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The Economy of Happiness

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Tulatin 18th August 2008, 10:23 Quote
I think the cost of Horse Armor came as a slap due to it being seen as a pithy triviality - it added nothing of use to the game, and truthfully, free content downloaded from other users would have done just as well. The other items, such as the Mehrunes quest - those did better, since they added a whole lot to the game. And damn they were good.
bigsharn 18th August 2008, 10:26 Quote
Quote:
Garlic bread may be £2, but with cheese, I should add £0.50


Not sure about anything else... but I want to know where he buys his pizzas, they're £3.50 for a garlic bread cheese here

na, in all seriousness I reckon giving people demos for free would be a good idea, then getting them to buy additional stuff, Hate to admit it but Jagex had the right idea with Runescrap
Dreaming 18th August 2008, 10:31 Quote
I would say the seller is always winning too, as out of 10 suppliers, 1 may be willing to sell (and make a profit) for much less, but because the going rate is much higher, inflate their prices. In fact, by definition, when goods are traded everyone wins, because the seller would only sell if they are making money (which games devs are, as you said, anything above $0.10 goes towards clearing off the fixed costs / overheads) and the buyer would only buy if they deem it to be worth the money. Well, I say that, the thing with marketing - and there is so much in the games industry now to the point we don't even get playable demos half the time, just mindblowing cinematic trailers - the thing with marketing means that people think the product they're buying is so much more than it actually is.

If you did a survey and asked people how often they were disappointed with a game they bought, I think the results would be alarmingly high. When I bought hellgate london, for all practical purposes it was still a beta. Despite me buying it from a Game store in a fancy 'Games for Windows' box. It even came up on first install as version 0.890 or something like that. The market is being squeezed at both ends, I'm sure. The game devs can't afford to spend lots of time getting every detail perfect because they are on a timeline from the publisher to get a saleable product to market for a minimal cost. But then as the quality of games (and the aftersales support) drops gradually then gamers like myself become cynical. Why does this game have no playable demo? Is it because like the last game I bought from them, it was rubbish?

I was thinking I wouldn't get another C&C game after the Kane's Wrath saga, but then I was wowwed by a video of Red Alert 3. Amazing! Got onto the beta, played it a bit, and released again, I'd just been suckered for the hype. It's hard enough making a purchasing decision when working out if it's actually worth the £30 to you - afterall I could spend that on something else like a day out that would give me a lot of utility as you put it - but when you don't actually know what you're getting it becomes almost impossible to judge whether it's worth the money.
kenco_uk 18th August 2008, 10:35 Quote
I know nothing about developing game engines, but I would assume that if a premium game used a single engine for it's graphics and you released two versions of the game, one locked at a lower res with no fancy shaders, some clever so and so would release a hack to allow full resolution and all details on high - this would then mean people would buy the cheap version in droves, as you're then getting something 'for free'.
Bauul 18th August 2008, 10:47 Quote
It's an interesting dilema. Personally, given I'm not flushed for cash, the price I would hapilly pay for a game varies between about £10 and £15, plus a few quid for P&P if necessary. I simply wouldn't pay £35 for a game because the fun I get out of it and the time I have to play it is simply not worth £35 to me. £15 yeah, but not £35. It's for this reason I haven't yet played COD4 as it's just too expensive (although the foreign import ebay prices are getting close to acceptable), but I bought Audiosurf and the Spore Creature Editor for £5 without a seconds thought. If COD4 was available to me at £15, I'd buy it in a moment, and arguably a sale at £15 is better than no sale at £35.

I kind of like the idea of buying different versions. Although in all honesty I can't imagine a way it would work, few people would be happy paying anything for a cut down version, they'd rather not buy it than spend £15 on an inferior product. Although, it works for sausages, maybe it would work for games...
Dreaming 18th August 2008, 10:49 Quote
Quote:
Originally Posted by kenco_uk
I know nothing about developing game engines, but I would assume that if a premium game used a single engine for it's graphics and you released two versions of the game, one locked at a lower res with no fancy shaders, some clever so and so would release a hack to allow full resolution and all details on high - this would then mean people would buy the cheap version in droves, as you're then getting something 'for free'.

Thats true, but its like the economy beans in Tesco are the same as any other, pretty much. A bean is a bean! People will still buy the more expensive one because they think they are getting more.
steveo_mcg 18th August 2008, 10:56 Quote
I'm with Bauul on that, i've only just purchased COD4 but i got it second hand for £15 so no new money for the publisher/dev. However if they had lowered the price to £20 i'd have bought it, the price just doesn't seem to have come down at all. The £15-20 range is about where i aim for games since i also don't get much time to play and can rarely be bothered to play through many times.

The flip side of this is that i bout SupCom twice since i knew that if i had a weekend to kill it would completely fill it. The first time i payed about £20 just after the (offical) nocd patch came out and the second time it came with the expansion pack for £10 so my little brother inherited my original copy.
CardJoe 18th August 2008, 11:03 Quote
I like the idea of technical limitations in different versions, but it isn't feasible thanks to crackers and hackers and slackers.

Me? I'd pay between £15 to £20 for anything I think is going to be a good game and give me a good ten or twelve hours of enjoyment, not counting multiplayer. Call of Duty 4? I'd pay £15, maybe less, purely because I don't like the multiplayer too much and the game itself is short. If it had Co-op though then you can expect me to shell out a few quid more.

The exception though is when I'm able to recognise incredible worth, such as with any Bioware game. I look at Mass Effect or KOTOR (which I'm currently replaying) and I see how much writing and work must have gone into that. I know that the campaign is going to be long and in-depth and I know there's going to be at least a nice/nasty path to follow through the game. I know that I can expect to sink a good hundred hours in that game, so I'd pay up to £50 for something like that.

Then there's lower prices. £5 - £7 is something I'd expect to pay for an episodic game (say 5 hours, plus MP) or for smaller, casual games. In this I'd include things like Audiosurf, as well as open sims such as Civ. It isn't that I don't think Civ is a great game - I love it. But there's no writing, no plot, nothing except the pure mechanics underneath it. I value that less and it will make me less happy, even though I know I'd spend a good 12 hours on the game at least.
Stickeh 18th August 2008, 13:19 Quote
Interesting article! I like the idea of different tech limited games but as stated all ready, they wouldn't be limited for very long.

If it were possible i would only buy alot of the games i have got just for the MP, i play with a strong community of friends and dont feel the need for SP (of course unless it is SP only like HL2 and its episodes ).

If every game came out at £20, i'd snap them up without thinking, well because next to the other new games its cheaper, won't we just keep pushing the price down once we have set a new low price?
In this day and age Devs spend longer developing thanks to wanting fancier graphics and CrAzY physics, shouldn't we be paying them more for the amount of time they put in?

Its all very different from your Asda Smart Price and you 'Executive Sausages' but it needn't have to be.
Timmy_the_tortoise 18th August 2008, 13:28 Quote
Is a comparison between the food/supermarket and games industries really a reasonable one?
Xir 18th August 2008, 14:07 Quote
Quote:
Originally Posted by Bauul
...few people would be happy paying anything for a cut down version...
Well, tell that to all people that have a "Home (Premium)" version fo their OS instead of "Professional"

Don't know about Vista (Networking is rumoured to have become easier), but the Home version of XP sucked for LAN's...
(Then again, I can't get my to machines running professional to connect reliably)

Xir
BlackMage23 18th August 2008, 14:12 Quote
OMG that cat picture is too cute!
The Infamous Mr D 18th August 2008, 15:16 Quote
I suppose half the problem for a lot of people is that once you start increasing prices beyond a certain level, there are fewer people who are prepared to part with the money, even if it provides a lot more enjoyment for your money. One of the big differences between value sausages and value games is you can't hack a value pack of sausages to increase your meat content.

The challenge for publishers is balancing the price of the game to offer the best return on their investment against the ease of purchase - the point where buying a game becomes a more attractive option than pirating it.
MrMonroe 18th August 2008, 16:25 Quote
I am getting a little worried about you, Mr. Harris. You're going off in a really weird direction and I think it's going to lose you money. You sound like you're going kinda... crazy.

Your bacon example is nonsense, but not for the reason you cite. The costs associated with production have nothing to do with it, but the seller isn't just accepting that he can't charge you more than Joe Average and settling for the lower price. He's counting on you, and he's counting on cheapskate bacon fans too. For any given product, there is going to be a normal distribution of people distributed by how much utility they derive from it. The seller's task is to try and divine what the most profitable price is based on that curve. If he puts it too low, he loses money from people who would have paid more, and if he puts it too high he loses money from people who can't pay. The trick is finding the balance. The seller can't sell the same product to everyone for different amounts, because then only people getting the very best deals will pay while everyone else complains about getting fleeced. For instance, and I'll be brutally honest here: a game like Braid doesn't really offer me anything. The ideas in it are kinda neat, but puzzle platformers only very rarely get me going. The price I'd be willing to pay is "ad-supported" and I probably wouldn't play for long. You've got to take people like me into account when setting the price for the game, because if there are a significant number of people like me in your target audience, then you're not going to be able to charge $50 for it. However, creating an ad-supported version just for people like me would be ludicrous. It's a huge capital investment for not much payout from a minority segment of your target audience.

People who would never, ever pay money for your game, like people who don't play computer games or pirates, aren't part of that target audience and they never were, so stop trying to appease them with lower prices or different options. They aren't going to play, or at least they aren't going to pay to play. The bacon vendor doesn't take vegans into account when he sets the price of his sausages, because he could never expect them to buy in the first place, even if the price becomes negative. (this obviously doesn't hold with game pirates, because if the product becomes free they will download it directly from you. Though that's rather a small comfort, I'm afraid.

The examples you cite of where this happens aren't reasonable: matinée showings are harder to get to for the average person, and thus the average person (the target on that bell curve) has less utility for that product, meaning if the theater owners want people to go they have to drop the price. And yes, if you are an informed consumer, you do get better quality sausages if you are willing to pay more. (eating organic, local meat is by far much tastier, healthier murder) You say one might sell a hobbled version of CoD4 with no SP content and reduced graphics capabilities for people with older rigs, and that's perfectly rational. However, you're talking about selling two completely different products. Sure there are examples of companies packaging something pretty and shipping it off as a "deluxe" edition or some such nonsense, but that's what marketing is about. If you fall for it it's your own damn fault.

And sure, you could do this with all your games, (though I don't see how you're going to make a "lite" version of Braid) if you feel like doing all the extra QA to test multiple builds across the myriad of options in customer computers. But seriously, with an independent developer like you, your best bet is to make the best game you can, make yourself a guess as to how much Joe Average will be willing to buy it for, and highball it by a few dollars. If people aren't paying, drop the price a few bucks. A few months later, when the audience that was willing to pay that price slacks off, drop it again and grab the next 1/4 of a standard deviation of your target audience. The people who get the most utility out of it will have bought it at the high price, and the people who don't get as much utility will have bought it for a reduced amount. Isn't that exactly what your proposal was?
Thacrudd 18th August 2008, 16:49 Quote
I think the idea has potential, and I would go for it to an extent. If I don't have a high-spec machine, I would not pay for the high-spec features. That is, so long as If I upgraded later on I would not have to buy a whole new copy of the game, only upgrade as you said. However, I would not like to see the price of a full-featured game be higher than what I am already paying if that makes sense. I do not want to pay $80 for what I am already paying $50 for right now, unless it is a deluxe edition with nice novelty items. It would be nice to get a full game for not as much if I don't know what it's like, and then buy the rest of the features if I liked it. That way I wouldn't have spent $45 on the Witcher lol.
CardJoe 18th August 2008, 17:01 Quote
I hate the phrase Joe Average. Can we think of something else?
Timmy_the_tortoise 18th August 2008, 17:03 Quote
Joe general?
kenco_uk 18th August 2008, 17:06 Quote
Joe Cheesecake?
Timmy_the_tortoise 18th August 2008, 17:08 Quote
Jazzy Joe.
OleJ 18th August 2008, 17:10 Quote
Quote:
Originally Posted by Timmy_the_tortoise
Is a comparison between the food/supermarket and games industries really a reasonable one?

I think not.
If you buy the cheap factory sausages you get 30% meat (from Brazilian cattle eating away on previous rain forest land) 30% fat, 39% water and 1 percent salt and artificial flavorings.
If you buy the expensive sausages you get 85% meat (from national farms), 14% fat and 1% salt and natural flavorings, herbs, etc.

I think the supermarket analogy in real life terms is better applied to describe a differentiated product choice so that people who give a hoot about the taste of their sausages (and can afford it) buy the expensive ones, while those who just eat sausages for the sake of stuffing something in their gob that is reasy and roasted can buy the cheap ones.

And I'd like to let the author know that cheap packaging does absolutely not deter the wealthy consumer. You will very often find that many belonging to the high class of society will only pick the expensive one over the cheap one when they want to profile themselves in case of guests, etc.
Middle class (yes I know class speak is a dead herring but it's yet the easiest labels to use) members will more often seek the "expensive" looking packaging to achieve a sense of wealth but this is again only on select products where it represents an emotional value.
Those constantly buying the cheapest and in bulk are primarily those on a tight budget where buying the expensive products represent a superfluous waste of money.

Since computer games (and all data for that matter) is immaterial you're literally faced with a fiscal controversy. Pricing something that anyone can duplicate without effort is undermined by the marketplace itself. So how do creators generate revenue?
Firstly one needs to figure in "Personal Relation". If your supposed customer cannot relate to the creator but only sees a mega-conglomerate then the value (utility) of the game might be high but there will be no relation and hence the otherwise customer will not relate to the fiscal (or real world) needs of the creator.
Now when talking relational psychology into business models things tend to get muddy very fast. Obviously :) But a way for digital distribution to work for both creator and user is to make sure that the sales point highlights the origin and honesty of the product while giving the user the ability to have his say in both price and communication with the creator.
Secondly: The buyers voice: In ye olde market place one would haggle (and you do it today with your carpenter etc.) and agree on a price that would equal a value to both parties. With set prices closed for argument you literally tell the possible buyer that if he doesn't agree on the price he should bugger off. This creates a situation of loyal and illoyal customers where the loyal ones (those who have great utility from the game) will buy the game no questions asked while the illoyal ones will turn around and go to your neighbor stall on the market and get a cheap but exact copy.

A very good example of taking advantage of the seller/buyer relationship while highlighting the need to support the creator is Magnatune.com. If you don't know what it is goo there immediately. It's a site where you buy music and you choose how much you wish to pay for the album. You are able to download the product without being handcuffed with DRM and other dis-trusting means. Margins are publicly shown so you also know how much the distributor and the creator makes from the sale. It is all very open and this is essentially what defines the concept. They know that if you wish to screw them over and copy their stuff then you are going to. So why bug the customers and scare away potential customers if you can go at it with a try to establish mutual trust and gains.
What makes the concept so strong is that a copy-site having ripped them off will not be able to offer same high service and they will easily be able to take them down through legal actions.
Now someone might go to thepiratebay to get a single or several albums and there's nothing they can do but even if they ran strict drm schemes and sued every one of their users there would still be copies of their music around to download for those who won't pay.

Lastly (on this suddenly lengthy post) there will always be those who are asshats and won't repay a favor. Be that a reach-around or helping your friend move house like he helped you. That's life. Distrusting the good apples because of a rotten few is the wrong way to it when trust is the foundation of ones business.
Anyways I know the author doesn't use DRM and my hat's off to that. Now comes the challenge of communicating the mutual gain of a buyer/seller relationship. While you sell your products tell the potential buyer about what he is supporting, let him know how bad or good you're doing, let him have a voice in pricing, let there be communication, be friendly :)
jrr 18th August 2008, 17:12 Quote
MrMonroe approach of start-high-priced, then keep reducing to get all the price demographics is a good idea, absent one detail: "newness" factors into utility significantly. It *shouldn't*, but for some reason the same game is perceived as worth less when it's older. This is likely a combination of 1) price competition with the second hand market, 2) the hype/buzz of a new, innovative, or really shiny game, and 3) consumer knowledge that prices drop over time.

Specifically, I suspect there are people that will be missed because when the game finally drops to a price they're willing to pay, it's become old and uninteresting.

Digital distribution messes up the whole formula. There is no second hand market to compete with, as a digital purchase is non-transferable.

When it comes to granularity of pay-for-what-you-use, there may be a good analogy in toll roads. People dislike paying to drive on a certain road, but the alternative is higher tax for everybody, whether or not they drive on the road.

I think the only way to split up a game without pissing people off is by the actual game content - episodes, single vs multi, etc. Paying individually for graphic settings or other features (voice, etc) is icky.
CardJoe 18th August 2008, 17:21 Quote
How about something not Joe at all?
jrr 18th August 2008, 17:22 Quote
Average Avery?
Lockinvar 18th August 2008, 17:32 Quote
Good article, interesting notion.

MrMonroe: Your second and fourth paragraphs (the largest ones) are petty, and make no valid points. You call the column nonsense and unreasonable, but then proceed to say pretty much the same things as the column (albeit in a different manner with a great many more words).
Quote:
Originally Posted by MrMonroe
People who would never, ever pay money for your game, like people who don't play computer games or pirates, aren't part of that target audience and they never were, so stop trying to appease them with lower prices or different options. They aren't going to play, or at least they aren't going to pay to play.

You're right in that some pirates would never pay, however those who pirate because they cannot afford games might if the price were lowered, as would those who pirate because they believe the price is too high (a common opinion in Australia - games cost about twice as much on average as in the US).
Quote:
Originally Posted by MrMonroe
If people aren't paying, drop the price a few bucks. A few months later, when the audience that was willing to pay that price slacks off, drop it again and grab the next 1/4 of a standard deviation of your target audience. The people who get the most utility out of it will have bought it at the high price, and the people who don't get as much utility will have bought it for a reduced amount. Isn't that exactly what your proposal was?

I think the article is suggesting more immediate price differentiation then the traditional approach you have detailed. Someone who has pirated a game because of the above reasons is unlikely to buy the game later from the bargain bin when the price would then (normally) better reflect its utility to them - because they've already finished it.
Timmy_the_tortoise 18th August 2008, 17:38 Quote
Ordinary Olivia.
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