Gamasutra - Kickstarter, lemon markets, and bailouts

Video game kickstarters rarely deliver on their promises. For the non-video game projects I've personally backed on Kickstarter, I've seen an average delay of two months over the original estimate. For the video-game projects I've backed, the average delay I'm currently tracking is over a year, but even that is tentative as more projects continue to push their dates back, and others may be on the verge of failure.

To take specific examples from the most funded video game projects, these are some approximate figures: Torment pushed its release date back 12 months (6 of which was called out during the campaign, due to stretch goals). Pillars of Eternity came out 11 months after its estimated date, Mighty Number 9 is targeting a date of five months after its original plan, Broken Age went two and a half years over plan to achieve a full release, Wasteland 2 achieved its full release 11 months late, Elite: Dangerous came out 9 months late, Homestruck is pushing a year overdue.

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The point that concerns me is that systems like Kickstarter and Steam Early Access are in danger of becoming lemon markets. There's a principle in economics related to information asymmetry, that argues that when sellers know the quality of goods and buyers don't, there's no incentive to sell quality goods. If buyers who want to buy cherries can't tell the difference between cherries and lemons and lemons are cheaper, sellers who sell lemons will make more money than sellers who sell cherries. This results in a downward spiral where each lemon sold lowers the trust of buyers in the market, which in turn lowers what buyers are willing to pay since they're likely to end up with a lemon, which eventually drives cherry sellers out of the market completely.

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Steam Early Access is in a similar position, the more games drop off the radar without ever achieving their promised full release, the less incentivized buyers are to take risks on future titles. If trust in the marketplace drops to zero, the only sellers who will remain are sellers who want to make a few bucks off an unpolished beta, and the only buyers who remain are the ones fine with paying for games of that quality. No one shows up to sell or buy cherries, when all they see on the market are lemons.

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The risks taken by Kickstarter backers are one-sided. If I back the Oculus Rift and the creators use that funding to make billions, I don't see any of the benefit. We don't earn equity for our investments, or interest on our loans; money is donated in good faith. Faith is the currency of Kickstarter, and my fear is that as it continues to depreciate, the platform will end up being far less than it could be and deserving projects will be unable to raise funds. The end state of Kickstarter may be an advertising platform where the funds raised and the deadlines promised bear no relation to the actual budgets and schedules of the games involved, it simply becomes a marketing tool to assess the level of interest in a product. What else do you do when life gives you lemons?

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cptbarkey said:

without escrow or asset backing, kickstarter is setting your money on fire. not much else to say about that.

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forgottenlor said:

Oh yes, the money I spent on Pillars of Eternity, Lords of Xulima, and Grim Dawn was set on fire. Oh, wait!? What are those great games doing in my Steam library?

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HiddenX said:

We have an oversupply of games in general right now (not only Kickstarter games).
That leads to a high level of competition and many price cuts (Summer, Winter, Pre-Summer Sales,…).
Some game companies will not survive this, unfortunately.

It is the job of sites like RPGWatch to identify the good and the bad games, so that the good devs with interesting games survive on the long run.

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Darkhawk said:

To my mind, Kickstarter has been the best thing happening to the game industry for the last 2 decades, nothing less. I've backed a lot since Broken Age, and have been hugely enjoying the releases. Sure, maybe I'll lose money with projects that will never see the light of day, but for me, it's all been worth it. Infact I find all of these constant 'no one will ever make it on Kickstarter anymore', 'Kickstarter devs fail to deliver with YOUR money' articles that seem to have been trending for what, 2 years now, to come from a completely different universe than the one I am living in and experiencing.

As others said, I can stomach losing some money now and then (not sure I have lost money yet, but Sui Generis might be shaky ) to have this fantastic possibility for developers to do what they are passionate about and deliver to niché audiences who value their work. So what if it takes 1-3 years more than estimated, as long as they deliver and put their heart and soul in it. This is way better than not having those games.

Well, my opinion.

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