Alpha Funding vs. Crowdfunding
This Saturday, my fellow developers’ game, The Long Dark, managed to stride past its Kickstarter goal of $200,000 CDN after a month-long saga of nail-biting suspense. The campaign was executed with a mix of increasingly large announcements and trailer videos. The Hinterland crew managed to get major press in outlets like The Verge and BoingBoing, covering the daily announcements related to the campaign.
Successful Kickstarters are a lot of work. In addition to having something people actually want to support, your media strategy has to be planned out. Merely Tweeting, “please donate!” looks like spam. If your posts display new features, concept art, trailer videos, and other content then it comes across as newsworthy. You have to prepare enough content to make announcements every other day or so throughout the entire campaign.
Crowdfunding is a major source of game financing due to the collapse of the publishing model. Not only are traditional publishers largely irrelevant due to the business model shift to f2p and games-as-a-service, but raising money from the public is preferable to contract terms that encumber most publisher dollars.
Another funding strategy has emerged as an alternative to crowdfunding: Alpha Funding.
Alpha Funding is when you charge users to access early versions of your game, usually starting at the playable alpha phase (hence the name!). Obviously, Minecraft is the foundation of this business model. A recent example is Klei’s Don’t Starve, a stylized survival game which began life as a paid alpha well before it arrived on Steam as a finished product.
Alpha Funding has a lot of advantages. You don’t have to bribe backers with cumbersome physical goods. Sure, T-shirts and plastic tchotchkes are a new avenue for game monetization. Yet, for a small team this can be a distraction. Alpha Funding allows you to focus on what’s important.
An early paying audience has an investment in your game. It’s a community of enthusiastic fans. Alpha users provide meaningful feedback and become evangelists instead of cranky forum trolls. When you finally launch, they become an important source of positive reviews and press.
Most importantly, getting paying users early is great customer validation. Not to mention an inspiring early source of revenue for your company. This allows you to experiment with pricing tiers for when you release the game in the wild.
There’s also the hybrid approach. The most famous example is Chris Roberts’ Star Citizen. It began as a crowdfunded project but has continued as an alpha funding smash–grossing $21 million and counting. They recently released a preview app which allows players to walk through ships they have already paid for in advance of the game’s release. Perhaps not early access to the game in the strictest sense, but a taste of the final product.
Publishers will continue to take a backseat to the indie revolution as crowdfunding evolves. Alpha funding has become so popular that Steam even has its own category for Early Access. It’s a critical game finance tool regardless of project size.