“Video games are no longer just a niche hobby, but the true scope of the industry is still not fully recognized. In the first three quarters of 2023, video games generated a whopping $39.4 billion in revenue in the United States. Compare that to the $9 billion in box office returns from films in the United States for the entire year.”
Despite these massive global numbers, even the video game industry has not been immune to layoffs. However, gamers worldwide continue to spend on new titles and hardware, making it an exciting time to be a gamer. But can the same be said for gaming studios? One startup is revolutionizing its approach to fundraising, potentially paving the way for other studios experiencing a decrease in interest from traditional, private investors.
Frost Giant, a venture-backed company working on a real-time strategy (RTS) game called Stormgate, is turning to its community for additional funding ahead of its launch later this year. This decision comes after a successful Kickstarter campaign earlier this year, which raised millions of dollars by offering exclusive bonuses and rewards to supporters.
TechCrunch spoke to Frost Giant’s CEO and production director, Tim Morten, about the company’s unique choice to pursue community capital. According to Morten, the additional funds could support marketing efforts and operational expenses.
Why turn to community funding?
Esports and the rise of RTS
Esports has gained significant attention in the last decade, with a primary focus on multiplayer games like League of Legends, Dota 2, and Counter-Strike. However, in the early days of competitive gaming, RTS games such as Starcraft and Starcraft 2 were the pioneers. While this part of the video game industry has grown considerably since then, RTS games were crucial in laying the foundation for esports.
Thanks to its experienced team, which includes developers from acclaimed games like Starcraft 2 and Warcraft 3, Frost Giant has already gained credibility. Stormgate is considered a spiritual successor to the popular Starcraft franchise, proudly displaying its ties. Fans of these iconic RTS titles will feel right at home with Stormgate, which is already proving to be a significant advantage for Frost Giant. The Kickstarter campaign alone generated over $2.4 million by offering rewards like early game access, Discord server entry, beta access, and even physical merchandise to over 28,000 backers.
Morten revealed that the team was pleasantly surprised by the level of interest generated by the Kickstarter campaign, although it was not intended as a fundraising effort. Instead, Frost Giant used it as an opportunity to offer its fans something special before the game’s launch. He added that the company had also seen some interest from individuals wanting to invest directly in the company before and after the Kickstarter campaign. While Frost Giant does not expect the same audience for its upcoming community raise, which is structured as a Reg CF offering, there will likely be some overlap.
As of now, Frost Giant has received $611,421 in reservations for its community fundraising on its Start Engine page. This positive momentum suggests that the company will be able to generate operating capital once its equity crowdfund goes live.
One significant advantage of Reg CF offerings is the requirement for financial disclosures. Similar to what we saw with Substack’s financials when it raised capital from its community last year, Frost Giant’s community raise will offer valuable insights into the company’s finances.
According to Frost Giant, Stormgate is fully funded for its upcoming launch. The additional funds raised could extend its post-launch runway, giving it more time to generate revenue and potentially attract traditional venture capital funding. However, Frost Giant may face challenges in this area, with venture investment into gaming companies declining by 79% globally and 86% in the United States last year compared to 2022.
Stormgate will be free to play but will offer in-game purchases. Morten cited the success of Starcraft 2’s increased campaign content, cosmetics, and heroes in co-op mode as inspiration. As an avid gamer myself, I can attest to the investment players are willing to make in their digital avatars, from purchasing skins in League of Legends to customizing characters in Baldur’s Gate 3.
Ultimately, no amount of successful Kickstarter campaigns, equity crowdfunding, or low-pressure monetization will guarantee the success of Stormgate if it can’t attract an active and dedicated player base. So far, Frost Giant has seen positive early indications, with Stormgate currently ranked as the 36th most wishlisted title on Steam and over 50,000 followers on the platform.
But, as the saying goes, the proof is in the pudding. Let’s see how Stormgate fares when it launches.”
