Monday, September 17, 2012

Every Film Should Maximize Crowdfund Dollars

I just put together an examination of the economics of crowdfund dollars in the entertainment (in that case, film) industry, and concluded handily that literally every film should seek as many crowdfund dollars as possible.  

Please ask me if you want to see the full analysis. (  Right now it is proprietary and confidential as we have big plans underway.  

(Editorial note:  The analysis I refer to is within a deck related to our devlopment of a social-media-based BD crowdfunding portal for all things film/movies.  That deck set is only available to those qualified entities interested in partnership within that film portal.)

A glimpse at the results reveals:

$1 RCF = $3 Marketing Value
$1 RCF = $10 Gross Revenue to the Film

Interestingly (cosmic coincidence?) the below article came out today in  See at:  I copy it below.  (Highlighting emphasis is mine.)

Here we see Revolution, a sizable gaming company, explaining why crowdfunding not only brought them half their budget for a new project, but also was favorable to standard financing.

For you in the film biz, the game 'publisher' is approximately equivalent to a 'studio/distributor' in the film industry.

I start here with Revolution's pitch video for their Kickstarter campaign. 

Revolution's Charles Cecil: Crowdfunding fuels creativity, but publishers still have their place
Different strategies for different platforms
Revolution's Charles Cecil: Crowdfunding fuels creativity, but publishers still have their place
 Product: Revolution news 
 Developer: Revolution Software 
by James Nouch
At the end of August, Revolution Software asked the Kickstarter community for $400,000 to fund a new Broken Sword game for release on PC, Mac, Linux, Android and iOS.

Predictably, the project comfortably exceeded said target, raising well over $100,000 in 24 hours and hitting the $400,000 mark after just a few weeks.

Indeed, as things stand Broken Sword: The Serpent's Curse's Kickstarter campaign has almost hit $600,000.

But how will this cash be spent, and why did Revolution - a studio you might imagine would have a better chance of securing publisher backing than most - turn to crowdfunding in the first place?

We spoke to CEO Charles Cecil about publishers, creative freedom and financial risk.

Pocket Gamer: You've exceeded the $400,000 you asked Kickstarter for, and there's still time left for you to raise more. How exactly do you intend to use all that cash?

Charles Cecil: Adventures, in requiring so much unique content, are expensive to write.

Most of our competitors have chosen to change their approach to allow cheaper development costs. We decided to stick to high production values – so this will be an expensive game to write.

We were able to self fund the first half, but needed to fund the balance – Kickstarter has allowed us to do this. Now we are fortunate enough to be able to deliver on our stretch goal pledges.

The first was the promise to restore elements that were cut at the early stages due to budget and schedule constraints.

The second is to add an extra section – which is fantastic, because the game will be considerably more ambitious, but will require us to reschedule and redesign certain elements.

What sparked the decision to crowd-fund Broken Sword: The Serpent's Curse? Why not partner with a publisher?

We started production knowing that we would need to raise the remaining funding mid way through development – and were confident that we would be able to do so.

Double Fine then launched their Kickstarter project, with huge success, and we decided that we should try to do the same.

We have found that with Kickstarter not only do we benefit from funding, but we also have the opportunity to work directly with a large number of fans of the series - crowdfunding really does offer an extraordinary opportunity.

Until recently the publishing model in which a publisher funded a game – and in taking the financial risk benefitted from its success - just didn't work for independent developers like Revolution.

We have had considerable success self-publishing our games on Apple platforms and more recently Android.

We continue to work with publishers on boxed products and wherever else is appropriate. Since we have funded the game together with our fans, we will now be able to benefit if the game is successful.

You've said that self-publishing will guarantee you and the team at Revolution 'creative freedom'. Exactly what are you hoping to do withBroken Sword that you feel you wouldn't have been able to do under a publisher?

When a publisher funds a game and takes financial risk, they quite reasonably want to manage production and schedules.

That leads to the publisher taking primary control of the schedule, and the developer primary control of the creative aspects.

The key problem is that the developer must sign up to specific milestone deliverables in advance which, in practise, are hard to keep without compromising the game.

So, for example, we would need to agree to complete the 'story' by a certain date after which we would have no option to change it – but in reality all these elements need the flexibility to be developed in parallel.

So having control of the schedule, the budget and the creative side allows us the flexibility to best decide how to develop all aspects of the game.

Under the traditional model, a publisher's primary customer is the retailer – and the product needs to be pitched such that a publisher will have confidence that a retailer will decide to stock it once the game is published.

Through this Kickstarter process, we have had very active communications with our fans – currently there are over 10,000. So we can be confident that we are developing a game that they will want to play.

It's a very direct and pure relationship.

Just how much of a risk is self-publishing for Revolution? Or are you confident that a property as well-known as Broken Sword will shield the studio from financial harm?

We don't for a moment underestimate the value that a publisher brings.

But the success of our Broken Sword games on iOS – we had 500,000 sales of the two games last year – has given us confidence that we can successfully self-publish our games on digital formats.

Of course a major benefit of Kickstarter is that we will have over 10,000 evangelists once we release the game – the sort of marketing support that would previously have been unheard of.
We don't take anything for granted, but we do feel that are in a stronger position now than at any time in our history.

Your Kickstarter video was a rather slick production. How important do you feel presentation is to a successful crowdfunding campaign?

Thank you. My instinct is that a video needs to look good, but not too slick – we are, after all, an indie developer.

The video was put together with a local film maker – very talented but he did not have the benefit of a particularly generous budget.

I think that we got the balance about right – although plenty of people have suggested that I don't give up my day job for a career in acting...

If The Serpent's Curse is a success, would Revolution return to Kickstarter to fund its next game? Or should developers avoid soliciting donations from the community when other viable options are available?

I felt that having funded half the project, it was quite legitimate to seek to crowdfund the balance. But crowdfunding is about much more than just raising money.

In particular it allows the developer to receive sincere feedback about the popularity, and therefore the feasibility, of a project, as well as galvanising the fan community.

I actually think that this way of democratising funding will grow and evolve – it is really exciting.

Adventure games seem to be enjoying a resurgence in popularity lately – but is the genre attracting new players, or simply reigniting the passions of older gamers?

Very much both. When we announced Broken Sword: Director's Cut we were delighted by the response from the people who had played the games first time around.

But the success of the Nintendo DS, Wii and then iOS formats showed that genre can appeal to a new audience too – an audience that wants to move on from hidden object and three-gems-in-a-row type games.

It is a great genre to be working in at the moment.

Thanks to Charles for his time.


  1. Crowdfunding is not a replacement for angel investor networks ... setting it up in competition to perfectly fine angel networks completely undercuts the massive potential for equity-based crowdfunding and participation by the MASSES.

    When it comes to money spent on projects, crowdfunding must be much smaller than angel networks ... much, much, much, much, much smaller dollar amounts limit the opportunity for crooks ... crowdfunding is not for lawyers and CPAs, crowdfunding is for CREATORS -- it's not so much about money ... crowdfunding is much, much more SOCIAL than angel networks ... and because it is social, it is much more creative. TEENY amounts of money matter because that money still represents an "earnest money" commitment.

    Equity participation allows for EARNEST MONEY participation by funders who might effectively become co-founders ... but it also weeds out the annoyance from those who lack anything more than a passing 5-minute commitment.

    The funders who participate in crowdfunding want to PARTICIPATE ... to share in the creativity ... crowdfunding is a way for them to be involved in projects that outside their geographic boundaries [that will be primarily defined by the jobs of these small investors].

    Crowdfunding is for the masses ... it is not for elites with a proven portfolio and well-healed investors.

    In the example of films or media, the objective of a crowdfunding should be something like a viral YouTube video series or demo tape EP (e.g. five brief videos, five songs ).

    The objective of crowdfunding should be a PROTOTYPE that connects the dots for people, for the next round of investors who'll commit to an investment because of something like a million likes on YouTube.

    The objective of crowdfunding needs to be smaller! It's about scope management ... think instead of doing something that LEADS TO to pilot for television series or Sundance film or videogame funded by angels or something that might take a half million to produce.

    THINK SMALLER ... think about unleashing creatively through social media; use crowdfunding as way to get "earnest money" participants and weed out the riff-raff.

    There is plenty of room for more creativity at the bottom ... when you get the amounts up to $1M, the lawyers and accounts show up and creativity goes out the window.

  2. Mark, while I appreciate your enthusiasm that crowdfunding is right for creative endeavors, you are not right that it is only for prototypes, etc. As opposed to 'thinking smaller', I encourage you to 'think bigger'. And no, creativity doesn't go out the window at $1M. That is just where it begins in the film industry. And CF certainly is well in the angel investor zone, and certainly is for sophisticated investors.

  3. I agree with David.

    It opens the door for funding options so that the public can help get the stories told that interest them,and it increases the interactive potentials in the storytelling industries.If they buy in to get the story pilot produced,they will buy in and use their social contacts to create the marketing buzz that will get further interest in the program especially if they have input.I am sure that this will even evolve further in the pay as you play microtransaction episodes where they can pay as they watch/play and even help drive the story.A lot of the investment criteria for angel investors are so strict that the producers spend so much time and money in the forms and applications.

    Having had week long meetings in Vancouver with Paris producers who have put together a Luxembourg investment fund that will provide fairly high returns on investments into a slate of feature films,it became evident that we can raise more of the funds that the public will buy into if we have a parallel crowd fund that can bring money into the productions as copros if the public likes the stories being shared with them.
    It is going to become a primary funding source that will put storytelling financing into the $ of the public,and not just the few rich that need the tax deductions and the wealthy studios.
    And the bigger the crowd funds the better ,especially if it spread over a number of programs.

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    2. Thanks David. Well said. Please note the additional 'editorial comment' I added within the body of the posting. In it you will see reference to the development of a robust, social media centric, BD-CFP for film. If you would like more info as a possible participant, feel free to reach out to me at:

  4. Hi! Great post. I agree it is a must for crowd funded films to maximize the use of every dollar. And yes, with crowdfunding films it allows both securing funds and working with a large fan base.