How we turned $ 140 thousand on Kickstarter into $ 40 thousand of debt, and then went to zero
This post is the third part of the article "Creating a game" The Contender "(" Rival ")": the concept of completion ". Here are links to part 1 (as we made the game) and part 2 (as we started the project on Kickstarter) .
There are two big questions that every developer should ask themselves to get started on Kickstarter in order to succeed. We answered them incorrectly.
I am John Tisdale. My friend and I created The Contender: A game on the subject of presidential debates . On September 9, 2015, we collected 127,827.01 US dollars on Kickstarter. It would seem - a lot of money, but only this week, on November 22, 2016, we finally paid off the debts. It took 440 days of work after creating the product and campaign on Kickstarter, before we received 1 dollar.
')
We did not expect that to be so.
Below are the very two big questions, our answers to them, made at that distant time, and what we learned in the end.
What should I do with all this money !?
In the gaming business, the USA and China have the greatest opportunities. Our list of advantages and disadvantages of both of these options was as follows:
USA
CHINA
After discussion, we decided to stop at the USA. We put on rose-colored glasses and really wanted to put the product on the market for Christmas. In October, all companies make large orders to prepare for the holiday. If it is late, the delays that are possible during the manufacture and delivery, can disrupt the delivery time.
We chose a large US manufacturer who printed cards for Uno, Settlers of Catan and Magic: The Gathering. Relying on their experience, we hoped that the guys would be able to provide us with some “insurance” against bad production ideas.
Alas! Large companies work with other large companies and move at the speed of large companies. We thought making test prints and making changes based on these prints would be a quick process, but it took weeks. This is not to say that the company is bad; we simply would have to choose a manufacturer who understands the problems that a small company faces.
Our assumption of "insurance" was not justified. Here are three examples of problems that led to the loss of time, money and investor-friendly attitude:
1. We wanted to have such a place in the box in which expansion cards could fit. Typography recommended a cheap cardboard insert. An empty cardboard insert led to the appearance of a warp zone, due to which hundreds of games were damaged.
2. We thought the company had the experience of delivering directly to Amazon order fulfillment centers. I ended up being forced to figure out how to do this, and I learned only after several unsuccessful attempts.
3. Our “Politically Incorrect” extensions (PI) arrived at Amazon without any marking. Amazon had to delay our receipts for processing, and many PI boxes were then flagged altogether incorrectly. We still get 3-4 returns per month from customers who received a PI box instead of a base game.
All these delays accumulated, threatening to disrupt our delivery by Christmas, despite printing in the USA. If you supported our Kickstarter, then you, probably, remember our message in which there was a speech about it. People are, of course, not happy. Even worse: after Amazon put the game into stock, some people could start getting the game through Amazon Prime service before the delivery from Kickstarter went.
Letters flow to us. The problem that each of our supporters addressed to us in the middle of December was one: “save Christmas”. We appealed to all who planned to donate the game. All who responded were transferred to free shipping within 2 days. Approximately 1,000 games were delivered to customers on time, but some were late. It all cost us about $ 10,000.
Here you have to decide how much you are willing to invest in yourself. Creating your project on Kickstarter, you must have 2 goals. The public goal is how much money you need to raise in order to have enough to release a product Personal goal - how much money you need to collect in order to start a company capable of releasing this product. The latter goal is much higher. Our estimate gave 150,000 US dollars. This meant, according to our calculations, the economies of scale would work, and the business would be able to support itself, making a profit.
We did not reach this mark, but were very, very close to it. Being delighted with our own success, we lived the next few weeks ...
1. We sold 4,000 games in a month, and this was only the beginning of the election year. If we can keep at least 25% of our drive, we will sell approximately 20,000 games by election day in the United States.
2. However - if we order 20,000 games, then we will immediately have a debt of 40,000 dollars. Apart from the fact that we will be suspended with extensions PI & 2016.
3. Consideration # 2. If we order 20,000 games and sell them, we get $ 150,000 each!
4. We: “We would like to order 20,000 games!”
5. Manufacturer: “Please! Make sure you pay us the rest of the money you owe us when you sell them! ”
6. Reality:
7. We:
It turns out that Kickstarter is a country of magical fantasies, where people come to the delight of your proposals in a way that does not translate into your small business. After talking with different people involved in this business, it turned out that this is the norm. If you keep 8% of your Kickstarter impulse over the course of a year, this means that you have succeeded. We had 4%. The CEO of a much more experienced gaming company told us that when he feels particularly aggressive, he orders 2-3 times more pre-order volume. We impulsively ordered 5 times more. It is clear that we were super-optimistic.
How optimistic?
If we printed in China and printed only what we owed, we would receive $ 23,000 each.
The first problem we encountered was the storage of items. Amazon.com's initial maximum capacity was 5,000 products. I launched the famous “northern charm” and received a free extension of up to 8,000 units. It was wonderful, since we had just 7,500 units of goods (basic deck + extension PI) for immediate dispatch. Failure to deliver this shipment would result in serious delays. Several hundred copies of the game are located along the walls of the Guts and Glory office. Where was the rest, I could not say for sure. Apparently, somewhere on the edge of space and time.
And this led us to the second problem. How do we sell all this? At first everything seemed so easy. The following describes what we tried to do:
Attempt: sending free copies of the game to bloggers and community members.
Result: absent. All that we got from this is the people applying to us. Larger parcels were returned to the sender unopened.
Attempt : advertising through Facebook.
Result : ~ 1,000 dollars invested in 30 different advertising casts, ~ 20 clicks received, 0 sales.
Attempt : Presented on YouTube channels with> 1,000,000 subscribers.
Result : the results were sold 3-4 games.
Attempt : Several comic commercials have been released, where puppet presidents play this game.
Result : a lot of time is lost - complete disappointment. There is no noticeable increase in sales.
Attempt : we visited the caucuses in Iowa and the primary elections in New Hampshire, featured in local news, were described in detail in the Daily Dot.
Result : 75% online sales increased while we were moving. But it hardly paid off, since we were spending money to stay on the wave. We attribute more active reinforcement to social networks.
Attempt : writing articles positioning the courtesy of company headquarters in Iowa and New Hampshire.
Result : a lot of fun. A little money.
Attempt : laudatory advertising in the Wall Street Journal (partly just fell into our hands)
Result : 100% online sales increased in 3 days.
Attempt : rent a booth at Politicon.
Result : net profit ~ 1,000 dollars.
Attempt : getting a platform near the annual game festival GenCon.
Result : it was cool for us. We were not at the festival, but we were close enough to get a fair amount of visitors, and were also able to meet quite a few people who knew a lot more than us. We heard that other small gaming companies lost money by paying for participation in the hope of a deal.
Attempt : products sponsored by Amazon.
Result : really works. We spent about $ 2.70 on advertising for every sale of the base game.
- UPDATE -
Attempt : writing a series of candid material about our business in the hope that someone will inflate this material on Hacker News / Reddit.
Result : hello everyone!
- END EDITING -
Attempt : to make more extensions and tell about them to people who already liked our game.
Result : DAMMIN, WHY WE DIDN'T MAKE IT ALL TIME!
We fell into the trap. We thought marketing means that we just need to go to the paths and paths that people follow, and people will give us the money. It turns out that the game is just good, and people want to play it. When we began to focus on improving and expanding the game, we not only saw an increase in revenues due to new extensions, but the sale of the rest of our games also increased. This is what pulled us out of debt.
We still have more than 10,000 games in stock, and we must quickly free up the places where they are stored. Our estimate of the nearest long-term storage fee at Amazon is $ 6,500. This means that we have to destroy thousands of games in order not to be in debt because of the storage fee.
Fortunately, we should not destroy everything, and what we sell, moving forward, ultimately gives profit.
There are two big questions that every developer should ask themselves to get started on Kickstarter in order to succeed. We answered them incorrectly.
I am John Tisdale. My friend and I created The Contender: A game on the subject of presidential debates . On September 9, 2015, we collected 127,827.01 US dollars on Kickstarter. It would seem - a lot of money, but only this week, on November 22, 2016, we finally paid off the debts. It took 440 days of work after creating the product and campaign on Kickstarter, before we received 1 dollar.
')
We did not expect that to be so.
Below are the very two big questions, our answers to them, made at that distant time, and what we learned in the end.
Question 1. Where to produce?
What should I do with all this money !?
In the gaming business, the USA and China have the greatest opportunities. Our list of advantages and disadvantages of both of these options was as follows:
USA
- We get the opportunity to put the old, good, large inscription "Made in the USA."
- Fast delivery, especially on holidays.
- Clear and fast communication. We can even visit the factory.
- Quick revision, if the quality is not what we expected.
CHINA
- Much cheaper. Almost 50% cheaper.
- I printed games in China earlier and had a good relationship with the company we used.
After discussion, we decided to stop at the USA. We put on rose-colored glasses and really wanted to put the product on the market for Christmas. In October, all companies make large orders to prepare for the holiday. If it is late, the delays that are possible during the manufacture and delivery, can disrupt the delivery time.
We chose a large US manufacturer who printed cards for Uno, Settlers of Catan and Magic: The Gathering. Relying on their experience, we hoped that the guys would be able to provide us with some “insurance” against bad production ideas.
Alas! Large companies work with other large companies and move at the speed of large companies. We thought making test prints and making changes based on these prints would be a quick process, but it took weeks. This is not to say that the company is bad; we simply would have to choose a manufacturer who understands the problems that a small company faces.
Big lesson: work with companies that have experience with organizations like yours. (ed. in terms of "size")
Our assumption of "insurance" was not justified. Here are three examples of problems that led to the loss of time, money and investor-friendly attitude:
1. We wanted to have such a place in the box in which expansion cards could fit. Typography recommended a cheap cardboard insert. An empty cardboard insert led to the appearance of a warp zone, due to which hundreds of games were damaged.
2. We thought the company had the experience of delivering directly to Amazon order fulfillment centers. I ended up being forced to figure out how to do this, and I learned only after several unsuccessful attempts.
3. Our “Politically Incorrect” extensions (PI) arrived at Amazon without any marking. Amazon had to delay our receipts for processing, and many PI boxes were then flagged altogether incorrectly. We still get 3-4 returns per month from customers who received a PI box instead of a base game.
All these delays accumulated, threatening to disrupt our delivery by Christmas, despite printing in the USA. If you supported our Kickstarter, then you, probably, remember our message in which there was a speech about it. People are, of course, not happy. Even worse: after Amazon put the game into stock, some people could start getting the game through Amazon Prime service before the delivery from Kickstarter went.
Letters flow to us. The problem that each of our supporters addressed to us in the middle of December was one: “save Christmas”. We appealed to all who planned to donate the game. All who responded were transferred to free shipping within 2 days. Approximately 1,000 games were delivered to customers on time, but some were late. It all cost us about $ 10,000.
Question 2. How much to order?
Here you have to decide how much you are willing to invest in yourself. Creating your project on Kickstarter, you must have 2 goals. The public goal is how much money you need to raise in order to have enough to release a product Personal goal - how much money you need to collect in order to start a company capable of releasing this product. The latter goal is much higher. Our estimate gave 150,000 US dollars. This meant, according to our calculations, the economies of scale would work, and the business would be able to support itself, making a profit.
We did not reach this mark, but were very, very close to it. Being delighted with our own success, we lived the next few weeks ...
1. We sold 4,000 games in a month, and this was only the beginning of the election year. If we can keep at least 25% of our drive, we will sell approximately 20,000 games by election day in the United States.
2. However - if we order 20,000 games, then we will immediately have a debt of 40,000 dollars. Apart from the fact that we will be suspended with extensions PI & 2016.
3. Consideration # 2. If we order 20,000 games and sell them, we get $ 150,000 each!
4. We: “We would like to order 20,000 games!”
5. Manufacturer: “Please! Make sure you pay us the rest of the money you owe us when you sell them! ”
6. Reality:
7. We:
It turns out that Kickstarter is a country of magical fantasies, where people come to the delight of your proposals in a way that does not translate into your small business. After talking with different people involved in this business, it turned out that this is the norm. If you keep 8% of your Kickstarter impulse over the course of a year, this means that you have succeeded. We had 4%. The CEO of a much more experienced gaming company told us that when he feels particularly aggressive, he orders 2-3 times more pre-order volume. We impulsively ordered 5 times more. It is clear that we were super-optimistic.
How optimistic?
Big lesson: if you are planning to sell outside of Kickstarter, then order a maximum of twice that already sold.
If we printed in China and printed only what we owed, we would receive $ 23,000 each.
Baby, what now?
The first problem we encountered was the storage of items. Amazon.com's initial maximum capacity was 5,000 products. I launched the famous “northern charm” and received a free extension of up to 8,000 units. It was wonderful, since we had just 7,500 units of goods (basic deck + extension PI) for immediate dispatch. Failure to deliver this shipment would result in serious delays. Several hundred copies of the game are located along the walls of the Guts and Glory office. Where was the rest, I could not say for sure. Apparently, somewhere on the edge of space and time.
And this led us to the second problem. How do we sell all this? At first everything seemed so easy. The following describes what we tried to do:
Attempt: sending free copies of the game to bloggers and community members.
Result: absent. All that we got from this is the people applying to us. Larger parcels were returned to the sender unopened.
Attempt : advertising through Facebook.
Result : ~ 1,000 dollars invested in 30 different advertising casts, ~ 20 clicks received, 0 sales.
Attempt : Presented on YouTube channels with> 1,000,000 subscribers.
Result : the results were sold 3-4 games.
Attempt : Several comic commercials have been released, where puppet presidents play this game.
Result : a lot of time is lost - complete disappointment. There is no noticeable increase in sales.
Attempt : we visited the caucuses in Iowa and the primary elections in New Hampshire, featured in local news, were described in detail in the Daily Dot.
Result : 75% online sales increased while we were moving. But it hardly paid off, since we were spending money to stay on the wave. We attribute more active reinforcement to social networks.
Attempt : writing articles positioning the courtesy of company headquarters in Iowa and New Hampshire.
Result : a lot of fun. A little money.
Attempt : laudatory advertising in the Wall Street Journal (partly just fell into our hands)
Result : 100% online sales increased in 3 days.
Attempt : rent a booth at Politicon.
Result : net profit ~ 1,000 dollars.
Attempt : getting a platform near the annual game festival GenCon.
Result : it was cool for us. We were not at the festival, but we were close enough to get a fair amount of visitors, and were also able to meet quite a few people who knew a lot more than us. We heard that other small gaming companies lost money by paying for participation in the hope of a deal.
Attempt : products sponsored by Amazon.
Result : really works. We spent about $ 2.70 on advertising for every sale of the base game.
- UPDATE -
Attempt : writing a series of candid material about our business in the hope that someone will inflate this material on Hacker News / Reddit.
Result : hello everyone!
- END EDITING -
Attempt : to make more extensions and tell about them to people who already liked our game.
Result : DAMMIN, WHY WE DIDN'T MAKE IT ALL TIME!
We fell into the trap. We thought marketing means that we just need to go to the paths and paths that people follow, and people will give us the money. It turns out that the game is just good, and people want to play it. When we began to focus on improving and expanding the game, we not only saw an increase in revenues due to new extensions, but the sale of the rest of our games also increased. This is what pulled us out of debt.
Big lesson: use your energy to sell what you sell. Do not use it for advertising and promotion of those who sell what you sell.
What's next?
We still have more than 10,000 games in stock, and we must quickly free up the places where they are stored. Our estimate of the nearest long-term storage fee at Amazon is $ 6,500. This means that we have to destroy thousands of games in order not to be in debt because of the storage fee.
Fortunately, we should not destroy everything, and what we sell, moving forward, ultimately gives profit.
Source: https://habr.com/ru/post/316946/
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