Examining Ground Floor Funding or the Minecraft Model

Minecraft is famously known as the game that broke through the Indie bubble, becoming a massive hit across almost every platform and getting worldwide recognition. It has subsequently left many developers and publishers trying to figure out everything Markus Persson did right.

For today's post we're going to talk about the funding model behind Minecraft and how it combined pre-ordering and crowd-funding into an attractive offer for consumers that developers can use.

Ground Floor Funding:

We're going to call this model "Ground Floor Funding": Where consumers are given the option to buy a game with an unknown future for a fraction of the cost.

The idea is that the developer has nothing more than a prototype at the start and will give anyone who buys the copy of the game a massive discount at the risk of the developer who has no idea how long or if the game will be released.

You may notice that this sounds very similar to crowd-funding and early access and you are correct. But there are several key differences between ground floor and the other funding models.

What makes this different compared to other models is the state of the game and the offer. You need to have something available before you go this route. When Minecraft was first released, it had the basic gameplay foundation ready with very little else. Developers who go this route are normally putting up incredibility early builds like alpha version .01.

To sweeten the deal, the developer normally promises two things for anyone who buys the game at this state with the first being a massively discounted price. When Minecraft was first released, it was priced at about $13 due to the lack of content at the time. Over time as the game was improved and iterated on, the price slowly went up to where currently the cost to buy Minecraft is $26.

The second part is that the developer leverages all future content free of charge for people who buy now. Depending on the development of the game, this can be an amazing deal and enough for them to take a risk on giving the developer money.

At this moment, there are two other developers who have made use of ground floor funding -- Kerbal Space Program by Squad and Prison Architect by Introversion Software. It's important to mention that Prison Architect did things differently which we'll talk about in a moment.

Kerbal Space Program has become a breakout hit thanks to its unique simulation gameplay and is currently still in development.

With Kerbal Space Program, Just like with Minecraft the developers leverage their earliest version of their title along with the promise of free content to have enough money to work on the title. Eventually as work continued and the game was moved onto Steam, the free content offer has been removed as development continues.

While ground level funding sounds great, there are several important considerations that need to be understood to make it work.

The Risks of Ground Level Funding:

Ground level funding has some restrictions on how it can be used properly. First as we mentioned is that there must already be something available and playable before you go this route. If you're trying to sell an idea or proof of concept, it's better to use crowd-funding like kickstarter.

Second is that no digital store will want to put a game in such a state on their metaphorical shelves. More so after Valve has begun to crackdown on early access and greenlight titles. Until you have something that's both popular and far enough along to be considered a game and not a prototype, you will have to sell it on your own.

Going back to Kerbal Space Program, the game was only available on the site itself for at least a year before they were able to get onto Steam.

It's important to have your site set up to handle selling copies of your game and you can turn to third party services to help you out. You'll need to be able to have a system to generate keys, handle transactions and downloads and if the game doesn't have in game updates, a place to let customers download the updated files.

Prison Architect is also considered one of the best examples of early access thanks to its continued support

If you are going with different versions or promised content based on when someone buys the game, you also need to be able to store and categorize your consumers in your system to make sure everyone gets what they were promised.

But the biggest risk is that ground floor funding is a harder sell compared to Kickstarter and early access. You're not going to have the protection and backing of a major site when you go this route and this can make it hard for consumers to trust you. Without the protection of Kickstarter or Steam, you'll need to really sell your idea in order to convince people to back it.

Another part of the risks is that it's hard to know what games will work for ground level funding as there are only three examples -- Minecraft, Prison Architect and Kerbal Space Program and they are very unique titles built around a lot of content and a long development cycle.

And even talking about Prison Architect is tough as it bucked the trend by pricing the game higher rather than lower when it was first announced and are going the opposite in terms of pricing compared to Minecraft and Kerbal.

But the risks can be worth the reward of providing a developer with all the funding they need while getting the attention and support from the fan base.

Selling Your Game Short:

Ground Floor Funding is not for every game or developer as you are putting all your chips on the table in hopes of scoring big. But when it works as in the cases of the games we've mentioned, can give a developer a very big safety and financial net to work on their dream project for as long as they want to make the best game possible.

Kerbal Space Program like Minecraft, leveraged all future content as an offer for people who got in early.

Prison Architect at the moment is over two years into development with no signs of stopping while the game continues to build a fan base and profit for Introversion Software.  For developers with a unique idea, ground level funding can be just what they need to be able to develop their game, but it's important to remember the risks that come with it.

(Reprinted from the Xsolla.com Blog)