I was having an argument with a friend over the recent rash of Kickstarter-funded games. He thought that the business model sucked; instead of making the game, selling the game, and then making a second game on the profit from the first game, Kickstarter games are sucking up the profit on the first game to make the first game. Worse,all of the money donated to a Kickstarter game has to be used to develop that game, and that game only. If the game makes several times more than the developer’s original estimate they have to plough the extra cash back into the game instead of keeping some back to see them through the lean times in between releases. His argument was that this just wasn’t a sustainable business model, and that this current fad for Kickstarter funding will burn itself out once people see that it only gets you that one game.
My counterpoint was that not everyone who is going to buy the game is going to donate to the Kickstarter. Donations are going to come from people who are really invested in that kind of game or that game’s pedigree since it’s not even like preordering a game from Amazon; you have no guarantee that the product will be made, that it will turn out anything like the developers say it will, or even that they’ll hit even their most optimistic release deadline of nine months to a year away. Those factors are going to put a lot of people off, and so the potential market for these games are much larger than the pool of Kickstarter donors, especially once you add in factors like Steam Daily Deals. I’m no expert on the economics of videogame retail, but I definitely think that they can make at least as much money as they get in funding from additional sales after release, especially if the game is good and word of mouth gets around.
Anyway, I’m interested in getting some additional opinions on this one. What do you think is the likely future of the crowdfunded development trend?