For crowdfunding week, we went out in search of projects that had used that model successfully to find out how crowdfunding really works.
I reached out to a friend and former colleague from my time at Electronic Arts and Mythic Entertainment who recently opened a new studio and turned to Kickstarter for funding. Derek Brinkmann is the CEO and founder of Citadel Studios, his first project is an ambitious "sandbox-style" moddable massively multiplayer online game (MMO) called Shards Online.
With Shards Online, Citadel intends to take online roleplaying to the next level by giving the community the power to make their own worlds. Players will have hundreds of different worlds to explore – each with their own custom stories and rules. Out of the box, Shards Online will also deliver a complete dev-created game experience with an immersive storyline. But it's the modification aspect (the eponymous "Shards"), explained in-game as "struggles between gods that fight for supremacy in a multiverse of worlds spanning many genres" that make the game stand out from its peers.
The game was successfully funded via Kickstarter on December 12, 2014. Shards Online is currently in development and is doing pre-alpha testing on early builds that are open to select Kickstarter backers. Shards Online hopes to ship in Q1 of 2016.
I spoke with Derek about the positives and negatives of crowdfunding. We also discussed what crowdfunding allowed him to do as CEO that other sources of venture capital (VC) might not.
[caption id="attachment_20288" "aligncenter" width="282"] Derek Brinkman, CEO of Citadel Studios[/caption]
...we only need to answer to our community. They don’t care about the bottom line, they just want the best game we can create for them. - Citadel Studios CEO, Derek Brinkmann
Phillip Brooks: What about crowdfunding made it a more viable option for Citadel than looking for venture capitial from another source?
Derek Brinkmann: Our company is not necessarily attractive to traditional investors since our end goal is not to be acquired by a larger corporation. Some people use the term lifestyle business, but what it really means is that rather than explosive growth where we have 1 million people downloading Shards Online at release, we are looking to start with a relatively small customer base and build it sustainably over time. This is the exact opposite of what early stage investors are looking for.
Additionally, it is important that the game development team has ultimate authority on how the game plays. If you have to answer to a board of investors driven purely by the bottom line, the game itself can suffer. I’ve seen that happen many times on previous projects I’ve worked on. With Shards Online, we only need to answer to our community. They don’t care about the bottom line, they just want the best game we can create for them.
PB: Gaming is a pretty crowded space in the crowdfunding world. What did the Shards Online team do to stand out from the noise in this category?
Before deciding to go the crowdfunding route, any team needs to answer two questions:
1. Is this product something that people feel is missing from their lives?
2. Is this the only way this product will get made? (Does the product already exist or will it get made by a larger corporation eventually?)
If the answer to either of those questions is "No," then crowdfunding might not be the right platform for you. The exception to this rule is having a celebrity name or well known intellectual property (IP) on the campaign. Crowdfunding is far easier for celebrities and/or pre-established IP.
So that’s how we managed to "stand out from the noise" by making sure we proved those two points with our project.
PB: How and why did you choose the platform (Kickstarter vs. Indiegogo, etc.) that you used to fund Shards Online?
DB: We actually almost went with Indiegogo. We went so far as to create the entire project page on their site before we changed our mind. The ultimate decision to go with Kickstarter was based on three things.
1. Kickstarter has such a huge community of people who are fully on board with the concept of crowdfunding. It’s actually surprising to see how few of the backers of our project were first time backers on Kickstarter.
2. Indiegogo does not have an easy way to upgrade your pledge. Once your campaign is up and running you can push your numbers by finding new backers and upselling your existing ones. Without an easy way to upgrade, you are hamstringing your campaign.
3. There is a perception around Indiegogo that it is for projects that collect the money even if they do not hit their goal. They have the option to do an all or nothing campaign (which we had planned to do) but many people just assume that if you are on Indiegogo you decided to go with that option. They don’t even bother to look.
PB: Were there any tools that you used in the process that you would recommend to someone looking to crowdfund a project of similar scale?
DB: This is an interesting question as the tools for collecting metrics for a Kickstarter campaign are limited. We relied upon Kicktraq to keep track our daily pledge numbers. Other than that, you are pretty much limited to the metrics built into the Kickstarter site.
Recently, Kickstarter announced integrated Google Analytics support that allows you to track a ton of data related to your campaign including referral traffic and other useful information. This is definitely something we would have used had it been available at the time of our campaign.
...you need to go into the campaign with people ready to hit the pledge button the moment it goes live. It is so extremely important that you have a strong first couple of days. So the PR for a crowdfunding project should begin at least a few months before the campaign goes live.
PB: What kind of preparation is necessary to get a crowdfunding campaign ready for public consumption?
DB: I could write an entire essay on the preparation required for a crowdfunding campaign. Let’s see if I can break it down:
1. PR – First you need to go into the campaign with people ready to hit the pledge button the moment it goes live. It is so extremely important that you have a strong first couple of days. So the PR for a crowdfunding project should begin at least a few months before the campaign goes live.
2. Page Content – Make sure you understand that your page is marketing. What I mean by that is your page needs to sell people who are not convinced yet. This means quality over quantity. You have very limited attention from a potential customer who is not sold on your project yet. If they see anything they don’t like, you’ve lost them. This means your presentation has to be dead-on and the product materials you show need to be polished and attractive.
3. Update Content – Updates are a staple of crowdfunding campaigns and it’s how you get your existing backers to keep talking about your project for the entire duration of the campaign. If backers are talking about your project, they will most likely convince other people to come on board. You should be prepared to produce an update about every other day. Every update you create, you need to step back and ask yourself, will this update get people talking? If the answer is no, you might as well not even post it because it will serve no purpose. Short and enticing video content here I have found works best. I would suggest having at least 1-2 weeks of updates complete and ready to post before you even launch your campaign. The more time you spend creating update content during the campaign, the less time you spend promoting the campaign.
PB: How did you figure out how much capital you'd need for development? How did you price out/prepare for the stretch goals?
DB: This is a really tricky question to answer. Very few crowdfunding projects go with a goal that actually meets the cost of development. More often crowdfunding is just a piece of the financial puzzle you need to put together to make a product real. For us, we focused on using the crowdfunding funds to finish getting the product to alpha rather than for the cost of the entire project. We plan to sell early access to get us the rest of the way. So we did some "Pro-forma Financials" which is just a fancy way of saying accounting black magic to try and come up with a number that would work for the goal we had in mind. Honestly, it’s a good thing we doubled our goal. Even without having to meet our stretch goals, it would have been very difficult to get to alpha with just the goal money. I think its human nature to always underestimate how much money or time you need to achieve something. It’s like the jar of quarters. You always estimate that there is about half as much money in the jar as there really is.
As for stretch goals, they really were just a product of the team sitting around and brainstorming. We didn’t actually say 'oh this or that goal will cost us X dollars more to make.' I doubt anyone really does their goals like that. You just come up with cool stuff to keep the momentum going past your original goal.
Very few crowdfunding projects go with a goal that actually meets the cost of development. More often crowdfunding is just a piece of the financial puzzle you need to put together to make a product real. For us, we focused on using the crowdfunding funds to finish getting the product to alpha rather than for the cost of the entire project.
PB: How did you define success for the project? Would you have continued to work on Shards Online had the minimum goal not been met?
I suppose you can look at success from two angles, both of which are equally important:
1. The game needs to be both fun and stable.
2. We need to have enough money to keep the company running and not have to worry about running out of money.
Would we have continued to make the game if the goal had not been met? I’m not sure really. I would like to think so, but at the same time, we would have really struggled to continue to afford development without it. In reality, we probably would have had to shift our focus at Citadel Studios towards contract work to keep the lights on. It would not have been fun.
It takes a certain kind of person to support a project purely on faith. These people really want to see the project succeed. Not just because they put money in, but because it is a product that they really want to see made.
PB: Crowdfunding often fosters a sense of community between the backers and the people creating the project. Do you think that crowdfunding creates more a more invested community than a typical release? For example, you've worked on AAA budget games, too. Do you think the quality of feedback from backers is more informed or useful than that from gamers who come onboard after a game is released?
DB: Definitely. It takes a certain kind of person to support a project purely on faith. These people really want to see the project succeed. Not just because they put money in, but because it is a product that they really want to see made.
Most of our playtesters come from backers during the Kickstarter campaign and their feedback has been instrumental to improving the fun factor of the game. We have actually come to know many of them from hanging out in our IRC chat channel.
One of our backers recently had a huge Shards Online vinyl sticker printed out to put on the side of his camper. Another one took one of the sound clips from the game and made it his ringtone. It’s really fun to interact with our core community. They are just so fired up about the project.
[caption id="attachment_20310" "aligncenter" width="610"] Crowdfunding creates an engaged community. This fan even made his own Shards Online sign for his camper.[/caption]
PB: Is there anything you would do differently now if you could go back and start from scratch?
DB: I know so much more about marketing now than I did when we started this whole thing. We spent almost two years working on the concept and initial playable demo before even going to Kickstarter. In hindsight, I would have spent much more time on marketing and developing the brand. In the end, it’s questionable that having a playable demo even helped the campaign. In marketing, the vision of what the product will be is better than anything you can show during development.
PB: How is Shards Online coming along? What do you think that crowdfunding allowed you to do that you might not have been able to do working with a big-name publisher?
DB: Shards Online is great! We are neck deep in development with the primary focus of delivering the alpha release. We publish a newsletter each month on the website and we also do a monthly Twitch Stream to keep everyone in the loop on our progress.
Crowdfunding allows us the freedom to create the game the community wants. We answer to no one but them and that is something you would never get by going with a publisher.
PB: Would you recommend crowdfunding to other entrepreneurs? Any caveats?
DB: Crowdfunding is a great way to generate some funds for development of a product but it is rarely the answer to all your funding needs. You also need to make sure that you have the right product for it. Even if you have the right product, you need to market it correctly.
Also, be prepared to work really hard during that campaign. The main reason I’d have second thoughts about doing another campaign is just the pure amount of work you have to put into it to succeed. I barely saw my family during that month.
If you do decide to run a crowdfunding campaign, make sure you seek out advice from people who have done it before. There is no sense in making the same mistakes they made. People who have done the crowdfunding thing are usually very open to offer advice and support to others.
Shards Online is currently in development. Check it out!
Do you have any questions for Derek? Please leave them in the comments.