stellar reputation and the nice discount, but probably less than if Plaid Hat has used Kickstarter. (Not that Plaid Hat is a “big” company, but they are an established company.)
As a backer, it’s very rare that I see a big company use Kickstarter in a way that excites me. I don’t mind that they’re on Kickstarter, but for me to back a project from a large company, I need some level of engagement to draw me in. I don’t think there’s anything ethically wrong with a big company using Kickstarter as a pre-order system, but I simply think that I–and many other backers–aren’t interested in supporting those types of projects. I think they’re actually less likely to overfund to the extent of a well-run project by a little guy.
What do you think? Do you mind seeing big, established companies on Kickstarter? Have you supported their products?