Jon Russell was Asia Editor for The Next Web from 2011 to 2014. Originally from the UK, he lives in Bangkok, Thailand. You can find him on T Jon Russell was Asia Editor for The Next Web from 2011 to 2014. Originally from the UK, he lives in Bangkok, Thailand. You can find him on Twitter, Angel List, LinkedIn.
This year already we’ve seen Kickstarter really show its potential as a fundraising platform. A plethora of projects have raise their target funding (and more) in ridiculously short periods of time, demonstrating in the process that the crowdsourced-funding model is more than effective, to say the least.
A record of more than $3 million
Today a new message was sent out, after a video game project from Double Fine Adventure passed $3 million in financing from Kickstarter. The total figure for the game is a record breaking $3,335,250, a quite incredible sum that has been achieved in a month thanks to more than 87,000 backers. Aside from the site, private investors are said to have contributed more than $100,000 in funding too.
Double Fine Adventure is the biggest project in Kickstarter history, ending at $3,335,265 and 87,138 backers! kck.st/wEuJ8g
— Kickstarter (@kickstarter) March 14, 2012
The project passed its $400,000 target in just eight hours (!) and the additional revenue for the point and click game has seen the team expand its original projection. The success of the project, which saw Double Fine post a range of videos and even live-broadcast the countdown to its contribution deadline, has seen its plans expand to develop for a range of platforms and add support for French, Italian, German, and Spanish.
The Kickstarter page explains:
Q: What happens if you go over the goal?
A: The extra money will be put back into the game and documentary. This has already resulted in increased VO and music budgets, and additional release platforms for the game (Mac, Linux, iOS, Android). The higher it goes the better the project gets!
The fact that the game has got so much more than its target funding sends out a powerful message to future projects, developers and, significantly, investors. As the guys behind Double Fine explain, crowdsourcing their cash gives them more control over their product than ever before:
Big games cost big money. Even something as “simple” as an Xbox LIVE Arcade title can cost upwards of two or three million dollars. For disc-based games, it can be over ten times that amount.
To finance the production, promotion, and distribution of these massive undertakings, companies like Double Fine have to rely on external sources like publishers, investment firms, or loans. And while they fulfill an important role in the process, their involvement also comes with significant strings attached that can pull the game in the wrong directions or even cancel its production altogether. Thankfully, viable alternatives have emerged and gained momentum in recent years.
Double Fine’s Tim Schafer played down the potential of Kickstarter killing publishers but he will be acutely aware that, given its success, the company has a new avenue it can go down to bring projects to life in the future:
I don’t want to say this is the end of the whole games industry as we know it — it’s not, and it’s not a replacement of all publishers… but it does mean that if you’ve ever been told your part a a niche market, you can make things happen for yourself.
While, for now, Kickstarter is coexisting with established fund raising methods, the fact that its popularity has surged to the point that a video game can generate millions of dollars, underlines its potential to grow further still and trouble the establishment.
Not just for the tech industry
It isn’t just the tech industry that can benefit, as the music industry and any form of production or entertainment has the potential to tap into crowdsourced funding. In today’s world, social media gives actors, singers, rappers and entertainers enjoy relationships with their fans that were unthinkable as recently as two years ago.
Fans follow their idols on Twitter, Facebook and other sites, and it isn’t hard to imagine that popular artists could jump on Kickstarter and raise a tonne of funding from their fans and private backers. As well as giving them independence, a crowdsourced record (album or even movie) would have the potential to be massive. Each backer would feel like they owned a piece of it; that’s serious monetisation potential, while the sale price of the product could be significantly subsidised by the funding and thus massively discounted (and even more appealing) for consumers.
Jason Calcanis heralded Kickstarter and AngelList as the two most important startups in the world today, and he believes that crowdsourced funding could be a game changer for the entertainment industry:
If George Lucas or Quentin Tarantino wanted to, they could raise $20M on the service tomorrow, give their movies away for $5 online without DRM, $10 on Blu-ray and for millions of dollars to a cable channel and make much more money — net-net — than they do with the studios.
For now, projects like Double Fine’s give a hint of the possibilities of Kickstarter and, as and when as established names take to the site, we’ll have a clearer idea of just how far it can go.
US government proposals
The US government is taking an active role in addressing the potential of crowdsourcing. The Senate is preparing a number of draft bills which aim to introduce regulation in response to the growth of the phenomenon.
The series of proposals that are being gathered, as GigaOm explains, are aimed at making it legal for investors to put forward money in exchange for equity. Two bills aims to place a cap ($1,000 and $10,000 are mooted) on the amount that crowdsourced investors can contribute to projects.
With the US government helping to make crowdsourced investing smoother and more regulated — something President Obama is reportedly keen on — the concept has clearly already gained significant appeal beyond its early adopting audience and fanbase.
From where we’re sitting, with a $3 million plus video game in the pipeline thanks entirely to the site, it seems like only a matter of time before a big name example takes things to the next level. Then we’ll be able to gauge exactly how disruptive the Kickstarter concept can be.
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