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The Disparity In Games Funding

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The dawn of Kickstarter has provided a dramatic shift in the way that the video games industry is funded. In years past, large-scale publishers such as Ubisoft and Electronic Arts have controlled the purse strings, providing advertising and distribution budgets that were beyond the reach of the average developer. While this approach is still valid (and still pretty much essential for AAA development), crowdfunding has at least provided developers with an opportunity to secure their own funding.

In the years since, crowdfunded projects have become synonymous with independent studios. Now that indies have a platform to reach their fans directly, those fans are able to pour their money into games that they are interested in. It also helps to connect a project to its fans who, having placed their trust and money in a game’s development, are invested both emotionally and financially. Although, it has be clarified that backing a Kickstarter campaign is basically a donation based on good faith, and not a buy-in clause giving the backers a say in development, or a guarantee on the final product. This grassroots ethos behind Kickstarter extends to programmes such as Steam Greenlight, in which the community votes on projects that would like to see come to fruition, proving that there is a demand for the game before it reaches market.

Of course, for many games, the money raised through crowdfunding is just part of the story. The reality of game development is extremely expensive, especially when the game is aiming to deliver cutting edge visuals. During the PS3/360 era in 2009, Ubisoft president Yves Guillemot predicted that games development would rise to around $60 million by the time the next generation of consoles arrived. While that figure is huge, it pales in comparison to the reality of Destiny’s now-famous $500 million budget. On today’s consoles, blockbuster titles can easily cost hundreds of millions of your choice of currency. For example, 2011’s Star Wars: The Old Republic cost around $200 million to develop. On its release in 2013, GTA V racked up a cost of $265 million, so it’s safe to assume that a project of similar scale and scope would carry a nine-digit price tag. Say what you like about these staggering figures, the reality is that AAA development is an expensive endeavour.


GTA V: $500 Million worth of content.

Contrasted with the budgets that Kickstarter campaigns raise, it’s obvious that the scale of crowdfunded games will never live up to their blockbuster counterparts. The highest funded Kickstarter project to date is Exploding Kittens, which proves not only that the world enjoys feline violence to the tune of $8,782,571, but that there is a gap with how much can be raised through crowdfunding as opposed to publisher funding. That’s not to say that $8,782,571 is a small number, and I’m sure a lot of developers could do amazing things with that money, but the disparity suggests that cutting edge technology is still in the hands of wealthy publishers that can afford it.

This article isn’t trying to criticize the nature of blockbuster games and the rich publishers behind them. In fact, without these huge war chests, we probably wouldn’t have seen many of our favourite games come to fruition. However, it appears that major publishers are starting to get hungry for those startup dollars, as Sony proved during their recent E3 press conference.

The announcement of Shenmue 3 is an unusual case. Sony announced the eagerly anticipated title at their conference as a game already in development, then promptly asked fans to put their hands in their pockets to a Kickstarter campaign. While fans welcomed the announcement, and the Kickstarter reached its $2 million funding goal in a matter of hours, creator Yu Suzuki has already admitted that the initial money will not come close to funding his ambitions for the game.

During a Twitch Q&A, Yu Suzuki expanded on the levels of funding required and how Shenmue 3 may differ. “At the $3 million level, Shenmue 3 will be more story oriented.”


Shenmue 3: $2 million, $5 million, or $10 million?

“Going to $5 million, there will be features not present in 1 & 2, features that I really want to see in Shenmue 3 like the Warring Kingdom scenarios.” “The $5 million Stretch Goal will focus on the area, Baisha. This will be something new and fun I would like to include for Shenmue 3. It will include siege and infiltration events based off the Warring Kingdoms period in Chinese history,”

“At the $10 million level, the area Choubu will get a big expansion, and be like Dobuita in Yokosuka where you will have a lot of options to explore and have fun. I hope we can shoot for that goal and make Shenmue 3 more open world like.”

Essentially, if players want to experience a true open world Shenmue, they will have to pay an extra $8 million than was initially announced at E3. Perhaps the messaging wasn’t clear at the time, but the suggestion seemed to be that $2 million will get the game made and released. Obviously, compared to the budgets of other blockbuster games listed earlier in this article, $2 million would only just about pay for a fancy title screen, but this seemed to be the message being conveyed. Perhaps Sony intended to make up the rest of the funding, but some communications seem to suggest that Sony are only stumping up the cash for marketing, which would still leave a considerable shortfall.

Regardless of the business deals involved, at least backers are promised a digital copy of the game for as little as $29. The question of when backers are likely to see the game still remains to be seen, especially since the Kickstarter campaign is still underway as of the time of writing (with $4,497,409 raised). However, what kind of precedent does this set for the games industry going forward?

Crowdfunding has become the solution for smaller games that may never see the light of day otherwise. This cannot have gone unnoticed by the major publishers. There is already a precedent for decently sized companies going down these routes, such as Stardock’s recent Galactic Civilizations III that entered Early Access last year at a whooping cost of $99. While that $99 did offer some nice incentives such as access to DLC and the ability to have star named after you in the game, the base game recently released at a more reasonable $49.99. Stardock charged people almost double the cost of the base game to play an early, unfinished version of it. Regardless of your opinions on value (which could be derived from playing the game a year early, or the promise of future DLC), this seems like a steep ask.


Galactic Civilizations 3: $99 for the Alpha, or $49.99
for version 1.0.

This and the Shenmue situation suggests that AAA development has seen a chance to offset some of its own costs using public money. This does make business sense; why use you own money when you can use someone else’s? Big companies cannot be blamed for wanting to capitalise on this source of funding, and it’s only a matter of time before others start trying this approach. Depending on how successful the Shenmue 3 Kickstarter proves to be, perhaps this will eventually become the new funding model for the industry as a whole. Square Enix has already moved into this space with its Collective platform which seems to operate in a similar fashion to Steam Greenlight. It allows game creators to pitch their ideas, then the community votes on which projects make it to the next stage where they pitch for crowdfunding. For Square, it is a safe, autonomous environment that allows them to pick up popular projects and secure a small level of funding upfront.

The ramifications of this are purely speculative at this point. No doubt Indie and AAA development will still continue down their respective lines. However, considering the ethos behind Kickstarter, it seems a little crass for big corporations who are already capable of funding these projects, to start asking for help in this regard. Crowdfunding has given projects the chance to survive that otherwise wouldn’t without the necessary finances, so why should companies on the stock market be asking for this same type of help? Will it saturate the market, thus taking or diverting funds away from games that really need it? Whatever happens, this could be a growing trend to watch out for over the next few years, and it will be interesting to see how it develops.

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  • SonicJumper

    This article is badly researched, as expected.

    > However, it appears that major publishers are starting to get hungry for those startup dollars, as Sony proved during their recent E3 press conference.

    What a silly statement. Sony is getting none of the Kickstarter money. The Shenmue 3 Kickstarter wasn’t Sony’s idea either. Many people over the years have suggested they want to see Shenmue 3 on Kickstarter. And it has been known for more than a year that Suzuki was looking into the possibility.

    > The announcement of Shenmue 3 is an unusual case. Sony announced the eagerly anticipated title at their conference as a game already in development, then promptly asked fans to put their hands in their pockets to a Kickstarter campaign.

    Wrong again. Sony did NOT announce Shenmue 3 as a game “already in development”. The actual quote Adam Boyes said on the E3 stage: “A developer told us they’re bringing back a fan favorite kickstarter for PC and PS4. Now this is very much their project, but we wanted to celebrate their announcement on our stage, since this is a game that PlayStation fans have been very, very, very vocal about”.

    This makes it pretty clear that the game is not being developed by Sony, and that the reason they got involved with the project at all was due to fan demand. Do your job and research Sony’s BuildingTheList campaign.

    > but the suggestion seemed to be that $2 million will get the game made and released.

    Yes, it would have. But obviously only a rather limited version of the game.

    > obviously, compared to the budgets of other blockbuster games listed earlier in this article, $2 million would only just about pay for a fancy title screen, but this seemed to be the message being conveyed.

    First, do you assume that Shenmue 3 will be an AAA title, or even a “blockbuster game”? If yes, what makes you think that? The game will be developed by YsNet, a small third-party developer. Second, who made you a financial expert that knows how much a title screen costs?

    At the end of 2013, Cyan Inc., creators of Myst, the best-selling PC game of the 1990s, ran a Kickstarter for their new game “Obduction”. They managed to raise 1.3 million dollars. Why didn’t you question how they could make a “spiritual sequel” to Myst, therefore an eagerly anticipated title, with so little money? It’s not like Cyan has a big war chest, they almost had to close shop at one point.

    > The ramifications of this are purely speculative at this point

    Translation: this article is a lot of hot air. Do some research next time.
    Kickstarter isn’t being exploited here by an AAA developer, or a big Publisher. Shenmue 3 is being developed by Yu Suzuki and his small YsNet team. The kickstarter is by and for them. Sony does not fully fund 3rd party games. And since Shenmue is Sega’s IP, there is no cheap and easy way that it could become a Sony 1st party project. Sony doesn’t fully fund the game. And if that disturbs you, you could just as well complain that neither Microsoft nor Nintendo are funding it either. They heard the fan requests as well.