What Is Initial Game Offering (IGO) & How Does It Work?
Initial Game Offering (IGO) is a relatively new concept in the gaming industry that has gained popularity in recent years. This fundraising mechanism combines elements of Initial Coin Offerings (ICO) and traditional crowdfunding to provide game developers with a community-driven platform for financing and distributing new games. In this article, we will explore how IGOs work, what makes them different from traditional crowdfunding or financing, and their benefits and risks.
What is an Initial Game Offering (IGO)?
An Initial Game Offering (IGO) is a funding model for video game development, where developers offer game assets or other in-game items to investors in exchange for funding. In exchange for their investment, investors receive a share of the game’s revenue and may also receive bonuses or discounts on in-game purchases. The main objective of an IGO is to provide game developers with an alternative way to fund the development of their games and generate interest in their projects among potential investors.
How does an IGO work?
In an IGO, game developers first create a white paper that outlines their game’s concept, goals, and development roadmap. They then create a new cryptocurrency or token that investors can purchase. The tokens are distributed to investors through an IGO platform, and the funds raised are used to finance game development.
The IGO process typically begins with the developer announcing the project and the details of the offering, including the target amount of funding and the terms of the investment. Interested investors can then purchase the offered game assets or virtual items using the supported payment method.
Once the IGO is complete, the developer uses the funding to develop and launch the video game. Investors will receive a share of the game’s revenue according to the terms of the investment agreement. The developer may also provide other benefits to investors, such as early access to the game or exclusive in-game items.
What makes IGO different from traditional financing sources?
In some aspects, IGO is different from traditional financing sources:
- Accessibility: IGOs provide a more accessible funding option for game developers, particularly independent or small-scale developers who may not have access to traditional financing sources such as venture capital or bank loans.
- Flexibility: IGOs provide developers with more flexibility in terms of investment and the nature of the incentives for investors. This can enable developers to offer unique investment opportunities and incentives that may not be available through traditional financing sources.
- Transparency: IGOs are often designed to be more transparent than traditional financing sources, with the use of blockchain technology allowing for greater accountability and transparency in the investment process.
- Community Building: IGOs can help to build a community of interested and invested players around a game, which can be beneficial for the game’s success and long-term viability.
- Risk: IGOs involve a higher level of risk for investors compared to traditional financing sources, as there is often less regulatory oversight and a greater potential for scams or fraudulent offerings. This means that investors need to carefully evaluate the potential benefits and risks. of an IGO before participating.
What are the benefits and risks of IGO?
An IGO can provide game developers with several benefits, including a new way to finance and distribute new games, especially for indie game developers who may not have access to traditional funding sources. IGO can also create a community-driven platform for game development, where investors become stakeholders and offer valuable feedback and testing. Furthermore, IGO can help game developers create a loyal and engaged community of players and investors who are invested in the game’s success.
Despite the benefits of IGO, they are not without risks. As with any investment, there is always the possibility of loss, and the cryptocurrency market is known for its volatility. Moreover, the regulatory framework for IGO is still unclear in many jurisdictions, which can lead to legal and compliance issues for both developers and investors.
The Bottom Line
An Initial Game Offering is a promising fundraising method for game developers that offers a new way to finance and distribute new games and allows developers to offer game assets or in-game items to investors in exchange for funding. However, it is essential to weigh the benefits and risks of IGO before investing. As with any investment, it’s important to do your research and seek professional advice before making any investment decisions. Despite the risks, several successful IGOs demonstrate the potential of this new concept in the gaming industry.