Fans give millions to fund fantasy Avatar video game

Source: Portalarium, Inc.

Ultima creator Richard Garriott was one of the pioneers in the video game industry, essentially inventing the role-playing genre and breaking ground in the world of online games in the 1990s.

Now the 53-year-old serial entrepreneur known as "Lord British" is hoping to make just as big of an impact in the crowdfunded gaming world with his latest studio: Portalarium. And fans have contributed millions of dollars—and are still giving—to help him succeed.

To date, his still-in-development game—"Shroud of the Avatar: Forsaken Virtues"—has raised almost $6 million from nearly 50,000 backers on Kickstarter, with nary a penny spent on marketing. That's a number that could climb higher at the end of the year, when the game is expected to be released to the general public. A fantasy role-playing video game, "Avatar" is a spiritual successor to the Ultima series, whose fan base remains avid even after all these years.

Garriott is planning to demo his anticipated game Wednesday and Thursday at the Game Developers Conference in San Francisco.

It has been a career full of summits and stumbles, and these days he's climbing the mountain once again, hoping to meet or exceed his past peaks.

Garriott's big break in gaming came when he was a high school senior, in 1979, with the release of "Akalabeth." Sold in Ziplock bags with photocopied instructions and a cover drawn by his mother, the game quickly found an audience—selling 30,000 copies and earning him $150,000 in royalties.

Within a few years, Garriott and his brother launched Origin Games, which became best known for the "Ultima" series, a long-running franchise that is often cited as one of the most influential in the industry. In 1992 Electronic Arts (EA) bought Origin for $35 million. He stayed with the company for eight years before striking out on his own to create Destination Games, which was bought 12 months later by Korean developer NCSoft.

After a seven-year stint there, he shifted his focus to the world of social gaming, where he had a rare, true failure. Today he's on the rise again with "Shroud of the Avatar," a forthcoming action role-playing game backed by fans on Kickstarter.

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Throughout that winding trail, Garriott has learned a few things about running a business and taking risks—from both sides.

For instance, he said, sometimes the reasons behind success aren't what they might first appear.

After the successful completion of "Ultima Online," the industry's first big massively multiplayer game at Electronic Arts in 1997, there was some internal confusion about why the game was a hit. EA, said Garriott, attributed the success to "Ultima's" reputation. Garriott argued it was the persistent world, where fans could play as they wanted. While he said he strongly encouraged EA to begin work on "Wing Commander Online," a massively multiplayer space simulation, the publisher balked.

"'Ultima Online" was the biggest-selling Ultima by a multitude of all the previous [games in the series] combined," said Garriott. "It was the fastest-selling PC game for EA when it launched. ... But EA thought the reason it had done well was because of the established fan base, and they told us to do 'Ultima Online 2,' [which was later canceled]."

("Ultima Online" has since been cited as a source of inspiration for games like "World of Warcraft," which currently has more than 10 million monthly subscribers.)

Garriott and members of his team left to found Destination and cool their jets while a one-year non-compete expired. By happy coincidence, the week that stipulation ended, EA decided to shutter Garriott's old studio in Austin, Texas.

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"That, for us, created an opportunity and a problem," he said. "The opportunity was that EA gave us back for free what we had sold to them for millions of dollars. The problem was, we couldn't pay these people."

The group decided to stick together and work without a salary if necessary. Within 24 hours NCSoft had reached out, and within two weeks it had bought the reunited company to help it grow a presence in the U.S. market.

Assembling an A team

Many of that original Origin team are still with Garriott today. Roughly one-third of his Portalarium staff are former Origin team members, but Garriott said he's learned that to make the best products, he needs the thinking of someone willing to challenge the thinking of veterans.

"The best teams are a combination of supposed industry veterans who know what works and doesn't work and greenhorns who, despite the advice of 'Don't go there; there be dragons!' say, 'Yeah, old man, I'm doing it'," he said. "You need both of those types of people on a team to create top-quality content. ... We're a mix of gray hairs and green talent."

That mix hasn't shielded Garriott's companies from some corporate life-threatening situations, though.

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For instance, in the mid-1980s, Origin bet the farm that Apple computers would become the standard in homes, as opposed to the PC. As the Apple market died quickly, the company realized no one on staff was an expert on PC programming, and it wasn't sure it could stay open long enough to complete the conversion for "Ultima V," which was being written for the Apple II initially.

"It was a horrible miscalculation on my part," said Garriott.

The company was $2 million underwater. Deciding to gamble on his game, Garriott negotiated a line of credit against his recently completed house to keep paying the staff.

"If this didn't work, not only would Origin be out of business, but I would have lost the home I had just built," he said. "I would sit in a comfy chair in my office, curled in a ball out of excruciating physical dread about how I was going to save the company."

"Ultima V" turned out to be the only game in the series that shipped on time, he said with a chuckle.

Learning from failure

He faced a similarly perilous situation as he started Portalarium. The company entered the market with a big bet on Facebook gaming—and released its first title right as that sector of the industry went south.

"I think we were six months to a year behind the curve," he said. "Had we been earlier, we could have capitalized on it before the crunch. But Facebook, as a gaming platform, imploded right about the time we emerged."

The company was down to a few months of money left in the bank, and team members began suggesting Kickstarter as a way to raise funds, thinking Garriott's name on a new role-playing game would turn heads. Most were in favor of it, but Garriott was wary.

"I looked at it with some dread," he said. "If it did not work, not only would that mean the company wouldn't work, but my personal IP value would have been thrown away. ... It could have been the end of my personal career."

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The campaign nearly doubled its funding goal, raising $1.9 million. And it has kept making money since then. Today "Shroud of the Avatar" is helping the company earn $100,000 per month, even though it's not officially released. (Backers are playing the beta, and more backers are coming on board regularly.)

And for Garriott, that means he's able to continue as a major player in the industry he helped create.

Lessons Learned:

  • Incorporate the community where you can. It invests fans in your product and saves you money.
  • Consistent delivery can maintain customer loyalty. Ship a product when you say you will.
  • Double check your gut. If you make big bets on instinct alone, it can be disastrous. Look at all of the data and available information, and factor that into your decision.

By Chris Morris, special to CNBC.com