Valve’s Gabe Newell was on Good Game recently and brought up a topic close to my heart; community funded games.  This is where the community (gamers) all chip in small amounts of money to fund a game, rather than a single large publisher.  The question is, will it work?

Overview

Like movies, many games are now costing tens of millions of dollars to develop.  Gone are the days were a small team (or even one person) could sit in their basement and bring out a hit title.  There are exceptions to this, but even an indie title like Braid costs hundreds of thousands to develop (not counting lost income had its creator “got a real job”).

With big money comes big risk.  When a single entity (usually a publisher) puts millions of dollars down, they expect a lot of money in return.  For this reason the developer often seems to “get screwed” in the relationship, making a seemingly insignificant amount given the popularity of the game.  Unfortunately though, until now, there hasn’t been much choice.  Community funded games offers the chance to take the power out of the publisher’s hands and into gamers.

One point I’d like to make that Gabe didn’t really touch on is the indie scene.  There are some games out there that could be made on a few hundred thousand dollars, or less.  Community funding would work even better in this case as the required investment is far lower.  The only issue is convincing people your indie project is worth their hard earned dollars.

The Good

More sources of funding for creating games.  For indie developers, this may mean there finally IS a source of funding.  With more money will come more games, now we just have to make sure they are good.

More freedom in game design.  Currently, publishers “play it safe” as shown by all the sequels and clones of existing games coming out.  By “spreading the risk” across a lot of gamers, the individual investment drops significantly (from millions to hundreds or thousands of dollars).

Encourages agile development.  It’s in the developer’s best interest to keep their latest playable demo as up-to-date as possible to show off to potential investors.  Developers can get feedback early when they go out for a round of funding.  Ultimately this will encourage small teams focussing on making good games right out of the gate; rather than spending years and hoping to find the fun parts at the end.

How Should It Work?

Gabe didn’t go into great detail about how the investment system would work, so I’ll just throw my thoughts in to give a foundation for discussions.

What is the typical gamer actually getting for their money? I see the gamer getting a % of the game, rather than a % of the company.  They should get direct access to the milestone builds as well as a free copy (or multiple copies) of the game upon release.  All profits from the game should then be distributed to the investors based on their % stake in the game.

When can gamers invest? I would break the investments up into rounds of funding.  The earlier a gamer buys in, the more of a share of the company they should receive.  Going by regular investments in a start-up company, there could be a round of seed funding (the initial investment) followed by a number of further rounds to bring the game to completion.  Here is a simple example:

To simplify, 10% of the company will be sold off at each round, for an increasing price each time.  The reason for this is that the earlier the investment, the higher the risk.

Note: These are the total investments for each phase of the game.  So the $10,000 in Seed might be 100 people each investing $100 each.

– Seed – (10% of company for $10,000)
– Series A – (10% for $40,000)
– Series B – (10% for $100,000)
– Series C – (10% for $250,000)
– Total – 40% of company for $400,000

Should gamers get voting rights? This is best left to the individual studios to decide, however I’d be leaning towards only high-level input on major decisions for the company, rather than any specific decisions relating to day to day running of the company.  There is a risk of watering down the original idea and goals if too much control is relinquished, and if there are a large number of investors (the whole idea of the model) it will be impossible to keep everyone happy.  Here are some examples of decisions that could be put to voting by investors:

– Which platform to run on – yes
– Is the product ready to ship – yes
– Should we allow double jumping – maybe
– What graphic style should we use – maybe
– Should the rocket launcher have 6 or 8 rockets – no
– How much UI should we have – no

Give gamers a feedback loop. Gamers need to be able to play the game early to both initially invest and to keep an eye on their investment (with the possibility of further investment).  Steam is perfect for this.  The game can easily be distributed and control can be kept on who has access.  I envisage a new tab “Funded” which has all the games you are currently funding, their status and a link to the latest playable.

The Bad

Things could go wrong. How well the first few games using this system go will make or break it.  If the studio runs out of money or the game just doesn’t sell, people won’t trust the system.  The best way to get around this is for Valve to make the first game something big like Half-life 3.

Conclusion

As I said, I’m a big fan of community funded games.  Valve is the perfect company to launch community games, both for the respect the community has for it, and with the perfect delivery platform, steam.  What I would like to see is Microsoft look into this model for their Xbox LIVE community Indie Games.