The gaming landscape in the last ten years has fundamentally changed and it isn’t simply related to improved graphical fidelity or the gaming platforms we’re playing on.
Ever heard of microfinancing and why has this movement taken off? Once upon a time there was a landscape where large publishers and venture capital firms controlled the flow of capital to gamers and developers alike; now, small investors have an opportunity to put money into games they passionately want to see succeed. It provides the seeds for an entirely new ecosystem in which these passionate gamers or casual investors can also be involved in the creation process.
One of the main reasons for this shift is accessibility. Other crowdfunding platforms like Kickstarter and Fig laid the groundwork for these types of financing. Micro-investment goes further, permitting an individual to financially invest smaller amounts, whether it be in exchange for equity or other forms of revenue share. For gaming start-ups, these new investment methods are huge. Start-ups are no longer giving creative control to individual investors or publishers that take significant ownership of their brand, but instead, rely on a community of smaller funders that want to see a project succeed because they are personally invested. Shovel Knight is one example of a game that would have struggled to obtain mainstream support in its early years, but followed alternative funding methods and eventually became a staple in the gaming landscape.
Why micro-investments resonate with gaming audiences
The psychology behind why gamers invest is fascinating. Unlike other industries, gamers often feel a strong personal connection to the titles and studios they follow. This is also why platforms like Republic have had success because they have created systems where individuals can invest relatively small amounts, often times 50 or 100 dollars, and feel like they are part of something much larger.
Additionally, another reason micro-investments work so well in the gaming space is based on the sheer amount of diversity in the different gaming genres and formats on potential investment. For instance, a startup might be developing an indie title with heavy narrative, it might be developing a multiplayer competitive experience or even experimenting with casino-style mechanics and each scenario appeals to a different type of investor. Interestingly, some platforms have even seen crossover interest from people who are also involved in other entertainment finance spaces, including areas of online gambling that have made huge strides with offerings of classic games like blackjack and poker in the digital realm. This makes sense. If you are someone who understands the buzz and risk involved with placing small bets within a digital platform, then the idea of making small, but meaningful investments in potential breakout games is not much different. There is risk, but there is also a potential upside, while also providing that rush when your decision pays off.
The platforms making it possible and the road ahead
A number of platforms are at the forefront of providing access to funding, including SeedInvest and Wefunder, which are widely known names across the overall startup landscape and have even had successful stories in the gaming space. Each of these platforms have a low barrier to entry for investors, as well as a much more curated experience for the projects provided to the investor.
For developers, these platforms provide an enormous opportunity. The gaming industry can be exceptionally hard to break into because of the necessary start-up capital a project requires, and many innovative projects never come to fruition due to the barriers of funding.
Micro-investments create hype through natural marketing of the game. When hundreds or thousands of people put a stake into seeing a game succeed, they naturally advocate for the project by sharing and re-sharing the project updates, testing builds when the game is early in its development, and continuing to push awareness for the game’s success.
The future for micro-investments in gaming looks bright.
In many aspects, micro-investments are changing how we will view our relationship to the gaming industry. They allow anyone with a passion for gaming a way to be a part of the industry not just as a consumer, but as a developer and shareholder. For developers (the startups) they provide the capital and community resources necessary to innovate. And for the investors, it is a way to be a part of something exciting, while earning both financial and social responsibility rewards. The gaming world has always relied on collaboration and creativity, and micro-investments may just be the next big game changer.
