Venture Beat recently published an article about game company acquisitions and investment – “Game acquisitions set new record at $4B in 2012, but investments tumble 57 percent“. You can see form the title that the acquisition part of the story is great news for the industry while the funding aspect is a bit discouraging.
Publisher and investor appetite in the gaming market seems to be diminishing as social games are losing their get rich quick luster. However, there there appears to be a new hero – crowdfunding. I’m sure you’ve all had a friend hit you up to contribute to their Kickstarter campaign to make that limited edition set of drink coasters the world has been waiting for complete with the repeated Facebook posts and the “we’re-almost-there’s”. What’s amazing is that it’s turning out to be a legitimate source for real funds for games. Lickstarter alone now generates 6 percent of game investment!
“Kickstarter, meanwhile, complemented VC investments. The crowdfunding site account for 6 percent of all investment ($49 million, excluding board games). Kickstarter was 63 percent focused on PC games and 23 percent on hardware. About 87 percent of the value was in just 7 percent of the projects, such as Ouya, which raised $8 million for its Android game console.”
While most of these Kickstarter projects are for relatively modest sums a growing number are breaking out and raising significant sums. In February of last year Double Fine Productions turned to Kickstarter and destroyed their $400,000 goal to raise $3.3 million. It set the gaming community ablaze.
Then in November the creators of Wing Commander raised a devasting $5.7 million. Here is a summary from Kotaku.
$3,821,900 of that comes from direct contributions on the Roberts while Kickstarter accounts for the other $1,910,818.
Almost more amazingly – the game is is a PC space sim! So both of these examples are from very well established game developers that made their names on games that are more or less cultural icons. It is debatable whether or not this level of funding will be reachable for less well known developers.
Only time will tell to see if the trend continues and if crowdfunding will become the dominant form of game investment. Either way, it is a fantastic development that is evolving the game market is ways no one would have predicted 2 years ago. The public will give to play the games they want.