The Rise of Kickstarter

Over the last few years Kickstarter has become more and more popular with over $3.6B spent. For those unfamiliar with the process Kickstarter provides a platform for (mainly) small businesses to crowdfund the money they need to get their projects off the ground.

The business will ask for say $25,000 to get their product produced. Backers will effectively pre-order the product and as long as there are enough pre-orders to meet the production cost then the product will be produced. If the production costs are not met then the backers will not pay any money; it’s all or nothing.

Often it will be many months before the product is completed after all the backers are usually buying in at prototype stage. So there is definitely an element of risk.

In general it is a good system, connect entrepreneurs with good ideas with a pool of investors. However there are a few drawbacks. As you know one of my hobbies is boardgaming and more and more board games are being funded on Kickstarter; at present there are over 250 board games up for funding. Often these are small companies or individuals trying to get their idea off the ground, but just as often they are larger companies that are using Kickstarter as a low risk way of getting the money for their game as well as gauging consumer interest. The biggest and best games will often be be funded to the tune of 5-10X the amount asking for. This also creates a huge amount of buzz around the game. In general it’s not a bad system and when it works well it’s a good synergy for both parties. I wrote earlier in the year about Gloomhaven one of the most successful Kickstarter projects in recent years. However not all projects are run the same way.

In the board game world most projects will have a series of stretch goals. Take a look at this successful, currently running Kickstarter for a game called Unbroken. It has raised almost 30X the amount required. As more and more money is raised there are a series of stretch goals which don’t intrinsically change the game. Instead each stretch goal improves the game with updated components and a better quality product. The game is cheap at $20US and even if you don’t back it eventually you will be able to buy it in stores. To my mind this is a good well thought out Kickstarter. They are asking for $11,000 and the fact they will get a lot more money doesn’t have a huge impact on the consumer except to provide a better quality product as an incentive to potential backers.

On the other side look at this project for a Batman Miniatures game. This is what is called a “Kickstarter Exclusive” unless you fund it now (to receive in a years time) you will not be able to get it anywhere else. It will not be available in stores nor online. For anyone on the fence there is real FOMO about this. If you are interested then the base game is $140, but if you like it you will want all the expansions and extra characters, but of course you won’t be able to try the base game to see if you like it and then buy the expansions later because they wont be available. So if you think you will like the game you are likely to go “all in” and pay for everything which will set you back $320. Of the close to 20,000 people who have kickstarted this approximately half have done this and paid a lot of money for something they don’t even know will be good.

The company making this game is a well known company; they probably don’t need to go Kickstarter and are essentially using this as a marketing tool. It’s been successful for them too, they have raised over $4M.

In the end it is legitimate tool to promote your large product; it’s just a methodology like this doesn’t sit very well with me. Clearly though it is successful and it works. My worry is that the small designers and entrepreneurs will get lost in the crowd of larger companies.

Facebook Comments

This entry was posted in Uncategorized. Bookmark the permalink.

3
Leave a Reply

avatar
2 Comment threads
1 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
3 Comment authors
Steve TraylenGYMIncome Master Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
Income Master
Guest

Completely agree. I have seen a lot of instances where huge companies have started a Kickstarter campaign where they quite obviously do not need any funds to get the product onto the store shelves. It really should be left to the small entrepreneurs who have a cool, innovative idea.

GYM
Guest

I’m not a fan of kickstarters or fundraising either, a lot of that money seems to disappear and there’s no accountability.