Recapping Crowfall's equity investment Q&A

Early this afternoon, ArtCraft Entertainment's J. Todd Coleman and Gordon Walton answered investor questions about Crowfall's equity crowdfunding venture, which closes out on Monday. We've collected some of the highlights.

Coleman says investors are "making a bet" that there's an "eventual win" in terms of an IPO or buyout or some other way. In the gaming business, he says, most companies that have a win, "get acquired." He wouldn't say that's even remotely in the works, but it's a possibility for companies like ArtCraft and is one way investors might profit from their investment.

When asked whether the raise was initiated because the company needed money, Walton explained that the company didn't realize they'd be able to do a raise like this (because it was enabled by a brand-new law last fall); in fact, ArtCraft ended a different raise to open this one and had run one prior to the Kickstarter as well.

"Do [we] need more money? Yes, we do," Coleman says, but he stressed that every company needs and wants more money. He said he now believes the game will cost in the $11M-12M range, up from the original $8M estimate, thanks to mistakes, new features, design changes, and the Travian localization partnership, among other things.

But the raise has exceeded Coleman's expectations such that worry over money isn't "keeping him up at night."

"The MMO business model is staggeringly good," he argued, defending the subscription model's consistency and the "strong business model" outlook for a solid MMORPG, especially one with a smaller base that is "delighted that [the studio] built them exactly what they wanted."

The duo also noted that they rely heavily on gamers who promote the game by word of mouth. "We owe everything to the people who are following us," Walton says, while admitting that surgical ad spends and targeted marketing are going to be a necessity in the future. Still, ArtCraft doesn't want a bajillion people showing up on day one with 80% bleed-off a month later, so don't expect that kind of overwrought advertising campaign.

As to localization, Coleman notes that the team's relationship with Travian will allow the EU and US versions of the game to share resources and design -- they'll basically be the same game. A potential Chinese version of Crowfall, however, would probably be localized developed by a Chinese team based on a "snapshot" of the western game -- ArtCraft wouldn't loop back changes made for that community.

Walton concluded the call by explaining that he understands the raise is not for everyone and thanking even non-backers for their attention: "This kind of investment is not like putting money in the bank.

Source: ArtCraft Webinar
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29 comments
Dystopiq
Dystopiq

"Do [we] need more money? Yes, we do,"


Hmmmm

Malice
Malice

Without going into my own reservoir of business experience to try and qualify comments I suppose it might be better to present an optimistic view. Both of these guys are MMO industry people I can’t imagine them recovering from a Crow fall failure as it’s my view both have put their personal industry prestige up as initial capital. You may not like or like either or for their histories but I suspect the equity play now is to ensure a successful product to market.

If they fail they lose big time as they wouldn’t be able to come to the gaming community again hat in hand. If they succeed everyone makes money and a game is produced. I am encouraged that they haven’t taken on a producer yet and rushed the product to market to increase capital for future development. I mean how many times have we seen that, and or perpetual alpha’s? I certainly won’t be buying a stock option my portfolio is good as is but I’m not seeing this as a negative at this point. It looks more to me they are doing everything they can to avoid failure, that’s a good thing. 

arktourosx
arktourosx

Defending the subscription model's consistency?  Doesn't want 80% bleed off?  That's some straight up deception there.

Addressing the second point first, every game seems to face that 80-90% bleed off even non-MMO games if you look at stats at sites like Steam Charts after a few months.  There are very, very few games that defy that norm and they're the big juggernauts in their field.

Which brings us back to the first point, a subscription model in this day and age is a huge mistake.  After you get your first 30 days for free after buying the game a subscription forces you to make a snap decision and judge the game as is if you want to keep playing.  For a competitive game where there are innumerable other options out there to be competitive in for free (be it other MMOs or even MOBAs/Lobby Shooters) they're going to have to be offering one hell of a product to convince people to shell out that $15.  And in a competitive game, players are like dominoes.  If half my guild quits, the other half of my guild is also likely to quit as well.  As one guild goes away, other guilds are left with less competition.  I'm extremely skeptical that's going to be a winning strategy.

Finally, Word of Mouth goes both ways.

arktourosx
arktourosx

@breetoplay I just don't see how Crowfall will be any different in regards to launching to a way bigger audience than they can sustain.  As one of the very few MMOs left on the Horizon it's hard to miss as an option.

As for the "derpy launch rush model" I'm 100% with you that I agree it's derpy as all get out but it seems to be what people are into these days.  When I talked to people about ArcheAge 3.0 and fresh start literally everyone's response was it was going to be 1-3 months of fun.  Same goes for many other games be them MMOs or MOBAs or otherwise.  I'm already hearing the same thing about Crowfall and it's "no-more-wipes" point that it'll be a few months of fun.  Personally this all seems counter to the idea of a long term time investment of a MMO but be it my own guild or the guilds we work with this seems to be a prevailing attitude.

Good to hear about the subscription.  Talking people into logging in once a week for an event or something is a lot easier when they don't have to keep paying for it.

breetoplay
breetoplay moderator

@arktourosx So what they were saying in that section was basically that most MMOs launch to a way bigger audience than they can sustain, partly because they market hard toward sales from people who won't like the game and won't stay, and partly because the industry is locked into a derpy "launch rush" model that doesn't make much sense for digital sales. Instead, they want to grow the playerbase in smaller chunks rather than try to throw a huge mass of people at it and only keep some of them.

IIRC, the subscription is optional -- it's a hybrid B2P model. TSW-style. So I don't think the point of exit is as much a concern.

Estranged
Estranged

Remember their KS page said they reserve the right to take on a publisher to finish the product.  This is against the whole ideal of Kickstarting a MMO.  Quoting them: 


https://www.kickstarter.com/projects/crowfall/crowfall-throne-war-pc-mmo


Kickstarter represents the absolute best way to start a new project – because it allows (and relies on) the fans to get involved from the beginning! 
Could we raise money from a publisher to build this game?  Probably. And if that’s what we have to do, to get Crowfall made, we will. But we would rather try and make a direct appeal to you, first.

Estranged
Estranged

@breetoplay @Estranged At that point, the backers have just helped fund a big corp game, nothing more than the pre-order, early access or pre-release issue that is harped on so often by the posters on this website.  I interpret that statement as a big possibility, that they are unsure of what will happen.  Now, going 4 million over budget?  

breetoplay
breetoplay moderator

@Estranged @Francis_baud @Armsbend @breetoplay You're gonna be in Camelot Unchained threads saying the same thing, right? :D Because they've continued collecting money and putting in more money and even expanding to a second studio because they have also expanded the scope of what they're doing and have shifted their timelines around too.

I'm not saying there's anything wrong with it. I'm saying nobody believes you can build a decent MMORPG on 2 million bucks, and literally nobody goes into a project like that knowing exactly what it's going to cost, indie or publisher.

Estranged
Estranged

@breetoplay @Estranged @Francis_baud @Armsbend That isn't fair Bree.  I could say you are biased concerning the Crowfall devs for obvious SWG reasons.  :-)


Also, I have a bias myself, considering one of them was behind the hideous beta Hero engine of SWTOR and all had their fingers on the destruction of SWG (seems an overwhelming majority of you think the changes were devastating). SWTOR was an expensive project.  Very expensive. So going cheap on the game engine irks me to no end.  It is like putting a lawn mower motor in a Mercedes.  So for me, that is two strikes.  I also fully admit that their KS campaign just irked me overall. That is 1/2 of another strike. 


Now as far as CU goes, CSE has been prudent.  Yes, I realized they would need continued sales/donations to further the project.  Yes, I know Mark put more of his own money into CU. However, they aren't begging for additional money or investment at this time.  There is a difference in begging versus  keeping a backer store up on the website. Should I be using the word "begging"?  Is that harsh?  Of course, I realize they are going to need box sales and further donations.  A steady stream of that is different than saying, "whoops, we need 4 million more dollars"! Also, I feel (from reading what they have to say) that CSE feels they needs to have a solid product to offer before asking for additional funds in a more aggressive manner.  


Oh, to answer your question specifically.  When/if that times comes for CU, I'll certainly be asking questions.  I'm just confident they are prudent, so that is the big difference in my eyes.  


breetoplay
breetoplay moderator

@Estranged @breetoplay @Francis_baud @Armsbend You could say that about my bias, but you'd be wrong, and my consistent votes for CU for most anticipated and best studio over the last several years, and my skepticism over Crowfall's finances (here and on the podcast) demonstrate it -- they refused a skeptical interview on their finances from me, even. I have no particular attachment to Walton or Coleman (Shadowbane was a pile), and what's been made public of Koster's involvement so far has been to propose economic systems that seem to routinely get shot down as being too complicated and to push ganker PvP in a way he knows damn well will not work. That's my perception anyway.

All that said, I think the idea that Crowfall suddenly sat up one day and said "whoops we need 4 million more dollars" is totally disingenuous.

Estranged
Estranged

@breetoplay @Estranged @Francis_baud @Armsbend The hyperbole is strong in me.  I was also pulling your chain a bit, just being silly.  :-)  


However, I'm trying to figure out what is wrong with my feelings on the project, other than the hyperbole?  


edit:  It is difficult for me to listen to podcasts, I find it interesting you have already explored this subject.  


Once again, I wasn't questioning your integrity, just having a little fun.  

breetoplay
breetoplay moderator

@Estranged I'm not sure that's fair -- I would be more annoyed if they didn't have that as a backup plan. Speaking as someone who backed the original campaign, I'd rather see the game made than not made, even if it means a combo of KS and outside investment or even a dreaded publisher making up the difference.

Greaterdivinity
Greaterdivinity

Good luck to them in raising the money, but it's shit like this that's why I refuse to crowdfund MMO's. Budgets are especially prone to balooning with MMO's, as problems are usually far more complex and it's way easier for the kind of feature creep that exists in non-MMO projects to be many orders of magnitude more work than they are with other types of projects.

I'll happily support the game if it makes it to market in a decent shape, but just can't get behind funding games like this given how just about every single one I can think of off the top of my head has had to revisit crowdfunding multiple times for additional, unforseen funding needs or find a publisher/big money backer elsewhere when crowdfunding alone wasn't sufficient.

Estranged
Estranged

@Skyewauker From what I have been told, rig labor is expensive as hell.

Skyewauker
Skyewauker

@Armsbend @Skyewauker @Greaterdivinity  You'd actually have to have a job to give input my dude.  A job that deals with numbers.  It does happen frequently.  More frequently than it should.

I worked on the BP Atlantis project.  The coast guard had us do a lot of extra work before they would let it sail away.  Google "thunderhorse almost sinks".  You will see why.  The final billed amount was 60% than the original bid.

There are always unforeseen circumstances.  I wouldn't expect you to know that.  You troll massivelyOP for a living.

Skyewauker
Skyewauker

@Estranged @Skyewauker @Greaterdivinity  This is what happens when you have "stretch" goals.  They start out with an initial vision.  When they exceed the money gained, they add shit.  I DETEST stretch goals.  Its why Star Citizen is taking a decade to make.  Finish your initial game design that you advertised for then put out expansions / do more crowdfunding for those.

If you don't like it, don't give them money.  Its the only way to stop the practice.

Armsbend
Armsbend

((Deleted by mod, ad hom.))

Skyewauker
Skyewauker

I don't work for oil companies. I construct. I don't work on production. I work in E&I. Not though.

Skyewauker
Skyewauker

It is. Very. Not base labor, but the overtime labor. There are only something like 4-5 cranes that can lift deep water oil well platforms and set them in place in the world. They are scheduled sometimes years in advance.

When there is a deadline and the job gets behind , overtime hours are increased, night shifts are brought on. All of this is never part of contracts initially. Every job is bid on a 48-50 hour work week. The average weekly hours end up going to 70-84+ hours a week. The need to meet the deadline drives up the price.

It's no different with crowdfunding an MMO. The initial contract / crowdfunding attempt is based on the core contract / game. When stretch goals are introduced (a change in the contract), more manpower (night crew) and manhours (overtime) are needed. This causes the project to balloon.

I honestly don't know why they don't do a better job of presenting their whole vision/plan in the first place so conversations like this aren't even brought up.

Skyewauker
Skyewauker

@Greaterdivinity This is life.  NO PROJECT ever finishes below or at budget.  Period.  Ive been a Project Engineer on 7 - 8 major Oil and Gas platforms and every single one of them have far exceeded the original contractual budgets.

When you make a budget for any project, its always an estimate.  Thats why things like change orders, extra work orders, etc. exist.   MMOs are, in a sense, construction projects.

TheScree
TheScree

@Armsbend @Skyewauker @Greaterdivinity As an avid follower of the title, I can assure you that they were upfront about the delays. It was implied when they shared these delays with us that the cost to make the title had increased. They made mistakes, combat was awful for the first 18 months. They owned up to it and changed course when it was clear the community wasn't buying it.


One thing that happens in MMO development is your backers don't end up actually liking some of the things you do. Considering we are ultimately the end-consumer of their product, they have a vested interest in ensuring we _want_ to play the game.


Whats unfortunate about the whole news today was that this was the first the community saw just how over budget they went.