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This week we wanted to talk about the ongoing success we're having with the post-Kickstarter fulfillment system, and our roadmap for the near term. But first, I'd like to welcome a brand-new goblin to the team: Character artist Esequiel "Zeke" Garcia. If you'd like to see some samples of his work, check out his portfolio at esequiel.com.
OK, on to Kickstarter. Here's a quick recap for those interested in the behind-the-scenes process: On the day the Kickstarter project ends, Kickstarter transmits all the billing information for pledges to amazon.com. Amazon's payment processing system attempts to charge all the backers of the project immediately. Typically about 90% of the pledges are processed within 24 hours of the end of the project. Pledges can fail to process for a variety of reasons, mostly related to Amazon being denied by the backer's credit card company. Notifications are sent to every backer with a problem processing a pledge, and usually within a few days most of those problems are fixed by the backers. A small percentage of the pledges are never able to be processed; the backers are unable to complete the transaction for some reason, and Kickstarter provides us with some visibility on who those backers are. In order to receive a reward, any issues affecting the backer's pledge need to be resolved favorably.
We are able to generate a series of reports from Kickstarter that allow us to see the backers' email addresses, the rewards they selected, the total amount they pledged, and whether their transactions were successfully processed or not. We import those reports into the fulfillment system that Paizo's tech team built on our behalf, which populates our databases with all the relevant information. After the import is complete, and we've done some sanity checks to ensure the data looks correct, we send the information on how to manage pledges to all the backers. That process began about three weeks ago, and we have been watching as people logged into the system and began managing their pledges. (If you have not received notification on how to access your pledge, or if your code failed to work, or if you have an email address associated with your paizo.com account that is different than the address you used with Kickstarter and you've been unable to link the two—or if you have any other problem with the system—please email email@example.com and we'll get the problem fixed ASAP!)
One aspect of our Kickstarter that introduces a lot of complexity is the variety of add-ons we offer. Add-ons are a way for backers to get more out of their pledge than just a basic reward. But add-ons exist outside of Kickstarter's processes. They have to be handled by our fulfillment system after the project has closed. That means that we have to be able to track the difference between what a backer pledged and the cost of the reward they selected, then allow the backer to allocate the "extra" money to add-on choices. Some folks decided to change their rewards between the end of the Kickstarter and the opening of the fulfillment system, so we also need to be able to track those changes and make the necessary credits and debits available to be processed as well. Fortunately, most backers who choose to change their pledges increased what they were pledging, which is great for the project, but of course that also implies that we need to be able to process new payments for those changes. We also have to process new payments if people want to do more add-ons than they pledged for during the Kickstarter. Luckily, Paizo has a really robust payment solution we are able to use, so processing all those changes is no sweat for the tech team!
We have a snapshot of the kinds of activity that we've been seeing since the fulfillment system went live. In the interest of transparency, we're sharing our inside information with the community.
We have 4,213 people backing the Technology Demo, and 8,737 people backing the full MMO Kickstarter. The obvious question is: How many people backed both?
That's a bit harder to answer than might be expected, because people change email, change usernames, and change various other elements of their ID in the months between the two projects. We are going to untangle this question and try to provide an answer we're highly confident is close to accurate, but right now we don't really know.
The final total of pledges to the Kickstarter was $1,091,194. Amazon was able to process all but $27,254 of that total. Most of the pledges that failed to process were in the $100 range, but we had a couple of multi-thousand dollar pledges fail. Our assumption is that these represented backers who were trying to "help" us reach our funding goal, but who knew that they didn't have enough credit to cover the big pledge. While we appreciate that enthusiasm, it would be better to keep the project clear of these kinds of charges. If you're considering "helping" another project on Kickstarter in this manner in the future, we recommend that you don't.
For comparison, the Kickstarter for the Technology Demo closed with $307,743 in pledges, of which $2,042 failed to process. The very small amount of failed pledges for the Tech Demo probably reflects the fact that it was funded early and was powering through stretch goals through the majority of the project's lifecycle.
Some of the failed pledges were fixed in the fulfillment system. And people have been changing rewards and buying more add-ons, which has increased the total amount raised. So we're continuing to increase our funding totals, which is awesome!
The Technology Demo project is currently at $310,012, due to some changes folks have made to their rewards in that Kickstarter. After fixing pledges, we are only recording a failed pledge total of $1,462. The second Kickstarter is also performing very strongly. As I write this, we have recorded a total of $1,120,492 in pledges, of which $26,954 have failed to process. Our current actual cash intake for the second Kickstarter is $1,093,538! We made up for all the failed pledges and even a bit more!
Of course, the money we are raising now is even more valuable than the Kickstarter money, because the pledges that processed through Kickstarter have two costs: The 5% fee Kickstarter charges, and the 2% to 5% fee Amazon charges (it varies by the total amount of pledges the project raised). The money we are adding to the totals in the fulfillment system does have a cost—the processing fees associated with using Paizo's merchant banking accounts—but it's much lower than the Kickstarter costs. So that's a win for the project!
We were really curious to see how people would adjust their reward choices, now that there's been some time after the end of the Kickstarter. The last few days of the Kickstarter were incredibly wild and crazy, so we expected that some folks would decide to make changes when we made that possible.
To our delight, it seems most of those changes have been to increase a reward. For example, we've added 20 more Crowdforger Buddy pledges (we're currently at 730). We also added 6 Guild Rewards (193 total), and we got 3 more Crowdforger Alphas! (40 total). To accommodate these changes, 14 Watchers were lost (now at 104 total) and we reduced the Adventurer backers by 16 (now at 2,610)—those would seem to represent the people who upped their pledges to new levels. There are of course a lot of other smaller changes as a few people changed their rewards in many of the other levels. We also added 5 new backers during this process: We extended an offer to some folks who contacted us directly about splitting a high-dollar value pledge into several smaller rewards or who wanted to add a high-dollar value reward to an existing Pioneer or Buddy reward without losing their place in the Early Enrollment queue. If you're interested in doing something like this, please drop us a line and we'll be happy to work with you!
The most anticipated outcome of turning on the fulfillment system was getting some visibility on which add-ons the community is interested in receiving! The runaway favorite is Twice-Marked of Pharasma, which has been selected 976 times! The runner up is the RPG Print Pack add-on, selected 783 times. Other popular options were the Regional Trait Pack (696), Class Pack (652), the Memorial of Honor (452), and Honorable Title (411).
A few curiosities: Hellknights Most Wanted generated 14 desperados! 99 people took the Miniature Multiplier option, and 363 of you will be able to give the Secret Salute!
Overall we've been very happy with the way the add-ons have been progressing. A lot of additional money has been raised by people opting in to purchase add-ons, so overall we judge the results a resounding success!
When the Kickstarter ended, we had an active stretch goal to bring Sean Reynolds onto the team working on the Emerald Spire Superdungeon. The goal to get Sean onto the project is $1,150,000, and we're closing in on that goal—we're only about $30,000 away!
We planned during the Kickstarter to combine stretch goals with a series of crowdforging votes, but since we didn't hit our funding goal until the last day of the campaign, that concept did not unfold as we had hoped. Since we still have $30k to go to the next stretch goal, we're going to be reformatting the second crowdforging vote, and we'll be re-starting the balloting in the near future to capture the upside from all new backers who will be able to join the project soon!
Yes, that's right! We're going to be opening up the fulfillment system to people who didn't back the Kickstarter so they can make pledges and choose rewards! After the end of June, we are going to take the system down for a brief period, and when we bring it back up, it will be open to anyone who wishes to support the game.
We'll be taking some of the add-ons out of the system and removing many of the reward levels. These are benefits that we will reserve to the original Kickstarter backers, but if you missed out before, you'll still be able to get involved with Early Enrollment, get access to the Emerald Spire superadventure and the miniatures, and help us keep the crowdfunding process rolling forward.
Everyone who backs a project like Pathfinder Online via Kickstarter is entitled to a regular summary of how we're using the funds raised, so this is a perfect opportunity to provide some updates on that front.
We've spent approximately $795k through the end of May. That may sound like a huge portion of our available funds, but remember, Kickstarter is not our only funding source—the Tech Demo helped us to secure other investment money, so we do have the resources we need to bring Pathfinder Online to launch. Our "burn rate" (the amount of money we're spending monthly) is on plan. We are continuing to work on the assumption that we'll begin Early Enrollment in the 3rd Quarter of 2014.
We currently have 15 people on the Goblinworks payroll. Our payroll expense is the biggest portion of our expense matrix. We're keeping as much of our other expenses to the minimum possible, to focus our capital where it does the most good: Hiring a great staff! Our staff expenses include salaries, taxes, and standard benefits such as insurance.
We do travel a bit, although our travel expenses are currently higher than they'll be over the near term of the project because we include the costs to relocate new hires to the Seattle area in that category. Besides relocation, we send people to various trade shows and conventions, both for their professional development and as a way to build awareness about Pathfinder Online and make connections with others in the industry who can be helpful in making the project a success.
We spent more money on marketing (which we label as "Customer Acquisition") than we expected to spend, because we needed to increase the pace of pledges for the Kickstarter. The cash we invested in marketing the Kickstarter was of course a positive, since we reached the funding goal and were able to reap the reward of receiving all the money pledged! And like all small businesses we have a certain amount of overhead for rent, legal and accounting services, supplies, and office equipment, which we call "Office Operational Costs."
We've also paid various licensing fees for software and middleware used to work on the project. We'll be spending more later this year as we continue to fill out the various parts of the software plan with things like a physics engine, AI, and world-building tools. There are also licensing fees associated with many of the tools we're using for art and programming as well. These expenses are not reflected in the chart above. The licensing costs we've incurred to date are approximately $130,000. Overall, we're fairly close to the budget we projected last year when we were building our initial financial projections. That's another good indication that the team is executing on the plan and that the assumptions we made about costs and timelines were reasonably accurate.
The money we raised from Kickstarter, plus the contributions from our investment group, are allowing us to execute on our plan and keep making forward progress. The more capital we are able to raise, the less risk we have and the more features we can plan to add during the Early Enrollment period. Those are two HUGE reasons that we're incredibly happy that the community continues to increase their support for the project, and why we're looking forward to the ability to enable even more people to help back Pathfinder Online!
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