The perfect games industry pricing model December 20, 2011 cliffski In all these days of bundles and steam sales and DLC and blah blah, people are happy to shout loudly about what they think about any particular pricing model or experiment, but I don’t come across much discussion about pricing models in theory, from first principles. So I’m going to ask, in theory, given magical powers to make anything work (like workable DRM, or perfectly rational customers etc), how would we sell and price PC games? Thinking about that makes us consider what the theoretical demands should be of a perfect system. What do we even mean by perfect? I would humbly suggest the following basic principles: The financial success of a game is strongly correlated to the amount of fun and enjoyment that it has provided, as a whole to the gaming population The financial success of a developer is independent of any personal relationships or circumstances. Games should not be hits because the developer plays tennis with the owner of another company etc. Gamers should feel that they are receiving a fair deal for the money they pay There should be a strong system of market signals. Good games should make piles of cash. Poor games should fail, thus encouraging future promotion of good games. There should be a level playing field. It should not be possible to purchase success, through sheer weight of advertising It should be financially viable to produce niche games, not just blockbusters. Do these principles seem sound? Any I’ve missed? Given that we accept these (for the sake of further typing…) what sort of system would exist, or what changes need making to the current industry to move us closer to it? I feel that the existence of a few major distributors and publishers that have gatekeeper status seriously undermines 2) and to some extent 5). I think that piracy of games seriously undermines 1) and can cause problems for 6). My main concern is with 1). If 2 games cost $10 and one provides an average of 22 hours of play time per purchaser and the other provides 3 hours, we really should be finding a way to get more money for game 1’s developers. The solution to that could be DLC, where the 22 hour players are happy to pay more because they are still into the game. Does that seem fair? It certainly seems more viable that game setting it’s price at 7 times that of game 2. Of course, it could be said that game 1’s better quality will lead to great word of mouth and 7X the sales, but I’m not sure that works in practice. More widespread use of demos would help with item 3) surely? or could we make an argument that DLC helps here too, because with DLC as an option, players are spending more closely what they choose to buy? Maybe we should go so far as to say that F2P and microtransactions solve all of these problems? except that kills of 6), because the many players + few whales strategy doesn’t scale down easily to niche. No wonder game pricing is such a mess.