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Double Fine’s Kickstarter project is just like Zynga’s Free-to-play model

By on February 9, 2012
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Yesterday, Tim Schafer and Ron Gilbert, creators of classic point-and-click adventures such as Day of the Tentacle and Monkey Island respectively, broke new ground in the funding of video games.

They put up a Kickstarter page asking for fans to fund them $400,000 to build Double Fine project, a new point-and-click adventure. Within 24 hours, they had raised the full amount, and then some, and the process they have demonstrated how the digital world has totally transformed the nature of content creation.

It’s not about volume

One commentator said words to the effect of “they’ve only had 11,000 people committing to the game, which isn’t exactly a best-seller”.

Which totally misses the point of what Double Fine have achieved. Tim and Ron are huge figures within the community of adventure gamers, people who are adored by their fans for having created masterpieces of storytelling, fun and intereaction.

They also can’t get those type of games funded by publishers any more. “There’s no market for point-and-click adventures”, say publishers who aren’t interested unless a game is going to sell 3 million units.

Tim and Ron ignored that, and went directly to their fans. They aren’t trying for a mass-market appeal: they are trying to make games that people love – and are willing to pay a lot for.

Who paid what, and why

This analysis was done at 13.51 GMT on Thursday 9th February. This is important because the numbers are rising so rapidly that I’ll probably have to redo the analysis in a few days.

At that date, this is what the Kickstarter summary looked like:

image

A traditional games publisher or media executive might thinkg “$534k, 12.5k users, that’s a little over $40 per user.” Which is completely accurate and utterly misleading.

Let’s look at what is really going on. Double Fine offered different reward tiers for pledging to the game that ranged from a copy of the game on Steam when it was released, through HD videos of the documentary, soundtracks and signed posters all the way up to lunch with Tim Schafer and Ron Gilbert themselves. Each reward was triggered by pledging a minimum amount, e.g.:

PLEDGE $100 OR MORE

1197 BACKERS

Original “Double Fine Adventure” poster (suitable for framing) exclusive to the campaign, special thanks in the game’s credits, and all previous reward tiers. (posters will be shipped for free in the US, and for $10 internationally)

So how many people paid for each tier:

image

Looking at this chart, you would be forgiven for thinking that people who spent $15 were your most important source of revenue. Then people who spent $30 and so on.

Now look at how those revenues (not pledgers) were split. Note that this is not perfectly accurate because the tiers are priced at, for example, $100 or more, so someone could have pledged $150 but I can’t tell this from Kickstarter. For the chart below, I’ve assumed that everyone pledges exactly the amount of the threshold, which understates the revenue for each category.

image

Let’s put it another way:

  • People pledging over $100 generated 55.7% of the total, but are only 12.9% of the audience
  • People pledging over $250 generated 32.5% of the total, but are only 3.2% of the audience
  • People pledging over $1,000 generated 15.7% of the revenue but are only 0.4% of the audience

It’s a power-law in action

Anyone who has heard me talk knows that I am a big believer in the power-law. I believe that the Internet is eroding the mistaken belief that we have to charge everyone the same price. Digital relationships with our fans enable us to offer them the ability to spend as much or as little as they like. It is the business model that drives free-to-play games from companies like Zynga, and it is the business model that has driven the Double Fine Project.

(I fully accept that Tim and Ron are going to make MUCH BETTER GAMES than Zynga. That’s brilliant and I look forward to it. They’re not giving it away for free. That’s their choice. But they are enabling players to spend lots of money on things that they value, just like Zynga.)

The point is that Tim and Ron have allowed their players to choose how much they spend. 6,230 chose to pledge around $15, the price of many indie games on Steam. If that was the only price that Double Fine offered, they would have made $93,430 from these people, and probably another $15 from everyone who was prepared to spend more on their game, for a total of £185,085.

But they didn’t. They realised that they had fans who wanted more, much more, and were prepared to pay for it. So via the medium of Kickstarter they’ve been able to give fans the opportunity so spend more.

And they’ve generated 3x as much revenue by giving fans what they want. That’s the real lesson of the Double Fine Kickstarter experiment.

If you make games, that’s what you should learn from: how to give your biggest fans MORE, and let them pay for it. They’ll thank you for it.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • I don’t think the Radiohead example is great, because “pay what you want” can be tough to scale when no-one knows how much anything is worth. I prefer a system where you set prices and people can then decide if they want to pay it.

    I don’t think a lesser developer could raise anywhere near this month. But the principle (“allow users to spend at different price points to enjoy something they care about”) could work for anyone who has managed to build a tribe.

    Of course, building a tribe is difficult.

  • Pingback: 分析Kickstarter项目《Double Fine》的运作模式 | GamerBoom.com 游戏邦()

  • Ben Board

    The comparison that sprung more quickly to my mind was the Radiohead/In Rainbows one – pay what you like for this album – even though everyone got the same product.  Better, Trent Reznor’s experiment: pay more, get the special edition.  Each has been an amazing illustration of the power of the whale.  (As I write Double Fine’s fund approaches $1.7m, and looking at the numbers, the biggest obstacle to even greater progress is that they’ve sold out of all tiers $250 and above.  Print more posters, boys.)

    My question is: how well does this scale?  Radiohead’s thing worked well – because they’re Radiohead.  This is working stunningly for DF, with its own deserved fan base, and with lots of excited industry buzz and novelty around it.  Would it work for a lesser developer?  Would it work, indeed, for DF a second or third time?  Will whales keep spending big like that, game in, game out?  I don’t know; perhaps they will.

  • Seems like some folks are hung up on the Zynga name drop, but forget the headline and focus on the crux of the article, because I think it’s an important point: 

    “I believe that the Internet is eroding the mistaken belief that we have to charge everyone the same price. Digital relationships with our fans enable us to offer them the ability to spend as much or as little as they like. It is the business model that drives free-to-play games from companies like Zynga, and it is the business model that has driven the Double Fine Project.”

    Giving players the opportunity to pay what they want strengthens the relationship between creator and their community and achieves a sort of symbiosis across the entire spectrum of players (pure freeloaders to giant whales). Whales are happy to have the opportunity to spend big because they’re engaged, entertained, or just completely in love with and supportive of the developer. Free is free (and who doesn’t love free or low-price entry points), but offering opportunities to pay more once that free (or low paying) user is engaged ensures that developers aren’t leaving money on the table. As Nicholas points out, if Double Fine had just said “show us your interest by pre-ordering this game for the eventual purchase price of $15” and left it at that, they would have left 3x revenue on the table. They wouldn’t have captured the super-rabid fans that want a poster and their name in the credits or a lunch with the creators.

    The Kickstarter funding / free-to-play model comparison is apt: Double Fine (with the direct digital relationship funnel of Kickstarter) just time-shifted the spending. Instead of the standard F2P model of getting players into a game, engaging them, and then providing opportunities to spend as much or as little as they’d like, Double Fine engaged their community through Kickstarter, gave them opportunities to spend as much or as little as they like, and will eventually deliver a game. Of course, this method really only works when you already have a rabid install base that is frothing to have your company produce something new. (Count me as part of Double Fine’s rabid install base).

  • First, excellent article and analysis, this whole case meant a lot to me, because it is so empowering for people and developers.

    I’d just remove Zynga comparison all together, or at least make it more indirect.. this bold MUCH BETTER is all about player’s perception due their taste for games, besides, it is another business model ascending, not free to play.

    Imo, if they made their game free after that it would greatly demotivate their crowd-funding supporters

  • hmmm, massively controversy firing headline aside, an interesting analysis.

    I think the reason kickstarter funding and f2p are so massively different is purchaser motivation. One is paying to expand an experience, the other to be a part of creating one. I think that new relationship between player and creative is potentially even more interesting.

  • This analogy works perfectly, if you consider people addicted to clicky slot-machine “games” the equivilant of passionate indie-game philanthropists

  • Colin

    I guess come back to that rationale when funding closes and see how it stacks up then.

  • Sort of true: 56% from people spending over $100 sounds like whales to me. 

    Zynga offers its games for free, and about 5% spend, some a lot; Double Fine offers a game for minimum $15, and more than half fit my definition of a whale.

    I do think the underlying motivations, psychology and business model are very similar. 

  • Colin

    I think it’s tenuous to say this is ‘just like’ Zynga’s model; as I understand it, Zynga makes most of its revenue from big spenders. ~42% of Double Fine sponsors have spent $30 or under, going by your figures.