Alphafunding – A new business model in the video game industry?
Traditionally, game developers would not release an unfinished version of their game mainly to prevent software piracy and plagiarism. Instead, multiple in-house alpha and beta runs would be performed to perfect the game in an iterative approach. Nowadays however, fueled through success stories such as Markus Persson’s Minecraft, which made a whopping $33 million in alpha/beta sales (Orland, 2011) more and more (especially independent) game developers make use of the alphafunding business model on platforms such as Steam’s Early Access Market; Gamasutra even declared it to be one of the ‘5 trends that defined the game industry in 2013’ (Graft, 2013).
What is alphafunding then all about? And will it live up to all its hype or will it sink into an insignificant niche existence?
Alphafunding refers to commercially making a game available in its earlier stages of game development. In most cases, alpha-access will be sold at a discount in comparison to the final retail copy, and every participant will eventually receive the full version (once it is released) without extra payment. The idea is to provide game developers with enough liquidity to finish the development process while constantly improving/refining the game experience based on community responses (Kuchera, 2014). Other benefits are a more robust server stability testing if it is an online game, and easier and more complete software-bug detection (‘thousand eyeballs see more than two’) through automated error reporting mechanisms (Scougall, 2014). Additionally, by letting players ‘shape’ the game content to some extent, there is a greater emotional attachment and hence a greater user loyalty and player base which is especially important for mmorpgs. Last but not least, by releasing the game ‘twice’ the game developer is able to generate more ‘hype’ in hope for higher sales figures. Letting the customer pay to essentially be an outsourced ‘game-tester’ thus seems to be very compelling to game developers. Gamers likewise profit by being able to play the game earlier, influence the development process and pay a lower price in comparison to the finalized retail version. Sounds like a typical win-win situation or … is there a catch?
In contrast to game projects on Kickstarter, which will only be developed if the required minimum amount has been collected, money spent by users on Alphafunding will not be refunded whether the final game will be released or not. Additionally, alphafunded games do not have a schedule of deliverables (as opposed to crowd-financed projects), meaning that a) games could potentially be stuck in the development process for an infinite time and b) that the final product (which alphafunders have already paid for) will be radically different than the initial alpha-version. Several projects (e.g. ‘Prison Architect’) which have either failed to deliver a final product, or whose final product was objectively different than the alpha-version have already tainted the consumer’s faith in such a business model. (Scougall, 2014). Additionally, and in order to avoid story spoils through alphafunders or lack of long-term interest, alphafunding might only work with certain ‘types’ of games such as sandbox ( Minecraft) or survival (DayZ) games.
All in all, alphafunding is an interesting twist to the traditional gaming industry. Whether it will however become the dominant modus operandi will largely depend on the faith gamers have in developers and whether the developers will not abuse their (literal) ‘credit of trust’.
Graft, K. (2013) The 5 trends that defined the game industry in 2013. Available at: http://www.gamasutra.com/view/news/207021/The_5_trends_that_defined_the_game_industry_in_2013.php, accessed 15.09.2014.
Kuchera, B. (2014) Unfinished, unfair and brutally difficult: What developers should steal from DayZ. Available at:< http://www.polygon.com/2014/1/2/5264192/dayz-early-access-lessons>, accessed 15.09.2014.
Orland, K (2011) Minecraft Draws Over $33 Million in Revenue from 1.8M paying customers. Available at: http://www.gamasutra.com/view/news/33961/Minecraft_Draws_Over_33_Million_In_Revenue_From_18M_Paying_Customers.php, accessed 15.09.2014.
Scougal, R. (2014) The Early Access phenomenon: Care to buy a dream? Available at: http://venturebeat.com/2014/07/21/the-early-access-phenomenon-care-to-buy-a-dream/, accessed 15.09.2014.