DDM Games Investment Review – Jul 06, 2017

Rewards with Backer Participation Matter in Crowdfunding

A client recently asked DDM to review rewards that offer backers the opportunity to contribute to a game in some way, concerned that these rewards may impact the game’s development timeframe and resources. In response, we reviewed top performing campaigns launched since 2015 across Fig and Kickstarter, removing MMORPGs like Ashes of Creation and the visual novel Muv-Luv. The campaigns reviewed: Shenmue 3, Bloodstained: Ritual of the Night, Pillars of Eternity II: Deadfire, Psychonauts 2, Yooka-Laylee, Wasteland 3, Battletech, Divinity: Original Sin 2, The Bard’s Tale IV, System Shock, and Shadowrun: Hong Kong.

Some basic data on these 11 campaigns:

  • The total money raised: $35,437,062 including equity investments on Fig / $27,563,463 from reward pledges alone
  • The total number of backers: 454,132 including investors on Fig / 448,598 from reward pledges (a.k.a. pledgers) alone

Note, the above numbers assume all backers or revenues on Fig campaigns were either pledgers or investors, but we know from Kickstarter campaigns that some revenues, approximately 4% on average, come from add-ons or no rewards chosen.

We reviewed reward tiers specifically whereby the developer allows pledgers input on a feature or design aspect of the game, calling these Participation Tiers. These tiers included the most basic input such as adding a short message to a guestbook to ones that had more impact such as designing an item, character or location. Adding a player’s name to the game’s credits was not included as this is a typical reward that is negligible on production. The following across the Participation Tiers from the 11 campaigns treats tiers as stand-alone, not cascading tiers whereby rewards flow into higher priced tiers, as it would be too difficult to parse values of the rewards:

  • The lowest tier offering a participation reward from these 11 campaigns is a $135 tier, but the majority started the participation rewards at the $500 tier or higher (8 campaigns)
  • Total participation pledgers: 3,682 or 0.8% of all pledgers across the campaigns
  • Total participation revenue: $1,897,425 or 7% of rewards-based pledges across the campaigns
  • Revenue from these participation rewards ranged from 2% of a campaign’s total rewards-based revenue up to 20% with the average 7%

For the 11 campaigns, we totaled pledgers and revenues by campaign from all tiers starting from the first participation tier onward. Together these tiers are columns labeled ParticipationTier+ below. For example, in Shenmue 3, the first participation tier is $600, which includes adding your name and a short 140-character message to an in-game guestbook. Starting with this tier and adding up through the $10,000 tier, this meant there were 634 pledgers in these higher tiers totaling nearly $843,000. Mindful that not all tiers contained participation rewards, as some might be voice messages by celebrity voice actors or one-of-the-kind or limited collectibles, these 634 pledgers/$843,000 were 84% of pledgers and 69% of revenue in Shenmue’s ParticipationTier+ group. Building on this, we then get the following picture, campaign by campaign:

Even though the number of pledgers and amount of revenue from Participation Tiers themselves is quite small when compared to the gross numbers of a campaign, they are a large proportion in the higher tiers for a majority of campaigns:

  • The average percent of pledgers in the Participation Tier+ group comprised of participation pledgers: 77%
  • The average percent of revenue in Participation Tier+ group comprised of participation pledges: 68%

There are different types of participation rewards, which can be combined with one another and offered in limited quantities in order to minimize their impact on development:

  • Low level impact: pledger adds name and/or short message compiled in end credits or in-game guestbook
    • Psychonauts 2 will use pledger names to label brains in the Hall of Brains and because it waterfalled throughout higher reward levels, this means over 3,400 names (!)
    • Cheapest of these rewards starts at $135 for end-credit message
    • Higher priced reward examples include affixing one’s name to an in-game plaque (44 pledgers at $1400 tier in Shenmue) or affixing name to a building in Chinese characters (88 pledgers at $800 in Shenmue)
  • Medium level impact: use player’s likeness for an item or in-game portrait
    • Medium impact because the likeness of a pledger does not influence design
    • Most common offering is an in-game portrait, typically starting at $500 with the most to be produced by a campaign at 91 in Divinity: Original Sin 2
    • Higher priced portraits are associated with premium status or in-game placement like honorary board member in System Shock (3 pledgers at $10,000)
    • Other examples include one’s likeness on an NPC (43 pledgers at $1,000 in Shadowrun: Hong Kong), on an item such as a corpse on a space station (130 pledgers in $350 in System Shock), or on a chibi or block figure (146 pledgers starting at $700 in Shenmue)
  • High level impact: pledger consults with game designers to influence design of a playable character/enemy or location
    • Most common offering is design an item, starting at $750 with most to be produced by a campaign at 75 in Pillars of Eternity II: Deadfire
    • Includes design a puzzle (4 pledges at $750 in The Bard’s Tale IV) or design a weapon (20 pledges starting at $2,000 in Bloodstained: Ritual of the Night)
    • Premium offerings include design a location such as pirate ships in Pillars of Eternity II: Deadfire (starting at $5,000) or memorable character in Divinity: Original Sin 2 (2 pledgers at $10,000)

Ideally, campaigns should offer a mix of participation rewards that work with the game’s IP. The rewards would offer some enticement and excitement in the higher tiers while easily integrating with features already planned so that the rewards will have minimal impact on development.

DDM offers comprehensive crowdfunding services, from strategic advisement to hands-on campaign management. For questions about DDM’s crowdfunding services, please contact us.