Equity Crowdfunding: Gateway To Games Industry Diversity

With eSports, the rise of VR and the proliferation of mobile devices across the globe, our industry is going through a massive upheaval. But, behind any major shift there are demographics of people driving those trends, making them profitable, and causing video game companies to take notice. So, just who are the people driving this upheaval? Activision's acquisition of Candy Crush developer King for billions of dollars should make it immediately evident: the most powerful force in video games at the moment are women and gamers outside the United States... aka people that aren't white males.

Despite the fact that the international video games industry far outweighs the domestic market, and the sweeping shift in society's understanding of what a gamer is (after all, women outplay men in America already), the video game industry in America continues to be run by the same small, tight-knit group of people: white dudes who dropped out of Stanford. Women and POC (people of color) get only seven percent of the total pool of VC capital, including investment in games, while the same group of white guys make out like badly mustachioed bandits in a silent film.

"Private small investors may become the key to injecting diversity into the industry, and if enough unaccredited investors reap rewards this way, it will force stuffy old white VCs to take notice and potentially change their ways"

Developers, publishers and venture capitalists are hurting themselves every day they don't respond to these changes in demographics, and they're beginning to feel it as more and more video games go to alternate methods of funding. Titles like Shenmue, Yuka & Laylee, Star Citizen and Broken Age are all major titles that have successfully raised capital through crowdfunding on platforms like Indiegogo and Kickstarter, websites whose backers are 42 percent and 30 percent women, respectively.

If more women and POC are playing video games, and women and POC continue to gain economic strength, then shouldn't there also be a similar rise in women and POC amongst the ranks at video game companies? One would think, but that's not been the case. The funding gap between white men and literally everyone else has gotten out of control, and it has created a cloistered cabal of back-door agreements between VCs and the gaming industry. This kind of academic nepotism stifles creativity and innovation and it needs to be stopped.

Luckily, the SEC recently agreed on the provisions from the 2012 JOBS Act which outline the rules under which investors may purchase equity shares of private companies. This development vastly expands investor access to startup equity and helps provide entrepreneurs with the rights to an equal opportunity for funding. By granting these rights to both investors and entrepreneurs through Title III and Title IV of the JOBS Act, the government is paving the way for the democratization of startup funding and early equity investment.

This is important for two reasons. First, the government has created an environment that is fairer for everyone involved. While it isn't perfect, it's a damn good step in the right direction. Women and POC are already better at crowdfunding than anyone else; more than half the successfully funded campaigns on Kickstarter have been produced by women. By finally allowing for an alternative route that has no requirements aside from an internet connection and a desire to market oneself, and acknowledging the inherent inequity that exists in the current system, we might finally be able to overcome these obstacles and grow an industry that mirrors the demographics to which it actually caters.

The second and equally vital reason the JOBS Act will get more women and POC into video games is that VCs will finally have to realize the fact that not only are women better at crowdfunding, they also make better investments. Female-led startups perform about 63 percent better than those led by males. In the videogame industry, that translates directly to sales and the power to provide jobs. Private small investors may become the key to injecting diversity into the industry, and if enough unaccredited investors reap rewards this way, it will force stuffy old white VCs to take notice and potentially change their ways.

"When you empower people to consume media that accurately reflects their values and experiences, they change what they consume and the medium evolves"

There will always be Ivy League graduates with Skull and Bones Societies that confidently promise to get so-n-so's son the capital he needs to make the next CoD clone. But for everyone else who loves video games and wants to dedicate their career to making them, but has been turned away from a tech job because their gender, race, or sexual orientation didn't mesh with a company's "culture," equity crowdfunding presents an exciting opportunity for ambitious entrepreneurs. For the indie developer creating a game that honestly reflects their struggles as a black transgendered individual, or the group of women developing an approachable action title that still manages to tackle depression in a meaningful way, equity crowdfunding could allow for their creations to hit shelves alongside mainstream fare.

The only way to change the face of the games industry and inject the diversity it needs to reflect its changing player base is to not only give women and POC access to the kind of media they want to consume, but also to put those voices in control. When you empower people to consume media that accurately reflects their values and experiences, they change what they consume and the medium evolves.

Correction: The PR team for StartEngine initially misattributed this op-ed to co-founder Ron Miller when it was penned by Marks. Apologies for any confusion this caused.