Indie game pricing - interesting blog article

[Colonel J]

Low prices, low expectations? Ars looks at indie game pricing

There's a thought-provoking piece this week in Arstechnica on the pros and cons for indie game developers of deep-discount pricing and the effect this has on sales, exposure and gamer expectations. Arguments both ways here.  I was wondering what Arcen think on this from your own experiences with Steam etc?

From my own experience as a gamer making buying choices, there's a mixed economy. There's a handful of small developers (e.g. Arcen, Introversion...) whose games and creative ethos I really believe in and want to actively support by buying their stuff from them direct and at full price (when I can afford to do that). For the rest, I have limited money and am much more heavily swayed by pricing; there are many games that I'd be unlikely to ever go for at £15 or more but would happily bite on a declining scale of £7.49 or £5 or whatever depending on how much it interested me.
And I say I put Arcen in that first small category - however this is a result of having picked up all your games at heavy discount prices (mostly from Steam) and then spent more time with them and really liked them and found out what you are about. Both Tidalis and AI War were things I'd mentally pigeon-holed as game genres that I thought were probably not my bag. So I didn't really pay attention to them until I saw them in a weekly promotion on Steam, saw the good reviews, downloaded the demo and liked it, so bought the games.

Long term though, there's got be a danger that this continuous stream of deep discount sales of 75% and 90%-off is eroding the market of people who might ever be prepared to pay a full price of say $15 or $20 for an indie game? Is it ultimately just driving down list prices across the market?

 

[x4000]

This is definitely a, heh, loaded topic.  With AI War, we have one of the pricier indie titles, but also one of the larger incomes for indie developers.  That said, the bulk of our sales have been made on discount.  How I feel about the discount promotions in a larger sense is somewhat irrelevant: for us, we couldn't stay in business without doing them periodically.

Market forces are tricky, because there's a lot of various pressures going on.  I think that it is lowering expectations about the costs of games -- and on the iOS in particular, the expectations are often ludicrious.  To some extent, XBLA can be that way, too.  On the PC there are some indies who complain, but I think there's a healthy range there. 

At any rate, I think that things are currently trending downward, but that's part of what is broadening the audience by bringing in people who are used to buying at retail.  And that part is awesome.  How the trend will end up, I have no idea, but I expect that prices will rise as the size and complexity of indie titles rises.  By the same token, if the market continues to expand, it really doesn't matter if the cost of individual games is forced downwards so long as there's a way to reach potential customers.  If in 5 years there's 5x the market and prices are 1/2 what they are now, everybody wins, you know?

My feelings on this are something that kind of change over time, but at the moment that's how I feel.

[TechSY730]

Ahh, the good ol' challenge of figuring the efficient (in the economic sense) price of goods that do not follow the traditional model of scarcity (like digital content). Its a tough problem, one that experts are still trying to figure out.

[Otagan]

Leave a game at $20 forever, and you will only sell to people who think $20 is a worthwhile price for a game of its level.

Sell a game at $20 for three months.  Get sales from everyone in the above example.  Drop the price to $15.  Now you get (for simplicity's sake) all of the people in the above example buying at $20, and now you loop in people who thought $20 was a bit too high.  Those people now get the game cheaper but had to wait three months to get their hands on it.  On the plus side, you now have more people who own your game to talk about it and raise awareness, and you now have more money than you had if you permanently left the price at $20.

And so on with further price drops over time.  Various indie devs have varying opinions on this issue.  I think the developers of Dominions 3 represent the most stubborn of indie pricing (leaving their most recent game at $55 for five years and rarely dropping it to $50).  They get a limited group of buyers who are genuinely and seriously interested in the game but lose out on broad appeal.  Then again, selling 10 copies at $50 is better than selling 40 copies at $10, so discounts can always go either way in the short term when implemented carelessly.

What I'm trying to say with that rambling mass of text is that either scenario (high prices/low sales; high sales/low prices) can be viable depending on how many copies are being moved, and it's impossible to know up front exactly how that will turn out.  You only find out how many copies you sell after the fact, so each school of thought has merit.  In a perfect world, you could practice perfect price discrimination by selling every single person interested in the game a copy at the exact price they're willing to pay, but that never works out and thus pricing is an eternal quest for the happy medium between sales volume and the price of each sale.

[zespri]

but I expect that prices will rise as the size and complexity of indie titles rises

Why would the size and complexity of indie titles rise? You can do only so much being an indie, where to rise to? (This is genuine curiosity, I'm not being antagonistic)

[Nalgas]

Long term though, there's got be a danger that this continuous stream of deep discount sales of 75% and 90%-off is eroding the market of people who might ever be prepared to pay a full price of say $15 or $20 for an indie game? Is it ultimately just driving down list prices across the market?

I'm a bit late seeing this, but for me that "long term" outcome already occurred at least a couple years ago.  $20 for an indie game?  I'm rarely willing to buy a big-budget AAA game for more than that much anymore, and I even wait for most of those to drop below that.  Actually, I can't even remember the last time I paid over $30 for a game, and I've only paid that much for maybe two or three of them in the past couple years.

I did the math at some point last year, and I think the average price I'd paid per game since ~2007 was about $6.  However, I had bought a couple hundred games in that period of time, including a massive number of indie games that were $2-5 each (or sometimes less in bundles), just because they sounded vaguely interesting, and there's not much risk when you're only out a couple bucks if you end up not liking something.  I spend about the same amount in total as I used to, but I get way more in return, so I'm not about to change my purchasing habits (although it has pretty much killed console gaming entirely for me; how many years is Nintendo going to make me wait for their big-name titles to even go below $40, much less down to $20?).  Sure, I'm usually a year or two behind on the latest games, but I have plenty of them to keep me busy, and they run better on cheaper hardware by that point, so that's another win.

I do make occasional exceptions for stuff I really like and/or want to support, though.  I spend more than enough time with AI War to be happy buying expansions at full price, and I bought a copy for my friend, too, when he was undecided about whether or not to get it.  I also pimp the hell out of stuff I like, which hopefully at least sometimes makes up for my cheapness with a few extra sales.  Heh.

[Panopticon]

but I expect that prices will rise as the size and complexity of indie titles rises

Why would the size and complexity of indie titles rise? You can do only so much being an indie, where to rise to? (This is genuine curiosity, I'm not being antagonistic)

As a studios success grows, the development ceiling will rise because of better finances. Being indie doesn't necessarily mean being small.

[zespri]

Being indie doesn't necessarily mean being small.

What does it mean then?

[dumpsterKEEPER]

Being indie doesn't necessarily mean being small.

What does it mean then?

The typical differentiation for an indie developer is one that is not reliant on a publisher for financial support (hence the "independent"). In many cases this is why they are small, in that they had to start with limited resources and build from there, but that is not always the case. Many consider Stardock to be an indie dev as they self-publish all their titles, but they are not particularly small.

That said, there's no formal definition of what constitutes an indie developer, so there's many different opinions on the subject.

[Zhaine]

Long term though, there's got be a danger that this continuous stream of deep discount sales of 75% and 90%-off is eroding the market of people who might ever be prepared to pay a full price of say $15 or $20 for an indie game? Is it ultimately just driving down list prices across the market?

I'm a bit late seeing this, but for me that "long term" outcome already occurred at least a couple years ago.  $20 for an indie game?  I'm rarely willing to buy a big-budget AAA game for more than that much anymore, and I even wait for most of those to drop below that.  Actually, I can't even remember the last time I paid over $30 for a game, and I've only paid that much for maybe two or three of them in the past couple years.

I did the math at some point last year, and I think the average price I'd paid per game since ~2007 was about $6.  However, I had bought a couple hundred games in that period of time, including a massive number of indie games that were $2-5 each (or sometimes less in bundles), just because they sounded vaguely interesting, and there's not much risk when you're only out a couple bucks if you end up not liking something.  I spend about the same amount in total as I used to, but I get way more in return, so I'm not about to change my purchasing habits (although it has pretty much killed console gaming entirely for me; how many years is Nintendo going to make me wait for their big-name titles to even go below $40, much less down to $20?).  Sure, I'm usually a year or two behind on the latest games, but I have plenty of them to keep me busy, and they run better on cheaper hardware by that point, so that's another win.

I do make occasional exceptions for stuff I really like and/or want to support, though.  I spend more than enough time with AI War to be happy buying expansions at full price, and I bought a copy for my friend, too, when he was undecided about whether or not to get it.  I also pimp the hell out of stuff I like, which hopefully at least sometimes makes up for my cheapness with a few extra sales.  Heh.

Heh, I was going to post almost exactly this.

The last game I bought that wasn't on sale was Dragon Age, and the expectations I had from paying £30 (so like $45 or something) then left me disappointed as it was alright, but not that great. Whereas if I buy something for under £10 then even if it's just ok I'll be happy to have spent the money. And if it's amazing then I'm very happy and might buy the dev's next game at full price!

[Shrugging Khan]

Silly capitalists!

In soviet russia, ARCEN would be a national institute, and AIW would be distributed to the population for free...nah, by force even!

[zespri]

Silly capitalists!

In soviet russia, ARCEN would be a national institute, and AIW would be distributed to the population for free...nah, by force even!

thank god, there is no such thing as soviet russia.

[Shrugging Khan]

Hah, don't be fooled by imperialist propaganda! Soviet Russia is within all of us, and all throughout the interwebs! Omnipresent!

'tis only a question of time until AIW becomes mandatory playing...for all of the human horde!