The below is not a true story, rather, a characterisation of a not-too-unrealistic scenario that will soon be available in the not-too-distant future.
Liu, 42, is an experienced game developer who has just formed a new company with some of her old co-workers. They have a great idea for a new game, which they estimate will take about two years and $5 million US dollars to complete.
Traditionally, the market of game financing is dominated by a relatively small number of individuals and companies. The risky nature of game production — high costs, intersection of many disciplines and competitive market leading to a lack of certainty of success — has led to this situation.
She examines the financing landscape and observes that she has a number of options:
- Big publishers — But they typically only deal with established developers and AAA games, not an indie title that Liu wants to produce.
- Incubators — Liu is experienced and already has a small studio. Further, the amount of their seed funding is nowhere near enough to cover her costs.
- Traditional venture capital — She approached a few but found them hesitant as they were not familiar with the game market and could not see the opportunity.
- Funds/government support — They placed strict requirements on the location of her team, place of release and types of games she could produce.
She looks around at what her fellow developers are doing and sees the traditional crowdfunding model on Kickstarter. After further examination, she realises that crowdfunding in this way only allows her to give her funders a nominal reward for their support.
Further, building a community around the game was very important to her. She wanted to engage her gamers in a long-term and authentic way.
One day, a friend of hers told her about a platform that would enable her to integrate blockchain technology into her game and create tokens, which she could sell in a crowdsale to raise funds for her game.
This was her introduction to Hoard.
Traditional crowdfunding rewards funders with gadgets and trinkets — maybe even a t-shirt! Companies who host these sales on platforms like Kickstarter know that funders are largely incentivised by a sense that they are supporting a product and team they believe in.
Crowdfunding on Hoard, however, will enable game developers to be able to offer their funders tokens that are intrinsic to the game or its ecosystem. Token holders essentially hold the right to be participate in the newly created economy.
Hosting the crowdsale
Liu decides she will host a crowdfund on the Hoard platform. She designs a token that will be used in the game world that she and her team will build — the token can be used to buy ingame goods and services. Token holders will also have special loot crates airdropped from time to time with unique items. Only 50 million tokens will be created and most of them are distributed to the community during the crowd sale.
She announces the crowdsale together with the game’s concept. Word spreads — not just because the game idea is innovative and unique (which it is), but also because gamers know that a token will provide them with real, in-game benefits. She raises the $5 million she needs to fund the project in just a few days.
Creating the community
Game development is underway, however, this doesn’t just mean that funders are quietly waiting for its completion. They have created online communities to share their excitement and discuss their expectations for this project with other gamers. Liu and her team are active participants in these groups and she has even hired a full-time community manager to answer questions and provide updates.
6 weeks after the crowdfund, as a gesture of appreciation, Liu decides to reward token holders with an ‘airdrop’ of a special token. This token gives them a remastered version of her team’s earlier game on the most recent playstation. Some holders choose to trade away this airdropped token as it is in high demand.
6 months after the crowdfund, Liu decides to do another airdrop. This time it is Twitter hints to certain URLs and soon a treasure hunt is underway. 1000s of people are playing mini games on the web and exchanging, combining and obtaining new tokens.
The game is still one year from being complete, however, a large amount of game press and publicity have been generated, as well as 100s of tweets sent.
As recent token sales in the blockchain space have discovered, the generation of a highly engaged community has been one of the largest consequences of crowdfunding. It is the engagement and enthusiasm of this community and the sharing of information on different channels that has enabled demand to grow for these tokens to grow even before the project has been completed.
When the project is finally finished, it has already established such a passionate community, not just in primary markets but also the secondary markets where speculators are curious to observe the growth of the new economy.
Benefits to the founding team
Liu’s team have also experienced a slight benefit from this. A small portion of the tokens that were developed for the crowdfund were distributed to team members. The activities that Liu and the team conducted, such as the airdropped activities, helped to build community enthusiasm and demand for the token, and the team and the community have seen value of their token holdings increase.
This is significant in an economy where revenue sharing of games is typically non-existent. The majority of profits go back to publishers and investors, which is understandable as they took on the majority of risk in the first place.
Additionally, having a token system means that developers can employ various activities to engage token holders, which can prolong the life of the game and result in long-term involvement of the team in the project.
The experience highlighted above is a not-too-fictional account of what is coming to the gaming industry in the near future.
The benefits are of this new model are:
- Enabling the development of smaller, niche games, providing gamers with more choice.
- Fairer distribution in the proceeds of a game as gamers and developers are directly connected without intermediaries.
- More community-driven and engaging games.
- Reducing marketing teams costs for game developers through the facilitation of an immediate community.
How big of a market is this, really?
As of 14 March 2018, the ‘Games’ category on Kickstarter is the site’s highest pledged category and has raised over $700 million to date. Within this, a mid-2016 report states that video games had raised approximately $186 million.
One of the first and most successful crowdfunded games is Star Citizen, which has raised more than $148 million since 2013. According to a study by the University of Cologne, the top categories of people who chose to participate in crowdfunding of video games were:
- Supporters who believe in the project driven to see certain games completed
- Consumers who wished to own a part of the finished product
- ‘Influencers’ or ‘idealists’ who see crowdfunding as a way of effecting change in the video game industry as a whole
Together with our team, partners and community, Hoard hopes to provide game developers with a better way of engaging their supporters by providing supporters with a more meaningful way to interact with and own the success of a project.
“Hoard provides an interesting opportunity to raise funds for game development by bringing game developers closer to the actual communities.”
- Hakan Abrak, CEO of IO Interactive
We hope you’ll join us in creating this new future.
Want to find out more about Hoard?
- Check out our website and learn more about our team and advisors.
- Watch our introductory video.
- Read our crowdfunding paper.
- Sign up to receive updates.
- Join the conversation on Twitter.
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