Hopefully everyone is familiar with Kickstarter by now. Kickstarter has been a pretty great source of funding for a year or two, but it has mostly been a success for Board Games or other Pet Projects. That was the rule until Doublefine did this. (For those wary of links, Doublefine raised $3,000,000 to create a classic-style Adventure game, up from their initial asking of $400,000)
One month later, lots of other game projects are trying to crowd-source their game into reality. I think this is a totally positive trend, with some great potential benefits for everyone. But it also opens the door for abuse, and in these first months we run the risk of getting abused into oblivion.
What Kickstarter Can Do
The promise of Kickstarter is fantastically large. It can help direct money into the projects people actually want to play, instead of into copy-cat projects chasing phantom marketing-speak. Doublefine Adventures is a perfect example - publishers have been unwilling to fund the project, but customers can pick up the slack.
This isn't just about market forces replacing bureaucracy - it is also about efficiency. Advances in distribution and creation have cut the overhead for producing a new game to the lowest level we've ever seen. It is entirely possible to make games much, much more efficiently today than at any time in the past. But the established team-sizes and business models are acting like friction - resisting this change. It is hard for a studio of 90 to staff-down to 40, and it is difficult for publishers to spend $700,000 on a game instead of just charging $2M and throwing the excess money to their buddies.
But an independent studio can absolutely reap these rewards - and that should be lighting a fire under the rest of the industry.
Why Platform Owners should care
Kickstarter threatens publishers, but does it threaten platform owners? It might. The biggest reason the industry is driven by a handful of large-scale publishers is because of the way Sony, Nintendo, and Microsoft have been wielding their power. The buy-in cost to put a game on the Xbox 360 is around $300,000 - just to get the hardware and contracts necessary.
Console games NEED publishers, at least under the current model. Microsoft experimented with opening up XBLA to smaller developers - and were largely successful, but the changing marketplace sort of obfuscated that process, so it looks like other Platform Holders will not be following suit.
Steam, on the PC side, has been bending over backwards to work directly with developers of any size. Putting a game on Steam costs nothing - it uses a profit-sharing model which has since been copied by the apple app store (which should tell you something!). But significantly, Steam allows developers to adjust prices however they want - a far cry from the console price-point rigidity. Boxed goods have held on to strong price-points because there are so many companies which require their cut - shipping, distribution, manufacturing, publishing, retail, development. Cutting the price of a game hurts everyone, and extra volume is expensive. On the digital side greater volume is essentially free - so there is more price flexibility.
We've been watching the industry move to a digital-only model, and we've seen how cost-efficiency has been a big side effect of that trend. Kickstarter is the latest symptom of that movement, and the smart money will be running to embrace that trend.