Kickstarter would not get involved in refunds for failed projects

Crowdfunding platform hosts several gaming pitches with thousands of backers, funds as investments versus donations currently unclear.

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The role of Kickstarter in the culture of games has grown exponentially, but some questions remain unanswered about what happens when a project fails. NPR spoke to people behind successfully backed Kickstarter campaigns and the crowdfunding company itself about the issue, which could escalate as the service becomes more widely used.

Will you get your $99 back if Ouya doesn't happen?

Ouya, the company behind the proposed open-source home console of the same name, raised more than $8.5 million in its month-long campaign. CEO Julie Uhrman said she wasn't sure about Kickstarter's policies, but Ouya would "treat our backers the best possible way" if it was unable to honor its commitments.

Kickstarter co-founder Yancey Strickler said it would be "new ground" if Ouya were to fail and the company had to consider whether to get involved in refunds. "I mean, no, I don't think that we would. But certainly, the kind of thing you're talking about is not a bridge that has been crossed yet. Someday it will. And you know, I think if something did go awry, it would be--it wouldn't be my favorite day."

The murky rules reflect Kickstarter's origins as a platform primarily to arrange funds for artists working on smaller-scale projects, NPR's article states. But today the service is also seen by some backers as a form of investment with expected rewards, or even a pre-order service, leading to potential backlash if a project falls through.

"Enthusiasm is ahead of [the] tools," said Ethan Mollick, a professor at the Wharton School of Business. "So, Kickstarter is a very minimal system in some ways. It's not really built to police itself."

Several other high-profile Kickstarter projects have emerged in the game space within the last year, including Double Fine Adventure, Oculus Rift, and Wasteland 2. While those projects were successfully backed, it remains to be seen when or if their end products will be released.

Discussion

0 comments
Exectech
Exectech

This post goes out to anyone who is upset that they have lost money "backing" a Kickstarter Project. Anytime you invest in anything there is risk involved. Don't ever invest something that you aren't willing to loose. It's gambling only the odds aren't completely stacked against you. Thoroughly research the people involved in the projects before putting a single penny into a project. In this type of investment you have something tangible to loose, money. The person or organization only has their reputation to loose. Only if it is a substantial amount could people band together and sue. However only the lawyers are going to be the winners in a lawsuit.. If you don't know the person and/or organization or they can't prove their previous successful projects then it's too risky. It's probably going to be vaporware and you should move on.

blackace
blackace

I've only backed 2 games. One of them was Wastelands, which hopefully will be completed by the end of the year. Kickstarter is just he middleman. They aren't a bank. Whatever funds that are given to these developers are an investment for a product. People need to realize this and not see it as a done deal. If a project does fail, the developers and company will be hurt the most, as gamers will no longer what to invest or purchase any of their future games. All those people who invested in the Ouya were crazy. Even if the product does get completed and shipped, it may still fail a couple months later. In the end you'll have a mini game console with just a couple of old games to play. I can't believe it took in $8.5 million.

SavoyPrime
SavoyPrime

This is the main reason I don't get involved in Kickstarter projects. I'm not about to donate my hard-earned money for a project that might not see the light of day.

cf_Kage
cf_Kage

This is one thing that seriously worries me about kickstarter.Especially if more companies ask for funding from fans instead of from their own funding.I would probably back a move though to give Crash Bandicoot back to Naughty Dog from Universal Studios who now owns the franchise... I would seriously consider that one....

Techn1c4l
Techn1c4l

I'm actually surpised that something that operate with funds like Kickstarter isn't serious about that.

BrunoBRS
BrunoBRS

i'm surprised this is only news now.

valium88
valium88

I mean the developers applying for a kickstart has to remember it's a kickstart and not a full fledged funding of their projects. I don't know how this works but being able to take peoples money, the website encouraging this should at least make them present a plan over the project making it easier to see if this is doable or not before they can grab donations. You can't apply for a loan in a bank without a plan, and on kickstarter it's given away. That said, there is always a risk of loss, but the risk is of course highest for the developer, not the kid donating $10.

csward
csward

Poor article from you Connor. If people invest in anything, their is a risk of loss. I'm not sure why you think they should be entitled to refunds (except in cases of fraud).

 

Let the buyer beware.

PixelAddict
PixelAddict

Something bad with some developer is going to happen at some point, and some people will lose money.

 

And then the hateful comments about Kickstarter will rain like fire.

theKSMM
theKSMM

I still think the crowdsourced funding is a great idea, but I also suspect that there will be someone who comes along, abuses the system, walks away with a bag full of money, and messes it up for the rest of us.  It's too tempting a target for the con men to avoid.

 

Even for legitimate funding requests, I think it has to be made painfully clear that donors are putting money towards an idea that may not succeed, not a guaranteed pre-order.  There should be no surprise for folks if their risk doesn't pay off.

dr_jashugan
dr_jashugan

I want the OUYA to succeed and also want it for $99. :-D

tmacman
tmacman

A lot of people (idiots) called this an investment, which it really isn't, it's a donation. You're not going to get any financial returns on this, you still have to buy the console, that is if it ever gets released, because you have no guarantee that this will make it to market and are not insured in any way if it does not. Now I just want to lay that out in front of you....YOU'RE THROWING MONEY INTO A WISHING WELL!!!

 

And just to add, my opinion on ouya is simple, it's rather stupid. I mean you can play android quality games on your tv for $100 now woooooooooooooooo [sarcasm]. 

firstclassgamer
firstclassgamer

I LMAO at this whole concept I'm waiting for this to go up in smoke

deathblow3
deathblow3

can i get backed i promise nothing and all you will get is my thanks :)

JimmeyBurrows
JimmeyBurrows

Well if a product isn't quite so "great" as the backers expected, it's their own fault... However if someone just took millions for a state of the art gaming centre and followed through with a cardboard box, I'd expect the money would have to be returned... If not then that's pretty much fraud, lol.

msfan1289
msfan1289

OOOOO i told ya so! thats what i been saying this whole time. Kickstater was really made for small time people that will never get funding for there project for anything else, not for well established, years in what ever industry they are from, in this case gaming industry , tehre are people who have the money from years working in the gaming indutry and wants to make a game on there own, and they already have over $100,000 to begin with, and they still go to kick starter asking for more money, i forgot what game a few weeks ago that Gamespot posted news about there kickstarter project. they already put in $500,000 of there own money before they did kickstarter, and asked for $400,000 from kickstarter! while that is going on there are other very small teams that will never reach there goal and only ask for less then $100,000, only a few reach there goal, but it seems like a lot of "triple A indie" teams are starting to take advantage if kickstarter, soon this will runin it for everyone else, people will expect a high production video from the team asking for money, will expect the team to have really good people who been doing what they have been doing for years and what not.

 

now for the refund, read the terms of use, if you invest money to the project and they fail you lose the money, if they dont give you what you want then you lose your money, it even says it right there kickstarter will not refund your money if a project fails. are people that stupid not read the terms of use? that is why you dont invest a lot of money into a project, so if they do fail or dont give you what you want, you call it a wash and have a good day. you can tho turn around sue the team for your money back, but the odds are if you only invested say $10-$200 its not even going to be worth to sue them for because you will spend more on legal fees lot of other things.  so what im trying to say is dont be stupid when investing.

cheamo
cheamo

I doubt anyone believed that their kickstarter contributions were anything more than tossing money into a wishing well.

GunBladeHero
GunBladeHero

Ha someday that will happen, someone will take the money and run. It's inevitable.

lazycomplife
lazycomplife

I personally don't have enough money to spend money on things that I may or may not be able to pay more money for later.

DarkSaber2k
DarkSaber2k

At the end of the day the people who run Kickstarter want all the publicity for how great they are, but none of the responsibility for being involved in anyway.

Mega_Skrull
Mega_Skrull

I wonder if people really know what they're doing when they fund something with kickstarter. Too many morons out there, just remember what happened with that  charity donation for the Mass Effect 3 ending change...

brain56
brain56

Wow, you've seen Weird Al live. I'd love to do that too sometime.

dengl
dengl

The depressing thing is refunds go to your amazon payments account and that money can't be used on other Kickstarter projects.

 

 

ender707
ender707

The stock market doesn't issue refunds either.

Lhomity
Lhomity

A hackable console (worthless for multiplayer and other online services) with the (soon to be outdated) tegra 3 chipset, by a nobody-company way in over their heads, relying on crowd-funding to push a system full of ad-supported free-to-play/pay-to-win vaporware - launching amidst the coming of next-gen consoles by Sony, Microsoft and Nintendo.

 

What could possibly go wrong?

thepyrethatburn
thepyrethatburn

One wonders if the recent issues with the Tropes Vs Women kickstarter was part of the motivation for this article.

darius_danze
darius_danze

I know ahead of time it's a risk but I have faith in the projects I fund, and honestly, I'm tired of waiting for the big money guys to green light the stuff I like.

johnnybowman
johnnybowman

Imagine a crowd sourcing Shark Tank thing. Everybody pitches into an idea for equity in the company or does this already exist.

decoy1978
decoy1978

@Exectech I fully agree! Backing any Kickstarter is in essence an investment. There is NO GUARANTEE whatsoever that the products will do well. You and 1000 closest friends may like an idea, but there were a million other consumers who didn't think so. Investment is all about risks...

alexLmx6
alexLmx6

 @PixelAddict Yeah, I think it's just a matter of time now, and the first big project to fail to meet it's stated goals will probably be the end of Kickstarter, at least as a huge moneymaker.

LiberalGamer
LiberalGamer

 @tmacman Depending on how much you donate, you receive different rewards. If you donate the cash equivalent of an OUYA, you get an OUYA. You are basically pre-pre-preordering and the preorder may or may not be refundable. 

theshonen8899
theshonen8899

 @tmacman You may want to do your research before posting wrong information. People who donated $99 get the console the day its released. They don't need to "still have to buy the console." Whether or not the console DOES get released is the gamble. Given the fact that they already have a working prototype and working directly with nVidia however, I'd say the chance are pretty high this will make it to the market.

 

But if you think about it, the idea of the Ouya isn't that much different from the idea of an Xbox. Xbox allows you to play watered down versions of PC games on a TV with a controller for 300 bucks. So yeah...woooo!

msfan1289
msfan1289

 @tmacman hey moron no one is forcing you to INVEST( just trolling) into there project, it is a risk you as a back are willing to take, and should know from the get go that if it flops it flopped and you lost your money and should forget about it. now if you donate into the project thinking that i should get a refund if everything flops then you should not be in Kickstarter in the first place.

 

like i said the whole reason for Kickstarter is to help the very small indie teams (from video games to music to movies and many more) make there dreams come true by giving them funds for something they have no way to get funds in the first place. Kickstarter was not met to help BIG triple A studios that been part of there industries for many years, made A LOT of money that have connections, that are very well established get funds to funds a project that they can very well fund them selfs. like a few weeks ago Gamespot reported that a old game is being made i for got what it is called, something swords or something. Well that "team" put in $500,000 of there own money before they even launch the Kickstarter campaign and they have the guts to ask for $400,000 from Kickstarter! you see that is teh problem with Kickstarter the greed of these big shots to get money so they dont have to put in more of there own money are ruining it for the people who actually needs the money to just pay for legal stuff and license fees for software. and i dont care if they are doing it with no EA, THQ, UbiSoft, support, they are not indie i dont care how much you say they are they are not, and they have no business to be in Kickstarter or Indie Go Go. but the people running Kickstarter dont care because they are making buckets of money from those what i call "Triple 'A' Indie"  its sad. such a good thing for people like my team of only 10 people working full time during the day, and some going to college, using our spare free time to be with friends and family, and only ask for less then $15,000. Chances are we will have to compete with a Triple A Indie campaign and not get funded, all because our game is like a Triple A Indie game.

FallenOneX
FallenOneX

 @cheamo You must not live in the U.S. I knew people that believed the "Playstation 9" commercial back when the PS2 launched!

GinsuVictim
GinsuVictim

 @lazycomplife I donated $15 toward helping a game get made PLUS getting the game when it's made. No more money is needed.

daihideo
daihideo

 @Mega_Skrull 

You need to look up what Child's Play is and even if the ending didn't happen I will still do a yearly donation to them because it's worth it. As a fellow gamer in my child years, I spent two weeks at a children's hospital in the early 90's and being able to play a Super Nintendo was probably the highlight of my experiences there.

evil_m3nace
evil_m3nace

 @Mega_Skrull the charity donations were never meant to fund a new ending...they were funds given to charity to show show much people would have paid for a better ending...by the way, I have donated to many project that seem feasible, from respectable people. example in point, Planetary Annihilation by Uber Games , same company that made super monday night combat.

saltbalsak
saltbalsak

 @ender707

 And Kickstarter doesn't offer you the chance to MAKE MONEY on your investment, so I don't see the correlation.

 

Kickstarter is like putting money on lay-away and praying you get a product of EQUAL VALUE in return sometime down the road, or perhaps nothing.

 

Investing in the stock market, you immediately OWN an existing product and there's a chance somewhere down the road it's worth DOUBLE what you paid, or perhaps nothing.

 

Oh, and FYI, the stock market does offer "refunds" of a sort. You can claim up to $3000 of stock losses every year on your taxes which gets deducted from your taxable income and lowers the amount of tax owed.

 

I know where I'd prefer to put my money.

10V3n0M01
10V3n0M01

 @ender707 this... funding a project with kickstarter is a risk and if you are willing to risk funding project then you should be prepared if the company were to fail.

Mega_Skrull
Mega_Skrull

 @evil_m3nace That's what I meant. I know what the donations were about, but it ended badly because many didn't realize in all their blind stupidity.

Frexerik
Frexerik

 @saltbalsak  @ender707 i think most people support projects where you get a special discount for being a early supporter, so technically, you would be investing say 20$ for a 30$ product..

ender707
ender707

 @saltbalsak The correlation is that you can choose to put your money wherever you want: stocks, bonds, money market, kickstarter, real estate, etc.  The investor is the one who decides what the acceptable risk/return is on any possible investment.

 

Crowd-funding creates the possibility of products coming to market that otherwise could not.  I would say that your equation of "equal value" later is missing a variable:

 

Money now =  (actual product of equal value later) + (arbitrary/perceived value of product assigned by investor) - (risk that product does not come to market)

 

If the investor wants the product bad enough to accept the risk, the investment makes sense for them as the value is greater than the initial investment.

 

P.S. A subsidy from the U.S. government is a refund "of sorts" I guess, but not from NASDAQ or the company from whom you purchased stock/bonds.   

saltbalsak
saltbalsak

 @ender707 I like your points on "perceived value" and I do consider that extremely valid.