Crowdfunding is changing the way a lot of people generate capital for projects. By using platforms like Kickstarter or IndieGoGo, producers are able to forego the traditional route of seeking investors to pledge money to their company and make a return on that investment.
For starting companies, or for smaller, established companies planning to undertake new, potentially risky projects, it’s a huge boon for a couple of reasons.
Reaching out for online donations allows startups a business model that prevents investors from holding power over the company. It’s entirely possible, and it’s surely happened in the past, that investors who aren’t satisfied pull their support and leave the company without funds. It’s also possible for investors to meddle in the affairs of the company and ruin their products.
The other benefit is that crowdfunding generates and gauges interest in the project. Many a video game or tabletop game has been brought to the market because people have had the interest to back it, ensuring that capital raised for that project wouldn’t be wasted.
On the other end of the spectrum, a lot of projects have failed to get past the Kickstarter phase, either because they couldn’t generate the attention needed, or because they simply couldn’t generate enough trust.
Getting a crowdsourced video game off the ground, for example, requires designers to prove that their concept is interesting, marketable, and can be made with current technology. Video games have long development cycles, meaning that it could be years from Kickstarter to the release of a playable game.
That’s no different than big name studios developing a game. Large game developers must contend with more investment by customers provided the developer is doing things well. The developer must keep to a timetable and update with the people who helped to fund the project.
A certain level of transparency is required to successfully launch a game via crowdfunding, but that can really help move the company forward, and make funding subsequent games that much easier.