Project Eternity, a video game from Obsidian Entertainment, has broken all records for the greatest amount ever raised for a game through crowdfunding on Kickstarter – smashing its initial target of $1.1 million to ultimately collect almost $4 million for the development of the project. The previous highest amounts were $3.3m and $2.9m for Double Fine Adventure and Wasteland 2 respectively.
So, what’s significant about this development – other than the fact that $4 million is loads of money?
Well, first of all, the obvious – $4 million is indeed a lot of money. What the sum proves is that the limit for what can be raised using crowdfunding sites such as Kickstarter could be anywhere.
While initially the site was useful for smaller projects requiring relatively few pledges, we now have proof that it is increasingly viable for multi-million dollar projects as well. If $4 million can be raised from around 74,000 backers for Project Eternity – then it’s perfectly feasible that $10 or $20 million could also one day be raised.
The implications of this are staggering. Whereas big-budget entertainment products (especially Hollywood blockbusters and high-end video games) previously required huge levels of complex financing from various backers, they can now be produced with a completely different financing structure previously associated with much smaller scale projects.
The benefits of these alternative structures is that it is much easier to gauge what your audience wants and what will satisfy them since you have already identified thousands of them and now have ways of communicating with them throughout the production process. In other words, it’s a lot, lot harder to make a massive flop.
Anyway, here are a few more figures to help put that $4 million into context:
$1.2 million – production budget of Reservoir Dogs film by Quentin Tarantino (albeit in 1992)
$0.1 million – average budget of video games in the 1990’s (Doom cost $0.2m for example)
$10 million – production budget of Gears of War video game in 2006.
$100 million – production budget of most expensive video game ever made: Grand Theft Auto 4 (2008)
$55 million – combined production budget for both of Quentin Tarantino’s Kill Bill films (2003 and 2004)
$30 million – production budget of Looper sci-fi film, released in 2012.
$18-25 million – average cost of multi-platform next gen game in 2011 (this category would be the video game equivalent of the Hollywood blockbuster).
$10 million – average cost of equivalent single platform game.
So, whichever way you look at it, crowdfunding seems likely to soon be very capable of raising the amounts required not just for smaller indie films and games – but also for the higher profile, big budget stuff as well. The question is whether this crowdfunding model will be attractive in all cases – and whether it can work across the board.
For example, it’s perfectly logical that video games can raise larger sums than films at the moment. Video gamers typically get many more hours of entertainment from the product, normally pay much more for it than they would for a cinema ticket, and are also likely to be early adopters of web based crowdfunding since, as gamers, they are by definition also users of some sort of computer/tablet/console etc.
Also, certain types of game are likely to be more successful in these efforts than others – particularly those with a cult following and those with many players, which means MMORPG games are perhaps in a better position to raise big sums than some others. Video games also usually enjoy a global market for their products in a way that exceeds even the international revenues of Hollywood (although Hollywood is better able to penetrate vertically, generating sales from more diverse portions of society unlike games which, despite changes in the trend, are still most popular with boys and young men).
The more interesting questions relate to what will happen to profits derived from these products. Will there be a model so that all those who invested in getting it made can also share in its profits?
Or, what happens if the game is not delivered at all? Then you’ve alienated not only your investors but also your core audience (since they are now united) – which means that a flop of this sort would be much harder to recover from than with more traditional funding models. Some experienced analysts have been warning of the potential problems of the crowdfunding model for some time.
Also what happens to those people whose role previously related to the financial side of production – securing investment etc? Will they now all become basically equivalent to social media marketers?
Of course the implications and consequences of Project Eternity’s success, and the broader trend of which it is a part, will take some years to be fully evident – but even now it does seem clear that even big-budget entertainment products will soon encounter some disruptive impact from crowdfunding technologies.