Games Changing the Rules of Crowdfunding?

Posted by Madeline Reddington /January 14, 2016 / crowdingfunding, Entrepreneurial Advice, FD Success Stories, FounderTalk, Hot Topics


Untitled design (28)Justin Bailey has long embraced a love of gaming in his career. He joined Double Fine Productions as COO in 2012 shortly after their historic crowdfunding campaign Double Fine Adventure (AKA Broken Age) raised $3.3M on Kickstarter – becoming the first campaign to raise a million dollars in 24 hours. This year he’s launched Fig, a curated, video-game-specific crowdfunding site using both reward-based and equity fundraising. He joins us this week to talk about why Fig sets creators and consumers up for success, the expanding market of the gaming industry, and how video game campaigns are helping fuel the next evolution of crowdfunding.

When did you start thinking about the ideas that would end up being Fig?

Before joining Double Fine, I was trying to figure out how to get investment groups involved in funding games. I had previously been with some traditional publishers their greenlight process seemed to support existing franchises rather than innovative games. New IP was hardly ever greenlit. I saw hundreds of pitches and so many amazing games come across my desk that I reviewed, and they never got made—often because they needed consensus from all departments to get through. If one department said “no,” that was it. Not to pick on marketing, but they might say “Hey, destroying things is all the rage right now, and adventure game pitch won’t have any destructibles.” But really, what we needed to be looking at was what’s going to be cool two years from now, not what’s cool right now. So there were are all sorts of things like politics and other reasons that games didn’t get funded, and they had nothing to do with whether the developer could create it, or whether it was actually a good game.

I was very interested in what happened with Indie Fund, because they were a bunch of former developers who got together, invested in games and made positive returns on every project. I also thought about how things are done in Hollywood.

Why can’t game financing imitate movies – we could start to have people coming together to help fund a creative project that was outside traditional video game publishing.    Tweet this!

That happened in film about 40 years ago and that’s where incredible franchises like Star Wars and The Godfather were established.

How have campaigns for games impacted the crowdfunding industry as it is?

Games have been one of the highest performing sectors in crowdfunding. It’s actually been on the forefront of evolving crowdfunding. Tim’s Double Fine Adventure was one of the ones that basically helped chart the course; the term “Slacker Backer” actually came from DoubleFine. Brian Fargo, who’s also on our advisory board, pioneered the use of stretch goals. During the year when those creators who are on our advisory board used Kickstarter, video games were responsible for the majority of all the revenue on Kickstarter. And gaming is still one of the largest sectors, although it may go down this year because of Fig. This game called Star Citizen was the largest crowdfunded project of all time—more than $100M now and still a continuing process.

So, why aren’t the current crowdfunding platforms right for games?

There are a few reasons:

  • They’re award-based. And because of that, they’re just platforms that help a creator organize their own communities in a very generic way (across some 30+ different verticals). They’re trying to be all things to all people.
  • There is a lack of trust. Largely because campaign goals are completely divorced from the actual budget. So the end-user does not really have visibility into whether or not this can get made.
  • Games can only get a portion of their budget. And the ones that tried to get it all almost always ended up shortchanging the creative vision. Once you’re funded, you’re done on the current popular platforms. But we take investment. When you take on investment, it’s not just about getting it funded. You ultimately want this product to be developed and to sell well. You’re aligned. To do something like that, you have to have the industry expertise.Untitled design (29)

In an interview, Tim Schafer said “Kickstarter campaigns seem to reach a kind of ‘cap’ around the $5M mark”…why is that?

The key part is what happened with Oculus Rift, where the people who believed in it and gave money to make the products basically got no participation whatsoever when it was acquired by Facebook for $2 billion. That’s one of the reasons why reward-based-only crowdfunding is going down; people don’t want to just give free money away to people for other investors to benefit from that; they want participate themselves. We’re making opportunities for that with Fig and set aside money so that unaccredited investors could actually participate in our campaigns.

Are there certain types of games that work best for crowdfunding on fig?

We hope not. We think the games that work best are innovative ones. We see a lot of communities and people being mobilized to support those.

With programming and asset creation becoming more and more accessible each year, do you think the value of game-design (new mechanics, modes, stories etc) will become the most important skill in the industry?

That’s my hope! You’re seeing reducing barriers to production, including tools for creators, to make higher-quality assets with higher production values. They can imagine any world, any genre and their concentration is on the game design portion of it rather than trying to create new tools. So that’s exciting to me, and I think we’re just starting to see that take off.

It’s really interesting when design shines through in telling an interactive story. In a way, that’s the exciting part about you having anything available at your fingertips as a creator. The developers don’t need to innovate on the technology side. They can say “Hey, what’s my creative vision?” and let that be the driving force.

You’re really making it easier for indie developers, is it your goal to disrupt the large studio model games have relied on?

I think that’s a potential way this could go. But for us, a huge success would be forming sort of a “Miramax” of video games—a “people’s publisher that enabled indies and gives them a chance.

What have been the biggest changes in the gaming industry over the last 5 or 10 years? 

The thing with the gaming industry is it destroys and recreates itself almost every five years.    Tweet this!

We saw the advent of social games about seven years ago, four years ago mobile games became big. The industry in general rapidly iterates, more so than others. I think one of the reasons for is that we’re such a young industry. I mean 10 years ago, the whole landscape was completely different.

What are the top 3 pieces advice do you find yourself giving over and over again to entrepreneurs or would you like to give to them?

I’ll go with some networking-specific stuff.

1. Networking is incredibly important. Start early. Get a really early version of your deck and make a list of people to reach out to, and iterate over and over again.

Go to friendly people first and make sure you’re pitching and revising 30-40 times over  before you get to the meetings absolutely must put your best foot forward.    Tweet this!

2. Develop relationships with people you can talk market and strategy with. For me, those people are investors, but they don’t have to be. Just find a group of people you can really relate to, whose opinions you really respect, to bounce ideas off of.

3. Be authentic. People are ambitious, they want to skip steps and jump to the conclusion, but real, honest relationships take time. That stuff’s really important. If you’re going to be trying to earn someone’s respect and use your own credibility to get someone to invest in your idea, it’s paramount to have the patience to build a real connection.