Cliffski's Blog

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:

1. 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
2. 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.
3. Gamers should feel that they are receiving a fair deal for the money they pay
4. 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.
5. There should be a level playing field. It should not be possible to purchase success, through sheer weight of advertising
6. 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.

This is really hard for a single developer, because we do not have much regular reason to return. I’d wager that if you are a regular visit to one of my sites you are either:

1) A reader of this blog. Hello!

2) A poster on my forums.

The problem is, you are never going to pop back to www.positech.co.uk in case there is a new game released, because it’s a 2 year release cycle these days. Eeek.

Because I am a wimp who prefers semi-regular income to sudden spikes followed by two years of silence punctuated by tumbelweed, I am happier if I get regular income from sales over time. Obviously that means I need a regular flow of new potential customers, and an ongoing healthy conversion of potential to actual customers. What ways exist to get this regular traffic?

1) Regular releases of new games. The problem here is you either have to make easy-to-make, small casual games that you can churn out regularly, or you have to expand big time and fund the creation of multiple big games with intertwined release cycles. I much prefer the latter, but it will be a few months before you are likely to hear me talk about that. And I have no experience of doing this yet.

2) Cross-sell affiliate games from other devs. I used to do this a lot, but in the end launched showmethegames.com instead. The problem is, it makes your website looks just like every other casual affiliate site and it stops reflecting your indieness. This is why I stopped it.

3) Build a community. Either through the game itself (MMO’s are a big win) or somehow through other means. Obviously a blog is a great help here, along with facebook and twitter. Youtube can even be a blogging site in some ways. The problem here is it all takes time away from game development. You can hire a PR guy, but the whole point of being indie is that you are close to your customers, so why hire someone to wreck that relationship? I screwed up a bit here on facebook. I didn’t know if I wanted my facebook page to be businessy or personal. I still don’t know, and I hardly ever bother using it now anyway, and almost feel like closing it. I do tweet a lot though @cliffski. Another win for me was the modding scene for all my games, expressed through the forums. Again, the trouble here is it takes time to support and encourage.

4) Spend advertising money. This is something I tend to default to. The main gain here is that it involves money but not time, and I am atrociously time poor. The downside is that it produces very marginal gains in profit. I feel it necessary to remind you that revenue is for ego, profit is where it’s at. If I quadruple the ad budge for democracy 2, I get an increase in profit of 6%. That’s still worth doing, obviously, but it’s also within the margin for error. There is little point in having huge sales, and admin hassles, and support costs, if you actually don’t end up making any more profit from doing so.

So what should the struggling indie do? Well it’s very very difficult. It depends on your strengths. The time-poor should maybe go with ads. people who like shorter smaller games should go with 1) people who love being online chatting 24/7 should maybe go with 3). I don’t have all the answers, I just know how I’ve muddled though this problem over the years.

The other solution is of course the ‘introversion’ strategy. You release games in sudden awe-inspriing bursts of sales-success that means you can finance effectively disappearing for years at a time. This is, after all the strategy of many AAA developers. I just find it a bit scary :D