Kickstarter isn't a store. When you back a project you're investing in potential. The project failing to get completed doesn't mean you deserve your money back. In this case, he spent the money on what he said he'd spend it on (building the game) so it's kind of insane for him to offer to refund backers their original investment. It undermines the principles behind Kickstarter.
On the other hand, it is unclear how backer rewards figure into the picture. Maybe he feels that since a copy of the finished game was listed as a backer reward, he owes people a refund for being unable to deliver that reward?
It continues bolstering the idea that Kickstarter is a store and not a prospective revenue builder. It creates expectations for others to follow suit if their projects go similarly.
1. that it's got nothing to do with responsibility 2. that the money should be gone (in trying to get the project done) and if they can refund funders they had no reason to crowdfund to start with and 3. that it's a completely different set of expectations.
Again, kickstarter is not a store. And it's not a bank either. If somebody with an idea wants a loan, he checks in with a bank not a crowdfunding site.
That is not how investment in business ventures or projects works. It's not a zero-sum game. Sometimes things don't work out and there's no value to return to the investor. It's called risk.
On the other hand, it is unclear how backer rewards figure into the picture. Maybe he feels that since a copy of the finished game was listed as a backer reward, he owes people a refund for being unable to deliver that reward?