The Problem with Crowdfunding: Project Phoenix Delayed Until 2018
posted Sunday Dec 13, 2015 by Scott Ertz
A number of years ago, I wrote about the problems with crowdfunding, and over the following 3 years we have seen a lot of crowdfunded projects go down the dark path of failure. Once a project is funded, there is no real guarantee that it will succeed as a business with your money. Even if the company does end up producing the product or service, there is no guarantee that it will be as expected.
This leads us to an announcement on a popular Kickstarter project for the Japanese indie game Project Phoenix. The campaign was run in 2013 and funded with a total of $1,014,600 from 15,800 backers. With that much money, you would expect a AAA-quality game, but this is an indie title with the PROMISE of a AAA title. The game was slated to be released mid-2015, but that date came and went with no game.
The company, Creative Intelligence Arts, announced in September that it was having trouble finding and/or keeping talented game designers and programmers to actually produce the game. That, of course, meant that the game was not close, since it suggested that the game hadn't really been started. So, what is this indie studio with AAA aspirations planning to do?
Announced this week, the game is delayed until AT LEAST 2018. That means that the 15,800 backers who gave their hard-earned money to Creative Intelligence Arts have nothing to show for it except an announcement that the company is in over their heads and have not started developing the product that was supposed to have already launched. Scenarios like this do not inspire confidence in the concept of crowdfunding for legitimate companies, like Double Fine.
This is part of the reason why only qualified investors were legally permitted to get involved in legitimate corporate financing, until recently. Regulations were in place to prevent the general populace from getting fleeced on larger amounts of money than are involved in a general Kickstarter campaign. It is time that the companies that facilitate these campaigns, namely Kickstarter and Indiegogo, start creating scenarios to protect their customers, the backers, from getting fleeced on campaigns like this one or the Kreyos Meteor.
