Let's Not Jump To Conclusions About Kickstarter-Funded Games Just Yet

Has Tim Schafer changed the gaming industry?

It's a question I've seen on more than a few message boards and Twitter feeds over the past 24 hours, following the Grim Fandango creator's announcement that his company Double Fine will use crowdfunding website Kickstarter to finance a new point-and-click adventure game.

The project has found astronomical success, shattering several Kickstarter records and earning roughly a bazillion dollars in less than a day. Since the money comes from fans, not investors, Schafer and Double Fine retain creative control. They don't have to answer to a publisher. It's the type of position that developers daydream about, the type of success that many other game designers would presumably love to emulate.

So will other studios follow suit? Is this really a game-changer? I spoke to Darius Kazemi, a developer who works on HTML5 games for Bocoup and has been working in the gaming industry since 2005, to clear up some of the smoke and help erase some misconceptions about game funding.

"This kind of thing is only going to be a game-changer for a specific kind of project for a specific kind of studio," Kazemi said in an e-mail. "The Kickstarter model is going to be a game-changer for established studios with a huge fanbase who want to move to smaller projects and break out of the publisher/developer cycle. But it's not going to change the world for everyone."

Not everybody has the type of brand power associated with somebody like Tim Schafer, Kazemi points out. As the mind behind beloved games like Grim Fandango and Day of the Tentacle, Schafer has already established his clout as a designer of point-and-click adventure games. Plenty of fans were willing to put their faith in his name (and the name of Monkey Island creator Ron Gilbert) alone. For indie developers or even bigger companies without Schafer's track record, this kind of success would be impossible.

Which leads into another question that gamers have been tossing around: Why would somebody as established as Schafer have to use Kickstarter in the first place?

"One of the main misconceptions that I've seen on Twitter today is: 'Well, if you're an established game company, the revenues from previous games should fund your next game,'" Kazemi said. "The thing is, that's the exact opposite of how it works in real life."

"That's the exact opposite of how it works in real life."

In order to make a big game, Kazemi says, a developer needs to raise funding. To do this, a development studio will typically pitch ideas to a publisher, which will then front the money in hopes of making it back through sales. Once the publisher has earned back all of the money it invested, the developer starts getting a cut of the profit — a very small cut.

"There are dozens of variations on this, but that's the basic setup — a deal that vastly favors the publishers," Kazemi said. "And any publisher would argue that it makes sense, since the publisher is the one taking on all of the risk."

So even if a company like Double Fine hit huge numbers on games like Stacking and Costume Quest (both published by THQ), it wouldn't make much of a profit. Certainly not enough of a profit to fund its next game.

"The point is that even if a game from an established developer sells respectably well, the developer usually does not see any money at all beyond the money they got to develop the game," Kazemi said. "In other words, they made a game, and it's out there, and perhaps a million people are playing it — but they have very little money in the bank, and very little money coming in, and a huge staff that they have to pay somehow.

"This is why devs often work on two or more games at a time so that while one is ramping down, the other is ramping up, and you don't have people twiddling their thumbs."

It's also why we always seem to hear about layoffs and studio closures after game launches, even when those games are successful. Kazemi says free-to-play models and downloadable content are methods that developers have used in order to try to break out of this cycle. With revenue from those sources, developers can earn money that they don't have to pay back.

"People don't realize how broken the traditional developer/publisher model is," Kazemi said. "And I don't blame them for assuming it would operate in a way that makes common sense."

Though it's premature to say Double Fine's Kickstarter adventure won't be a game-changer, it's hard to see it working for many other companies. And even successful game studios are almost always going to be reliant on deep-pocketed publishers to help pay their bills — unless they have brands like Tim Schafer.