Why Crowdfund?
It’s a question that pops up from time to time – especially on general board game forums. It’s often couched in skepticism. There are of course many reasons why companies – even established companies go to Kickstarter or Gamefound. So, let’s talk about them.
Publishers Need Capital to Make the Game
The most romantic view of crowdfunding is that backers, with their support, make an impossible project possible. And, for a lot of projects – especially from smaller publishers – this is the case.
I like to think of board games on Gamefound/Kickstarter in two broad categories:
Games that are fully developed, and the only use of funds is manufacture & fulfillment.
Games that need some amount of development (art, content, etc) post funding.
Even if a game is fully developed, manufacture and freight is a huge capital investment. For instance, at current pricing, it would cost us about $60,000 to manufacture and freight 5,000 units of Nut Hunt to the States.
Nut Hunt isn’t an unusually large game – it has 111 meeples, 4 pieces of punch board, 135 cards, and comes in a box about the size of Catan.
Jamey Stegmaier said that it cost Stonemaier about $150k to get through the first print run of Wingspan.
For a small or medium sized publisher there is a massive difference between investing tens of thousands of dollars to develop and bring a game to Kickstarter, versus north of $100k to manufacture through the first print run.
Games that aren’t fully developed (need additional artwork, copy for scenarios, additional component design) are even more reliant on a successful crowdfunding event (although there is also additional risk to backers with these projects).
It’s Easier to Plan For & Meet Demand
Aside from access to capital to print games, it can be hard for publishers to accurately estimate demand. Maybe a first 5,000-unit print run did well, and there’s demand for a second edition. Is that demand for another 5,000 units, or is it for 15,000?
Crowdfunding is a great way to gauge interest and to give everyone who wants a game the chance to get involved. The publisher can still over-print relative to the crowdfunding orders (with an eye to ongoing sales), but those core orders are a great starting point.
By crowdfunding a project rather than self-funding multiple smaller print runs, that demand can get filled faster - in the time it takes for one print run, rather than the years it takes for multiple.
This doesn’t just hold for second edition print runs, but also for expansions, and first editions.
A Powerful Marketing Tool
A crowdfunding campaign won’t market itself, but it is an excellent call to action for a community. It can build hype, defines a timeline to get involved, and offers incentives in both stretch goals and the feel goods of making a project a reality.
The short nature of a crowdfunding campaign heightens awareness around the product. It allows publishers to focus their marketing budget into a short window, and to build momentum with a preview campaign and paid advertising. It also taps into focused marketing channels of people browsing crowdfunding sites, and content creators who highlight current and upcoming campaigns.
Many Kickstarter campaigns also rely on FOMO (Fear of Missing Out). While some publishers have taken strong stances against FOMO in their campaigns (an ideology that fits our philosophy), it is worth noting that crowdfunding is a strong vehicle to market through FOMO. It has built in time constraints and exclusivity.
Deluxification
Some level of exclusive crowdfunding rewards is motivated by economically viable deluxification rather than a marketing strategy that leverages FOMO.
Producing and distributing big box miniature games would likely be uneconomical without the ability to leverage crowdfunding platforms.
Ankh: Gods of Egypt by CMON Games
Sure, companies like Games Workshop, Privateer Press, and Broken Anvil, make awesome miniatures that aren’t reliant on crowdfunding events, but those companies have infrastructure built around manufacture and distribution of miniatures.
The high price point that comes with miniature packed board games can make it difficult and risky to try and gauge appropriate demand. The wider margins offered by crowdfunding also allows for component skews that couldn’t be offered at a reasonable price point through retail distribution channels.
Wider Margins
Even after accounting for fees, and a “Kickstarter discount”, crowdfunding presales should have wider margins than any other non-direct to consumer distribution channel. For instance, per unit margins on a $50 MSRP game sold for $45 (including shipping) in a crowdfunding event could be about ~$15, versus less than $10 if sold into distribution and retail.
Sale Price is the price paid to the publisher - final MSRP is ~$50
Efficient Financing
Kickstarter fees are about 5%. Fully developed games (that are just using funds for manufacture & fulfillment) should take 6-9 months to fulfill, and games that need additional development work and assets (illustration, sculpts, etc), can take years to fulfill.
5% over a year, or multiple years is very efficient financing compared to what most board game publishers can get elsewhere.
Hasbro’s Debt Schedule – Board game crowdfunding campaigns that take more than 18 months to fulfill are getting cheaper financing than Hasbro
Risk Mitigation
The combination of accurately meeting demand, along with receiving upfront payment makes crowd funding a phenomenal tool for risk mitigation at publishers.
A portion of that risk is transferred to consumers (risk of fulfillment, time value of money, less certainty around product quality and gameplay). So, it’s important that we as publishers remain conscious of offering good value and mitigating risk through transparency, reviews and playtesting, and that we do our best to deliver on our promises.
Because, at the end of the day there are products that are impossible to create without the support of the crowdfunding community.
