Star Citizen’s New Moves Prioritize Sales Over Backers
Cloud Imperium Games has taken heat the last few days for moving the goalpost on Lifetime Insurance (LTI) once again. The small, vocal percentage of the fan base that helped grow Star Citizen into the large project it is today has been in an uproar. But that vocal minority, the ones who created the discussions that perpetuated Star Citizen’s success, is becoming an increasingly smaller percentage of Cloud Imperium’s sales base, and CIG is now clear of a financial obligation to appease their backers. Their moral obligation is up for debate.
I’ll be honest: I agonized over releasing this article. These are murky, passionately contended waters, and by wading in I risk my working relationship with Cloud Imperium as a content creator. As a disclaimer, the points I bring up are in no way intended as a personal reflection on Chris Roberts or any of the talented individuals employed by CIG, or my continuing devotion to and passion for this game and community. Rather, it is commentary on the way businesses operate as an independent whole. And it is not about LTI, but how people react to it. (And if any readers of this work for CIG, I hope you take it to heart that I believe you are doing your level best to work hard and do right by the customer. Even so, a larger difficult conversation needs having.)
The case takes a history lesson as much as a summary to understand. Lifetime Insurance, which grants holders of Star Citizen’s sometimes multi-hundred (if not thousand) dollar starships protection from ever being lost permanently through destruction, was originally intended as a limited time reward for early backers of the game to help generate sales.
After a period it was taken away, with assurances that LTI was non important, and essentially a collector’s sticker. Insurance, according to CIG, will be trivially cheap to buy with your hard earned (or purchased) in game currency. At backer request it was later reintroduced for all who pre-order design concepts of new ships before they are ready to play; essentially, a pre-order within a pre-order.
Chris pledges “To put fun ahead of shareholder profits.”
But with the latest sale of the 100i and expensive Hercules lines of ships, LTI has become a reward exclusive to backers investing new money in the game, rather than trading in old pledges for store credit. Which leads one to wonder: if LTI is not important, why is a coveted feature being taken from those who have already pledged money in a still unreleased game? Are older backers now, in effect, lesser?
It’s easy to guess at the motivations for the change. Generating new funds for the game is important, and LTI was seen (rightly) as a powerful sales carrot to dangle. The rising backer sentiment that those who invested early and have been waiting patiently from delay to delay over the years are now treated as stale money was either not foreseen, or more unfortunately, calculated to be outweighed by the benefit of encouraging sales to newcomers and a growing pool of “whale” big spenders. Feelings are hurt. Words are being said. As always, Reddit is a warzone.
A good deal of this anger is rooted in “The Pledge” — a one page letter from Chris Roberts explaining the ways Star Citizen would respect and represent their customers beyond how a big publisher might treat them. In it, Chris pledges “To put fun ahead of shareholder profits.” And as pretty as that sounds, the ongoing nature of that decision can only be made by those investors who own a majority stake in Star Citizen’s operations. While CIG has been quiet about whether private equity holders exist, a kickstarter era interview seems to confirm it— and should investors exist, they would expect a growing return on a very delayed product.
Over the years I have seen many companies, in many industries, begin to prioritize sales over customers as they grow. I’m sure you have too. In the games industry, it’s been a sore spot for years. EA, Valve, Bungie, Ubisoft, Take Two properties, Bethesda, Twitch itself, are all on different stages of the path towards sales team dominance. And yet, no one individual in any of those companies is out to screw the customer. But gamers get angry. We take it personally. We feel like these companies are our friends, or should be. We grew up with their titles, and in thanks for our loyalty, we feel they’ve stopped saying hello and started going straight for the wallet.
It’s sunken cost fallacy monetized to an incredibly clever degree, and no apology is needed for that.
It’s worth noting that the CIG of the kickstarter — Chris Roberts, a dozen people, and a dream — is not the CIG of today. There are five development studios and hundreds of employees globally. People have been hired, fired, acquired, moved and shaken. This isn’t a bad thing. It’s enabled the infrastructure that is turning Star Citizen into not just a dream of the most ambitious game ever, but the real deal, and one now visibly on track to near future completion.
Cloud Imperium has made a series of shrewd business moves to enable their unprecedented success, and the ability to refund a pledge for store credit — melting, as we Citizens call it — was not least among them. It was backer beneficial, but also incredibly effective at encouraging just a few dollars more of spending.
You may find the following situation familiar. A new ship comes out that matches your gameplay style way more than the two small ships you have from early development. Melt those suckers down, and you can cover most of the cost of the new ship. What’s $20 more? But then there’s that next ship a few months later. You rinse and repeat a few years, and it’s easy to see how passionate backers can balloon from that first $60 into the thousands. It’s sunken cost fallacy monetized to an incredibly clever degree, and no apology is needed for that. It’s up to individuals to control their spending. To borrow a quote, “It’s not personal, it’s strictly business.” And at least the game’s return value keeps increasing in kind.
Even so, it’s difficult to dismiss that the new Warbond Only LTI is a textbook definition of an anti-consumer move, and it certainly isn’t the first step in that direction. Warbonds, the term for cheaper ship SKUs that cannot be purchased with store credit, have become a case study in devaluing old money.
…Why sink development costs into something 100 people will buy when the profit from minimizing the expense of one purchase is so much greater?
Using past purchases (a definition which includes giftcards) often covers only 85% the cost of a new ship compared to pulling out your wallet, presented as a roughly 15% discount on Warbonds. Now, with the case of the A2 Hercules gunship, there is the addition of the free Tumbril tank — a $100 value on it’s own, bringing your previously spent pre-order money down to 75% value, on top of missing out on Lifetime Insurance, a feature many backers consider a point of pride.
You can see the appeal. Marketers have been writing this book for decades. Isn’t it so much more pleasant to think about as a nice discount, with LTI and a free tank thrown in?
Backers have not let this go unnoticed, and in my estimation, nor should they. This same tactic, which depends on the sales of the few outweighing the discontent of the many, are what have led to gross cost inflation in other video games for years.
Consider Rockstar: In 2009, a $40 microtransaction in Grand Theft Auto IV would get you two complete multi-mission story expansions with new characters, voice acting, weapons, and vehicles. By 2015, a $40 microtransaction in Grand Theft Auto V would give you the purchasing power for one car. Sure, it angered fans — but why sink development costs into something 100 people will buy when the profit from minimizing the expense of one person’s purchase is so much greater? Customers voting with their wallets can be ignored.
The danger comes from ignoring small pushes along the way as companies hedge their bets on how far customers will bend before they break. Most recently, EA finally achieved that devaluation breaking point with Battlefront 2, whose $20 lootcrates gave only a distantly remote chance of unlocking the new characters they promoted, and were incredibly difficult to earn in game. After extreme backlash, EA rolled it back — but not out of the kindness of their hearts. They had pushed the profit margin as high as they could, and could now comfortably set it just below that marker, confident in their market research.
It should come as no surprise that many feel “The Pledge” has been skirted, if not ignored.
Cloud Imperium has not nearly approached this level of customer squeeze yet, but the move marks a keen understanding of maximizing backer spending, and left uncontested these devaluations might be a sign of things to come. The laws of business would predict it, and only Chris has the power to ensure the pledge is upheld, and only so far as the game’s investors allow.
As for the argument that Cloud Imperium is justified in devaluing the purchasing power of old pledges as the game’s ongoing development is still in need of finances, I’m not sure I buy it without knowing what CIG’s margins are. For me, a question is begged: is the near $200 million of steady backer funding predicated on a respectful way of doing business not enough? And if not, why is CIG of all companies so cash strapped that a sales decision must be made that would be known to upset a sizable portion of of Star Citizen’s active backers? The decision to open 5 studios was on them. It should come as no surprise that many feel “The Pledge” has been skirted, if not ignored.
These aren’t pleasant subjects, but they are worth considering and entirely reasonable to air publicly. At the end of the day, the only people who can determine when anti-consumer decisions cross the line are the backers themselves. And to reiterate: I do not think this devaluation is malicious in spirit, or a poor reflection on the morals any of the individually talented people at CIG — it’s just the natural, if not inevitable, flow of every day business.
For my part, I say debate on. As much as I passionately love and believe in the game, community, and people working at CIG including Chris, I would prefer if my dollars invested in the game are just as valuable as a newcomer’s the entire duration of the pre-order period. (Yes, pre-order — not pledge. Not this far along.)
Should the backers take devaluation in stride, let us hope that like with so many other companies our personal love for the people and game do not lead to a bad deal.
After all, Cloud Imperium itself is just a company, and for a company this subject isn’t personal. For a company, it’s strictly business.
Matt Anderson
BadNewsBaron
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For more on how Star Citizen’s ongoing development affects content creators, and a solid dose of positivity that I happily maintain, check out my previous article.
