Fargo: “If you don't reach 20% of your goal in two days, you'll almost certainly fail”

It's hard to escape the feeling that there is less enthusiasm for crowdfunding in the world of video games these days. The capacity for projects to grab headlines has become limited to those that are either trying something truly unique and ambitious, have veteran and proven talent behind them, or have garnered a remarkable number of pledges within a remarkably short space of time - all of which are now few and far between.

Even leading platform Kickstarter saw a dramatic year-on-year decline in the amount pledged towards video games campaigns over the first six months of 2016: just $8.2m compared to the $20m seen in 2015. It's a decline noted among developers, too, with inXile Entertainment CEO Brian Fargo observing that it's tougher than ever to excite potential backers.

While his fourth crowdfunding campaign now draws to a successful close, with Wasteland 3 reaching its goal after just three days, Fargo believes there is a myriad of factors behind the declining interest in such fundraising ventures.

"In 2012 and 2013, there so much sheer excitement around it," he tells GamesIndustry.biz. "The press gave it lots of coverage, but now it's fingernails on a chalkboard to some of them. There were also categories and genres that people desperately wanted and had been denied to them, whether it was a point-and-click adventure or a role-playing game.

"On top of that, a lot of people backed projects, the creator developed them but the backers never had the chance to play - just as you've probably bought something on Steam and never got a chance to play it. So as more time goes on and you have all those elements, it's more difficult to rally people together behind a purely rewards-based campaign. They're still out there, some backers still love it, and we love offering those rewards, but it gets harder to get them excited each time."

"If I'm in a crowdfunding atmosphere where people are profiting from the games, that's a very sustainable model. That will never fatigue."

Brian Fargo, inXile

This dwindling interest in video games crowdfunding means that the window for success is narrowing. It has always been the case that developers need to concentrate on the launch of their campaign, driving for as much early interest in possible, but Fargo is able to quantify this in a way that draws the line between hope and failure.

"If you can't do 20% of your target in the first 48 hours, you generally have a 90% fail rate," he says. "When a movie comes out on a Friday and I'm excited to see it, if the weekend rolls around and I didn't get the chance, for some reason I don't care about it by the next weekend. There's a peak interest you have, and you have to be part of that wave and that focal point.

"The trick is finding an audience who will come to you, one that already exists. Look at Exploding Kittens; it appeared to come out of nowhere, but the creator was part of [digital comic strip] The Oatmeal, which had 3m followers on Facebook. He brought that audience over, along with his sensibilities and humour, and they had a hugely successful campaign.

"There are people who loved Wasteland 2, people who loved Fallout 1 and 2 and wished 3 was different, and an audience of isometric RPG players that grew up with and loved those types of games. I'm able to identify the audiences and bring them over to something they really want."

MORE THAN MONEY

Given the success of Wasteland 2 and the other games Fargo has attracted backers for, plus his reputation and the numerous classics to his name, it is perhaps hard to understand why a veteran developer even needs crowdfunding at all. Surely he could just as easily raise the money needed by reaching out to publishers or investors?

To this, Fargo stresses that Kickstarter and now Fig only account for a portion of the capital required for his projects. inXile works with partners such as Deep Silver and Techland over details such as console or foreign territorial rights. And, of course, the profits from previous titles are put into the next ones. Wasteland 2 in particular was "very profitable", the developer says, and those profits were redirected into its upcoming sequel.

"I get the most creative freedom when I'm financing a large part of the project myself," says Fargo. "It also helps negotiations with partners if I'm bringing half or more of the money to the table. The deal feels different, both economically and creatively."

There are other benefits to crowdfunding beyond the obvious financial boost. The audience and interest generated by the campaign sets up a funded game for success, thanks in part to the enthusiasm of backers-turned-evangelists.

"We get this army of people that supports us and believes in us," Fargo explains. "If we've done right by them, they're our voice when it comes to launch. We're not a triple-A company, we don't have tens of millions of dollars to spend on marketing, so word of mouth is everything for us. To have them shouting from the rooftops that they believed in us, they backed us and we gave them a great game is invaluable to us.

"Also, when people put money into your project, they're far more engaged and provide feedback. When you're only getting feedback from internal people, egos get into place or feelings get hurt. If you watch a guy kill himself for a month to work on something, it's hard to say 'hey, that looks bad'. Whereas our audience doesn't have any problem with that.

"I need that feedback all the time. I really do place value in what they're saying and what they're reacting to."

Of course, herein lies another delicate issue when it comes to crowdfunding. When people pledge money towards a project, many may feel that gives them a right to be heard. Developers then face the challenge of creating the product they envisaged, while also trying to appease those who are part-funding it. If feedback urges the project to go in a different direction, are developers obliged to abandon their original designs? How can Fargo or any of his peers be sure what to listen to, and what to tune out?

"We're not a triple-A company, we don't have tens of millions of dollars to spend on marketing, so word of mouth is everything for us."

Brian Fargo, inXile

"That's really my job as producer, to sift out the good ideas from the bad ones," he says. "You've got to treat the community well and with respect, you have to listen to what they're saying. But if they have a poll about putting vampires into Wasteland, it's not going to happen. I'm not going to be bullied into something I think is bad for the product."

"If a publisher wants me to change something, they can just hold the money back and then I risk missing payroll. So I would have to capitulate for things I didn't think were good for the product, or flat out knew were bad for it. This is a much healthier dialogue."

GROWING FIG

Wasteland 3's crowdfunding campaign is notable as it marks Fargo's switch from Kickstarter to Fig, the games-specific platform for which he has served on the advisory board since its launch last year.

Part of the reason, he told us, is that Fig better protects backers from the scandals that have plagued other crowdfunding sites, instances where funds have been raised but no product has been released and the creator has disappeared. With Fig, pledges made by non-accredited investors - i.e. those without the capital and regular history of major investments - will be paid out over the life of the project rather than up front.

Fargo also pointed to Fig's policy of curating all campaigns that appear on the site. These are selected after extensive discussions with the developer over how viable the product is and how likely full funding will be. While this so far has almost exclusively benefitted members of the site's advisory board, including Double Fine and Harmonix, Fig has since begun approving campaigns for independent developers and it is hoped that the site will become more open in future - although Fargo stressed it will always be curated.

"You've got to treat the community well and with respect, you have to listen to what they're saying. But I'm not going to be bullied into something I think is bad for the product."

Brian Fargo, inXile

Another key motivation for Fargo's switch is Fig's goal of helping those all-important higher-tier backers profit from successful campaigns. This concept, a major unique selling point for the site, has now become a reality: Last month, the US Securities and Exchange Commision (SEC) approved Fig's proposal to reward non-accredited investors with game shares, starting with Psychonauts 2. It's an incredible incentive for cash-rich consumers who want to get something back from the games they help fund, and an accomplishment that Fargo insists cannot be understated.

"It took Fig a very long time to get approval from the SEC to allow this kind of single investment," he says. "It's very novel, a bigger deal than most people realise.

"Obviously it took a lot longer than they thought. We were fortunate that the timing happened right when we launched our campaign. I know others were frustrated, because they were waiting for it. For Double Fine, I think it came nine or ten months after their campaign ended. So it was quite a process, and a big feather in their cap that they were able to get this approved finally."

There's also the suggestion that Fig's SEC approval could set a precedent for other crowdfunding platforms servicing different industries, potentially enabling them to financially reward higher-tier backers. However, there is still a lot of new ground to cover as developers learn how to accurately convey how much those supporters can expect to reap from a game's success.

"The way we did it on our particular campaign is we ran a model out that basically said if this one does as well as the last one, this is what we think might happen," says Fargo. "That was our way of picking a benchmark.

"When you're running a public company, or doing anything in the public eye, you can't make forward projections. All we can do is rely on the past, and that's very much how we handled it."

HEY BIG SPENDERS

Of course, offering game shares and a slice of the profits is not the only way to attract high-end backers to your crowdfunding campaign. A purely rewards-based push for pledges can still garner plenty of funds if developers offer something of value. Fargo says this doesn't necessarily have to be pricey physical rewards - instead, personalisation can go a long way to appealing to potential customers.

"We get the attention of the higher backers when they can put something personal of themselves into the game, whether it's their name, their wife's name, getting engaged, developing a quest - something they can point to," he says.

"Imagine if the next Mad Max movie could have a character named Faran Brigo. I'd probably pay a lot of money for that, I'd think that was the coolest thing ever - it's the same thing for the games business. I think the personalisation is the thing they get most interested in."

But even with the offer of being immortalised in a video game, it can be difficult to encourage consumers to part with hundreds of dollars without more tangible rewards. It's still possible, Fargo reiterates, but has become a much more challenging process.

"Depending on the campaign, we used to do some pretty significant revenues from rewards that were $500 and up," he says. "But that part of Kickstarter or rewards-based financing has almost gone away.

"If I'm in a crowdfunding atmosphere where people are profiting from the games, that's a very sustainable model. That will never fatigue. If we stay with crowdfunding, that's something I could repeat ad infinitum."