During the first year of NEMOG, we have focused on the impact of crowdfunding on the video games industry. To cover this topic, we have worked on a three separate but strictly connected issues: 1) crowdfunding as enabler of industry value chain reconfiguration; 2) crowdfunding as new source of value capture and creation for independent games developers’ business models; and, 3) crowdfunding as a fast emerging form of open innovation.
1) The impact of crowdfunding can go well beyond the mere funding of projects and significantly transform the industry value chain. The analysis of case studies suggests that independent games developers consider crowdfunding a suitable channel for financing cost-intensive projects, building up and/or reinforcing a niche community of players, controlling the development phase, and managing publishing (and distribution) without external intermediaries.
2) Crowdfunding significantly transforms the business models of game developers as the benefit of using crowdfunding goes well beyond fundraising. Other benefits include validation of business ideas during early stages of product development, product co-development with customers, and product pre-sale. Successful campaigns have enabled independent game developers to tap directly into the crowd of gamers and other small investors, reducing their reliance on traditional funders (such as publishers, banks and venture capitals).
3) In the dichotomy between inbound and outbound open innovation, the discussion on firms’ perspectives has identified three categories of processes: outside-in, inside-out and coupled. Building upon existing studies and using cases in the video games industry, we started to build a theoretical framework to include crowdfunding within the open innovation literature.