Crowdfunding in financing independent video game development
Crowdfunding has become an increasingly popular option for independent video game developers looking to finance their projects.
With platforms like Kickstarter, Patreon, and IndieGoGo, creators have been able to raise funds from the public to bring their ideas to life. This form of financing has become essential for independent game developers, as it allows them to access financing that may not be available from traditional sources. Crowdfunding also gives developers an opportunity to establish a direct connection with their audience, allowing them to create a passionate and dedicated fan base from the beginning.
From AAA titles to experimental indie games, crowdfunding has allowed creators to pursue their dreams and create games that would have otherwise been impossible.
What is crowdfunding?
Crowdfunding is a form of financing that involves raising money from a large group of people, typically via the internet. In exchange for the money, backers receive some sort of reward or incentive, such as a copy of the finished product or a discount on the product once it's released. The three most common types of crowdfunding are rewards-based crowdfunding, equity crowdfunding, and debt crowdfunding. Rewards-based crowdfunding involves offering backers a gift or other item in exchange for their financial support. Equity crowdfunding lets backers invest in the company and earn a profit from its success. Debt crowdfunding involves lending money to the company and receiving interest payments.
Rewards-based crowdfunding is most common in the video game industry. It allows independent game developers to bring their projects to life by raising a certain amount of money from the public. This article focuses on rewards-based crowdfunding, but there are a few other types of crowdfunding that are worth mentioning. Equity crowdfunding is a form of crowdfunding in which backers receive a stake in the company. Debt crowdfunding is when backers lend money to the company and receive interest payments. A company might turn to debt crowdfunding to access capital they cannot get from banks or other traditional sources.
Types of crowdfunding
There are many types of crowdfunding that video game developers can choose from. These include rewards-based crowdfunding, equity crowdfunding, debt crowdfunding, donation-based crowdfunding, and Patreon. Rewards-based crowdfunding is the most common type of crowdfunding for video games. With this type of crowdfunding, backers donate money in exchange for a gift, such as an early access code to the game or a T-shirt.
There are some advantages to rewards-based crowdfunding compared to other types of crowdfunding. First, it's easy to set up and doesn't require any new laws or regulations. Second, there's no need to give up equity in the company, which means that backers will have less of a stake in the project and are more likely to act as passive investors. While rewards-based crowdfunding is better than equity crowdfunding in terms of protecting backers, it's much less secure than debt crowdfunding. While rewards-based crowdfunding has worked well in the past, it has become riskier as the industry has become more popular. As a result, rewards-based crowdfunding may not be a good choice for video game developers.
Benefits of crowdfunding for video game developers
One of the benefits of crowdfunding for video game developers is that it allows them to get the funding they need without having to sell part of their company. The traditional route for video game developers to get funding is through a publisher. In this situation, the publisher will put up the majority of the money for developing the game and the developer receives a small percentage of the profits after the game is released. In crowdfunding, developers are able to raise funds from their audience without having to give up any equity in the company.
They can also establish a stronger connection with their audience because they're communicating directly with the people who helped make their project a reality. Another benefit of crowdfunding is that it allows game developers to presell their product before it's released. This can be beneficial to developers because they will have money before their game is released and they don't have to find a publisher to help fund the creation of their game.
Crowdfunding platforms for video game developers
There are many crowdfunding platforms that video game developers can choose from. These include Kickstarter, IndieGoGo, Fig, Patreon, and Thunderclap. Kickstarter is the largest rewards-based crowdfunding platform on the internet. There are many types of projects on Kickstarter, including video games. Kickstarter is geared towards entrepreneurs and creative people who are trying to make something new. Once creators set up their project, they set a goal for how much money they want to raise. If the project doesn't get enough backing, then the backers aren't charged.
IndieGoGo is another rewards-based crowdfunding platform that focuses on creative projects. IndieGoGo was created specifically for smaller projects and has a less strict approval process than Kickstarter. Fig is a hybrid crowdfunding platform that focuses on video games. Fig was created to provide a middle ground between Kickstarter and investing in stocks. It's geared towards game developers who want to maintain creative control over their project while also accessing some outside funding. Patreon is a membership platform designed for creative projects. While it is more commonly associated with artists and musicians, there are a number of video game developers who use it as well.
Tips for creating a successful crowdfunding campaign
Before launching a crowdfunding campaign, video game developers should do their research and make sure that they have a viable product. The product should be something that people will want and that you can actually create. A video game developer should have a clear vision for their project and know exactly what they are trying to accomplish. They should also have a solid plan for how they are going to execute their project.
Crowdfunding is a great way for video game developers to get their name out there and connect with their audience. There are many ways to promote your crowdfunding campaign. You can post about it on social media, send emails to your friends, or use a tool like Thunderclap where you can pre-post your campaign on many different social media platforms at once. Another important aspect of crowdfunding is providing rewards for backers. It's important to offer backers something that is both desirable and within your budget.
Crowdfunding statistics for video games
The popularity of crowdfunding has increased significantly in recent years. In 2018, the crowdfunding industry raised $33 billion, up from $9 billion in 2012. Video game crowdfunding has also jumped in popularity, with the amount raised by games increasing every year. In 2013, the amount raised by video game projects on Kickstarter was $2.2 million. By 2018, this had increased to $94 million.
There are many reasons for the increased popularity of video game crowdfunding. One reason is that crowdfunding has become more mainstream in recent years, allowing a larger audience to participate in it. Another reason is that video game developers have become more knowledgeable about the benefits of crowdfunding and know what to look for in a good campaign.
Finally, crowdfunding platforms like Kickstarter have become more popular and have made it easier for people to discover new projects.
Different types of crowdfunding rewards
Rewards-based crowdfunding is an extremely popular method of raising money for game developers. There are many different types of rewards that game developers can offer their backers. A common type of reward is a copy of the game once it's released. Another type of reward is digital content related to the project, such as wallpapers, avatars, and behind-the-scenes videos. Physical rewards are also a great way to get backers excited about your project. These can include T-shirts, posters, and other merchandise related to the game. You can also offer backers the opportunity to participate in the project. This can include naming a character in the game or getting a credited role in the project.
A personal loan can be used for a variety of purposes, including funding a game development project. Personal loans typically have a fixed interest rate and a set repayment term, and can be obtained from banks, credit unions, or online lenders. The process of applying personal loans and quick loans for a game project may involve providing information about the project's budget, timeline, and revenue potential, as well as personal financial information such as credit score and income. It's important to carefully review the terms and conditions of any loan, including the interest rate, fees, and repayment schedule, before agreeing to borrow. Additionally, it would be advisable to have a solid business plan and financial projections for the game project to show lenders the potential return on their investment.
Risks of crowdfunding for video game developers
While crowdfunding is a great way for video game developers to raise money for their projects, it does come with certain risks. These include not meeting backer expectations, serving as a liaison between backers and the company that hosts the campaign, and dealing with fraud and misuse of rewards. It's also important to remember that you are dealing with backers' money, which means you need to be careful with how you use it. You also need to work closely with the crowdfunding platform to make sure that the terms of your campaign are being followed. Finally, you need to be careful not to overpromise when it comes to rewards. It's easy to get excited about your project and promise things that you aren't able to deliver, which can lead to problems later on.