Ramblings from the man behind Van Ryder Games

Ok, this started off as a blog focused on Kickstarter, but of late I've been discussing more topics and thus I have renamed the blog to a more general title. I hope you enjoy my ramblings!
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The truth about Kickstarter and risk

A.J. Porfirio
United States
Thompsons Station
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Saloon Tycoon on KS Feb. 18!
I know I owe the two of you that read this a post on creating a KS cost/benefit model, but that is a time commitment I haven't been able to make yet. So in the mean time, let's take a look at risk.

I should point out that I've spent much of my professional career as a Risk Manager, so you at least know I am not totally blowing smoke.

So with that, I'd like to make a point about risk...

One great thing about Kickstarter is that risk is pooled or spread out across a lot of different people. Both project owners and backers involved in a Kickstarter are taking some sort of risk.

I'll start with the backers, but I think it is worthwhile to look at the project owner as well, as I have seen comments on BGG or elsewhere that imply the project owner has no risk. This is just plain false and grossly inaccurate in my opinion.

As a backer you are taking some risks:
Risk 1: The game never gets delivered.
Risk 2: The game does not meet your expectations.
Risk 3: The game is available later at a reduced cost

The consequences of Risk 1 for the backer is they are out $X or whatever they put toward the project. Obviously the fact that the total pledge $'s are spread between 10's, 100's, or even 1,000's of backers limits the loss to any one person. The amount pledged scales your risk of course, which is why you should discriminate more if you are planning to pledge more. As far as I know, this hasn't happened for a board game yet and I hope it never does. But even if it does, I don't think it is going to put anyone into foreclosure on their house.

The consequences of Risk 2 are you have a poor experience with the game. This risk is one that can be managed by the backer. Namely, a backer should be able to get a very good idea of whether they will enjoy the product based on the information provided by the project owner. The less information consumed, regardless of availability, the greater the risk is you may not enjoy the product. Backers should understand their tolerance for risk so they can be comfortable pledging for a product.

Risk 3 is a bit of a misnomer. I see all the time folks complaining that they refuse to pay retail on Kickstarter because they know they'll be able to get the game later at a reduced price. This may or may not be true. Probably in a lot of cases it is. But this is not something that is native to Kickstarter. You very well may buy a game today and tomorrow I might find it on Amazon for $5 cheaper. The point is, it isn't the fact that the game costs "retail" that is stopping these guys from backing. It is simply that the perceived value is not worth the asking price for that person. This risk is minimal and it is unlikely the benefits of waiting will result in more than a few dollars saved. Plus you are likely foregoing fringe benefits of backing a project.

There are definitely risks taken by backers of Kickstarter projects but they are very tolerable for all but the most risk averse folks.

Now let's talk about project owners. Contrary to what seems to be popular belief, project owners are taking a far greater risk than backers.

If you've read any of the dissenting posts about KS on BGG or otherwise, you have surely seem a comment akin to something like this:

"Kickstarter allows designers to bypass the traditional gate keepers (publishers) and produce a game without any risk."

The first part of the statement is absolutely true. The second part is probably false in almost every case, most especially in the projects good enough to get funded. Let's look at the project owner's risk.

Risk 1: Opportunity Cost
Risk 2: Financial Risk
Risk 3: Risking Reputation

What do I mean by Opportunity Cost? If you've ever designed a game or even attempted it, you know how time intensive it can be. If you were planning to take your project to Kickstarter and I told you that I could see the future and your project was not going to get funded would you consider to spend time on the game? This is time you could be spending on other more lucrative things like time with your family or maybe on another game design. Those opportunities are foregone in order to make the game and bring it to Kickstarter. The catch is there is not fortune teller that can tell you if your project will succeed or fail. So you as a a project owner, are risking your time and effort on the project.

Risk 2 is financial risk. It kills me when I hear or see comments about there being no financial risk for project owners. It is very likely that long before a project has funded or is even posted on KS that a lot of money has been spent in preparation. I can tell you for a fact that I spent well over $1,000 on art for If I'm Going Down... before I even thought I might be able to get funded on Kickstarter. This is a risk I took because I believe in my game. My friend Grant Rodiek who recently funded his Farmageddon game on Kickstarter, has been very open about the fact that he spent a lot on the artwork well before Kickstarter was even a consideration.

You've heard me talk about BGG ads. I can promise you there are no refunds for ads if your project doesn't get funded. This is an expense that is a risk. Sending prototypes to reviewers. Not free.

How much do you value your time? $10 an hour? $20? $50? I can promise you the designers and publishers of the slick games that get funded on KS are spending hundreds (even thousands, I know I have - and my wife will unhappily attest to that) of hours designing and producing the game and project. So you do the math. Let's forget this silly notion that project owners do not have any financial risk. In fact, I think there is a strong argument that the financial risk is far less by going the route of pitching to publishers.

Risk 3 is the most important in my opinion and should be the scariest for small timers and first time publishers designers. What is the saying? "You only get one shot at making a good first impression" or something to that effect. By the nature of KS, you are putting yourself under the spotlight. If the game gets produced and does not make the grade, people will remember the next time you create a game and try to push it or kickstart it. If you go to a restaurant and the food tastes like crap, do you suggest the restaurant for your next time out so you can try a different menu item? No, you write off the whole restaurant as crap. This is the same effect project owners that are successful at funding, but unsuccessful at producing a quality product will experience if they don't deliver. Damage to reputation is also damaging financially as it will directly affect your ability to successfully sell product in the future.

The beautiful thing about all this is that the market weighs all of these factors and our collective actions as backers and project owners determine what is tolerable, what works, and what doesn't. Where there is risk there is reward, and that is certainly the case with Kickstarter.
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