Mission Control: The changing boundaries of control and ownership in the world’s biggest crowd funding success.

The latest controversy surrounding the in development game Star Citizen, struck me as illustrative of the pitfalls and complexities of new forms of financing, and how they manifest the sunk cost fallacy in new, unexpected ways. It isn’t just money people are investing in such projects, but also their hopes and dreams. Polygon’s Emily Gera astutely explained way back in 2012, exactly why the sunk cost fallacy is pretty dangerous for crowd funding in particular, you enjoy no real legal protection of your investment if the project dies, which exacerbates defence mechanisms such as self-justification when people feel as if their personal financial investments, sometimes as high as $27000 dollars, are at risk. I believe that the  tumultuous history of this project is an interesting case study into the changing creator/consumer dynamics facilitated by platforms such as Reddit and crowd funding websites such as Kickstarter.

Even though you may not have any legal ownership of a project, the intricate marketing techniques fielded by successful crowd funding campaigns can generate such intense emotional investment that many fans not only feel personally involved with a project, but will actively evangelize it, and defend it against detractors. All crowd funding investments are essentially sunk costs once a project meets its goals. When costs are sunk you cannot get them back, they’ve sunk beyond your grasp. When someone tries to get a refund, they will be refused. Daniel Freidman’s favourite anecdote to use in describing the sunk cost fallacy is that of a concert goer staying all the way through a crap show to get his money’s worth, even after immediately regretting his decision to attend, the second the first song starts playing.

If I had to give my personal definition of Star Citizen, it would closely match that of YouTuber Downward Thrust:

Namely, that Star Citizen is a dream that many people are waiting to come true. For the most part, I agree with him on his analysis of attachment, yet where I strongly disagree is the claim that time is not on Star Citizen’s side. It has now been over 6 years, and Star Citizen is still going strong, having generated 194,134,247 dollars of ‘fan-ancing’, a term I’m happily borrowing from Suzanne Scott, defined by her as referencing the direct funding of a project via monetary contribution by fans, and emphasized  by her to be particularly relevant in context of pre-existing fan bases of either a medium or specific media property (Wing Commander, even Star Citizen itself after acquiring enough brand recognition). She notes that part of the appeal lies in projects outside traditional industry players having an underdog, sub-culture appeal to them.

Anthony N. Smith sheds some light on the complex process of a crowd funding campaign, noting how the campaign phase is where someone pitching a project will look to secure both money and hype for their project, which then shifts towards execution after having secured sufficient funds and a sufficiently large community. But with their ever broadening scope, the developers of Star Citizen, Cloud Imperium Games (CIG) is noted to have never left this ‘campaign phase.’ Thus, they are forced to walk a tight rope between delivering on the promises they have already made, whilst securing additional funding for their project’s ever broadening scope. Two reddit threads, spread one day apart show the results of CIG losing their balance with a wrong decision and swiftly regaining it after a course correction. The below summary comes courtesy of u/Ch11rcH

I can certainly understand why fans would be hyper critical in this case, normal investing relies on professional investors getting direct power and influence in exchange for their money. Though as noted above, the individual expenditures of individual fans can reach astronomical proportions, Star Citizen’s developer Cloud Imperium Games (CIG), actually claims fans to be asking for this themselves.

This seems to be, at least for some, in great part due to how successfully CIG’s owner Chris Roberts is appealing to nostalgia for his revered 1990’s game series Wing Commander. Altaf Merchant and his colleagues  actually looked into how strong the pull of the past could be upon those exposed to advertisements playing to their feelings of nostalgia. They identified 4 main factors, which I’ve tied to Wing Commander for the sake of convenience. The four main points were past imagery factor (memories of wing commander), positive emotions (the joy that series brought fans), negative emotions (lack of modern equivalents) and at times, physiological reactions (think of fans who’s hearts race upon the thought of their old love re-imagined with modern technology).

This advantage of having time on their side, was also extended to the initial crowd funding campaign, as explained by Steven Chen and his associates in their research of what makes a Kickstarter campaign successful. They noted that CIG essentially made use of Kickstarter as a springboard, using the hype and media buzz of crowd funding’s novelty from 2010-2013 to dramatically prolong their campaign beyond Kickstarter’s usual limit of 90 days. They did this by running a parallel campaign via their own platform, cutting out Kickstarter from its 5% cut of successfully funded projects, and not having to play by Kickstarter’s rules anymore either once they’d generated enough public awareness to get enough traffic to their own storefront. My humble opinion is that the real genius of this move was that Kickstarter was heavily disincentivized to make a fuss, as it benefited from all the exposure that Star Citizen brought it, without any of the controversy kickback.

Interestingly one fan interviewed by Screenrant’s Mat Morrison specifically took issue with being thought of as a cultist. But the overwhelming passion of the community is not just due to the appeal of CIG’s marketing, it is also because the stifling costs of pledges to the project play heavily into the phenomenon of the sunk cost fallacy, something I agree on with detractors of the project. I find it fascinating how clever marketing, layered sunk cost fallacies, and nostalgia can foster such intense emotional investment in a project, to the point of cult-like fanaticism. Such ardent devotion is a double edged sword for brands though, wielding it is not without risk.

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