The Perils of Kickstarter - Over Promising - Under Delivering

Crowdfunding and Kickstarter has been a cornerstone of game development for several years now, and I last touched on some trends about two years ago in a blog post. Only a few days after that post, one of the miniature games I'd supported, All Quiet on the Martian Front (AQMF), abruptly shut down and its owners declared bankruptcy. While that particular property was eventually purchased and its new owners are trying to make a go of it, what looked initially to be a game with a broad player base now appears to firmly be a niche property. AQMF isn't alone in encountering difficulties in fulfilling their campaign obligations, as now the Robotech Kickstarter, which had been struggling to produce "Wave 2" for over a year, has finally thrown in the towel in a major way.

As of yesterday, Palladium announced that not only will "Wave 2" not be produced, but that the company's 30 year old license to produce Robotech games (role playing and otherwise) has expired and will not be renewed. This means that they'll effectively be having a firesale for existing product and not making any additional product. You can read the details of the announcement in the link above, but ultimately the failure of both the AQMF and Robotech Kickstarter campaigns come down to poor planning, poor management, and a "wave" strategy which can be Kickstarter speak for "Ponzi scheme" in many instances.

Palladium outsourced most of their production to a 3rd Party, and much of the early money spent was wasted because the CAD work wasn't suitable for actual production and had to be repeated. They also failed to comprehend several other salient costs up front, and once they realized that the over $1.4 million raised wouldn't cover the project, they went to the "wave" strategy. The Kickstarter money only covered the first "wave" and they expected additional "Wave 1" sales to fund the next wave of obligations.

This scheme works fine if a game truly takes off and the Kickstarter market represents only the early adopters. However, what most of these campaigns fail to realize is that the campaign can and often does represent the saturated total market. So there are no significant "Wave 1" sales over and above the initial campaign, so there is no money to fund additional waves of product, and this is exactly what happened in this case.

Sadly another miniature Kickstarter that seems to have run into difficulties is something far more modest, Totentanz miniatures Cold War Gone Hot 15mm campaign covering the French, Italian, and Spanish armies. Unlike Palladium, this is a cottage industry production house looking to fund a small project. They already had a successful track record with other miniature lines available on the website, but they seem to have fallen into the same traps - over promising and under delivering. Additionally communication has been poor because of language barriers.

Miniature games aren't alone into falling into development traps, I backed a board game back in 2012 and it finally showed up late last year. The final product appears solid, but I'm not sure anything is worth a five year wait. If I look at the full list of Kickstarter campaigns I've supported, a significant portion have been delayed or partially delayed (maybe as high as 20%), but only a few (<5%) have have either not delivered (1) or delivered substantially less than originally promised requiring follow up and/or refunds.

Looking at those numbers, however, would reveal that ~80% of the campaigns have delivered what was promised on time. These are generally companies with a long string of successful Kickstarter campaigns - like Gamelyn Games, Reaper miniatures, Stonehaven miniatures, and several others. Presumably their advantage is a better understanding of the supply chain costs, product costs, and logistics.

When it comes to Kickstarter campaigns, the old axiom "Caveat emptor, quia ignorare non debuit quod jus alienum emit" ("Let a purchaser beware, for he ought not to be ignorant of the nature of the property which he is buying from another party.") - generally shortened to caveat emptor - still holds. Although there are several laws which protect the purchaser modernly, in most cases when a Kickstarter campaign fails, it fails because the company producing the merchandise is out of money - so refunds will likely not be forthcoming. Therefore as with any speculative investment, it is important to understand the risks up front.