Responding to this thread, which won't let me post the full wall of text:
http://www.gog.com/forum/general/release_the_last_federation_collection_the_lost_technologies_c1336/Hey guys -- Chris Park, the head of Arcen Games here.
One of you fine fellows (won't say the name, since I don't know his forum handle and I don't want to mess with his privacy) gave us a shout at arcengames at gmail dot com, and so I'm here to answer a few questions. Today is super busy for me and so I likely won't have time too much to respond further. I figure I should state that up front so you don't feel like I just surprisingly ran off on you or something.
I'm going to wind around very circuitously with a lot of background here before I get to the main points that are being stated here. If it seems like I'm being evasive, please do read to the end, as I'm hoping I get to all your points; but simply laying some groundwork first. I really hate it when some company representative comes out and gives non-answers or answers completely different questions.
Also: if I am gone and don't respond to some burning question that somebody has, please feel free to email our address noted above again, and I'll pop back by.
So, here's the deal with new expansions and how we price them. We've done the same thing for AI War since 2011ish, and I don't recall hearing a ruckus about it at the time, but we weren't on GOG. (And obviously, people are allowed to suddenly speak up even if they didn't before.) Anyway, my point there isn't "but see, nothing's different and so it's fine," but rather "this is not new for us, just so you know, and you can take that as you will to either see us in a better or a worse light, but I figured I'd bring that up."
Wow a long preface! Anyhow, I guess I'll number these points so that they are easier to discuss:
1. We all know there's a long tail to many games, after an initial high volume (relatively speaking) of sales. Hence the origins of GOG. The question, though, is whether or not the long tail is sufficient to warrant further investment in things like expansions or free post-release content, or whether there must always be a rush to the next sequel.
2. Sequels tend to cost more, or be the same price at the very least, as their predecessor. Sometimes they're a huge update, other times not so much. But I think that limiting things to this cyclical model of sequels as the main driving force of further revenue for companies (let's face it, we have expenses if we're to keep developing games and paying staff) is not great for customers. And it tends to sometimes lead to "changes for the sake of changes" to make the sequel seem worth it. I'm really off on a tangent here, and I apologize. But this does play into my thinking, so I think it's a bit relevant.
3. Expansion packs are something I prefer, particularly paired with free post-release content, because they are cheaper to customers (yay!), cheaper and faster to develop (yay!), a safer bet of a modest amount of income for the developer (yay!), and you get to have all the prior content of the game plus the new stuff, not minus anything (big yay!). That said, as DLC stacks up it can get prohibitively expensive for players (boo!), and the return on investment for the developer is a lot lower than a new game (boo!), and the press coverage and other marketing things that happen for new games is a lot thinner on the ground for an expansion (boo!). Unless you're Starcraft or something.
None of the above at all addresses what you were talking about. So now on to that.
4. Figuring out what to charge for a new expansion is tricky, and figuring out how to discount it is also tricky. If you look at the sales of individual expansions for AI War or the first expansion to The Last Federation, they don't make sense on paper. We "lost money" making each of them. Like, a lot of money -- in some cases $30k or more. BUT that is bad math.
5. The true income from an expansion is not just what it directly earns, but what it earns PLUS what new sales it spurs of the base game, plus any spurred sales of any collections it is now a part of. So all of our expansions have been moderately profitable. Not full-game profitable, but things that more than made up for our cost of making them and then some.
6. You may not care about this, and this is sort of beside the point, but I think it's relevant to point out here nonetheless. The extra profits from that sort of thing get plowed back into making further games, which helps us avoid things like kickstarters and whatnot while still being able to have things like a 6 month delay in Stars Beyond Reach or a however-many-month (4?) in the original TLF base game. Those games are novel and required quite a bit of experimentation and refinement, and we could afford to do so largely on the strength of past game sales. At any rate, it's how we self-fund, and expansions are a big part of why things like AI War have enjoyed enduring popularity.
7. Also kind of an aside, but there's new content for free in the base game here, which you get whether or not you buy this new expansion. There are several new achievements, three new events, three new alliance types, a new option relating to the first expansion, and various other smaller stuff. We could have put that in the new expansion to make the new expansion "that much more enticing," but we consciously chose to put that for free in the base game so that you'd have something new whether you choose to buy the expansion or not, even though that "devalues the expansion" in some ways. If some of the other stuff we're doing seems like an f-you to existing customers (which I'm sorry it feels that way; it's not meant to, and more on that below), then hopefully you'll at least see this bit as a thank-you.
8. All right, so to the discounts, which is the meat of the problem people are having here. First, discounts in general, before I get to this specific case. You probably know, we run reasonably frequent discounts, sometimes high ones. Why do this? Well... it makes money. On months when we don't do discounts, we typically run at an enormous operating loss (we'll make between a sixth and a third of what it takes to run a small company with 5 fulltimers and a variety of contractors and no office space). When we run discounts, we'll make between two to three times what we need for a given month. So, those cover the dry months.
9. When it comes to a new game or expansion release, generally the wisdom is to not discount too much too fast, and I think that's good wisdom. The people who want the content the most are willing to pay near the full price for it, or indeed the full price, and we give a slight discount to encourage more people to pick it up than otherwise might. Aka, 10%. Pretty standard. I don't think anyone is complaining about this, but I should point out that, based on my own observations and what other developers and publishers have said, you're really "leaving money on the table" (an ugly phrase, but apt) if you go lower than that. We already price our expansions and our games pretty low, and I feel good about the value for money you're getting, so digging even deeper than 10% does indeed seem like a foolish move at this particular point.
10. Next piece of general wisdom is to not discount something new too heavily too fast after launch, or you anger the people who just bought it at a higher price. I _totally_ agree with this, and you'll notice that we don't do that. Here again you're also somewhat "leaving money on the table" (ugh that phrase), but even more to the point it's a legitimate grievance for the customer. Well... kind of. I mean, as a customer I'd certainly be pissed, anyway, even though what someone else pays for something doesn't affect whether or not how much I paid was a proper value. The economist or business weasel would make the latter argument, but it just "feels wrong" to me, and violates the sense of fairness in all of us.
11. All right, so what's up with this bloody collection being discounted so heavily then, when it includes this new expansion?? This is the crux of the complain, as I understand it. Well, here we are: it includes two other products which have been out far longer, and I consider the extra discount to be on them, rather than on the new expansion. Of course I can make up whatever math for the internals of a collection like that I want: "the new expansion actually costs twice as much there, and the other stuff is therefore 95% discounted! No worries!"
12. But in point of fact, the reasoning is that we're discounting the "other TLF stuff" by a heavier amount since it is older, and the collection by the same amount in order to encourage new people who are hesitant to buy at all to buy the collection rather than the base game only. It's an upsell, and I think the value is there for the new customer as well, so I don't feel bad about it despite the ugly word "upsell" (Would you like a large bucket of grease for only $0.50 more?).
13. Now, here's where we come to the last part of my explanation. Well, some math first. The logical mathematical argument to make against #11 and #12 above is "if the other stuff in the collection is discounted further but not the new expansion, it should be discounted differently." Right you are. So if the base game and the first expansion are both 50% off, but together they make up 79.4% of the value of the collection, then by that math the expansion itself should actually be discounted by (79.4*0.5)+(20.6*0.9), which is, if I did my math right, a discount of 41.76% on the collection rather than 50%. _That's_ what would have been completely fair to the existing customers, and it's that 8.24% difference in price that I presume is what irks you. I get that. And in some senses, I have to agree.
14. THAT said, if we are trying to get new customers in, and get them to buy the collection rather than the base game alone, having a 50% discount on the base game and a 42% (let's round) discount on the collection is going to be a serious deterrent to buying the collection. I'm really sorry that this feels like an f-you to our existing loyal supporters (or just people who liked the game and have no clue about who we are). It's not meant to be. But remember back when I was talking about how our expansions are not profitable on their own, but instead rely on pushing more of the base game and collections? Collections are by far the largest piece of income out of that group, and the launch of a collection is the time we make the most income off it, because then we at least get some modicum of press attention thanks to the expansion. Not having the collection discounted competitively at that timing would drastically cut down income during the release period of the expansion, in turn making the expansion itself way less profitable, in turn making future expansions less likely and the further validating "string of sequels at full price" model that personally I don't care in circumstances like this.
15. Are there problems with the above argument? Sure. It's a gray area in a lot of respects. You can see the math, though, and the thought that goes into this sort of thing. We try to strike a balance between doing right by all customers new and old, and remaining profitable. If you're interested in this expansion, presumably you might have some interest in future work from Arcen, and thus that 8.24% difference in the launch discount on the collection is hopefully not a dealbreaker on that. If it makes a really big deal to you in terms of not feeling like the expansion is worth the money it costs now, then I imagine you have enough other games to occupy yourself until the expansion goes on a discount that you find more favorable. It will eventually, of course. As I outlined above, it's something we have to do in order to stay in business at the scale of staff we have in the niche market we're in, so it's no use me pretending like "will there be a discount? whooo knooows?"
16. When it comes to early adopters who buy in early and/or feel compelled that they absolutely must have this now, all I can say is: THANK you! Yes, you piece-for-piece bear a larger part of the load in terms of financially supporting us. As much as I've pointed out how we couldn't do without discount promotions during the long tail periods, I also can't stress enough how much we couldn't do without you, the early adopters -- and you, the other folks who buy at full price during non-discount periods. My hope is that we're providing you a great value at any of those price points, and that your choice to buy it at a given time is a mark of either your enthusiasm or support or both.
I'll end this rambling mess by saying that I do apologize for the feeling of f-you that the discounting has given some of you. And I recognize and respect the fact that some of you will not accept my reasoning above, which makes sense given that it's a gray area where a judgement call has to be made one way or the other. I respect the fact that some of you would make a different call than what I have. Hopefully at the very least, even if you are still dissatisfied with the choice I made on the discounts there, you come away from this with a feeling that this was not a move made out of disrespect toward you, or nefarious intent.
I try to do my best to balance my obligations to my customers, my staff, my contractors, and my own family (there are no investors or other owners), and it's a tricky thing. Usually I feel like I do a pretty good job of balancing all that, but sometimes I royally f it up, which is not a great feeling. Personally I don't believe this is one of those times, but I understand you may feel differently. If that's the case, my suggestion would be to simply wishlist the expansion for now if you still want it, and buy it when it's on the discount of your choice sometime in the future.
It frustrates me that I can't think of anything else to say, because I know some of you will still be upset. But the above is all I have.
Very best,
Chris
