Community Support or Funding Amount: Actual Contribution of Reward-Based Crowdfunding to Market Success of Video Game Projects on Kickstarter

Abstract

The research provides empirical evidence differentiating between market success and funding success in reward-based crowdfunding campaigns of video games and hypothesizes that the actual contribution of crowdfunding is more stemming from community support and feedback rather than funding amount. The paper uses publicly available data by combining three different sources. Project data from Kickstarter, a large crowdfunding website, in the video game category are extracted and matched with market success variables of ratings and revenues from two other public sources namely Metacritic and Steamspy. Regression results indicate that once the project is successfully funded, the funding amount does not have a significant effect on market success variables. On the other hand, the number of backers as a community support variable is a significant determinant of market success in terms of higher revenues and ratings for a project. Whether the project was successfully funded or not moderates some of the relationships. Prior literature is predominantly focused on crowdfunding success in terms of financing. Yet, this study empirically demonstrates that funding does not necessarily indicate that projects will be successful in the market and further shows the actual contribution of crowdfunding to the market success of video game projects is the community engagement, not the funding amount. This study contributes to the rapidly emerging crowdfunding literature by extending its boundaries from the crowdfunding platforms themselves to the differentiated effects of crowdfunding on market success, which has not been studied thoroughly. This paper provides a new avenue of research by suggesting not solely focusing on funding outcomes but understanding, defining and explaining the dynamics of the community aspect in crowdfunding platforms with their repercussions on market success. Future work can also highlight potential differences in these effects between product groups, as well as more holistically assess market success and capture interactions within the community on crowdfunding platforms.