IndieGameStand was built as a tool for indie game developers. Often the indie developers that make awesome games aren’t the best at this marketing/advertising thing. I thought it might be interesting to take a qualitative look at all the gaming bundles out there and really look at them as marketing tools for the indie game developer. This analysis is qualitative (rather than quantitative), but I welcome any indie game developers out there who have hard numbers to share data with us so that we can incorporate it in a follow-up post.
Once upon a time, I got a Masters in Economics. We all know supply and demand, but how does that all apply to games? As with any market, each game developer/publisher sets a price in order to maximize its profits. Of course in the real world, we don’t set our price once and draw up a simple linear graph to find economic equilibrium. Game prices change over time, there are daily deals, bundles and a bunch of other pricing mechanisms that are all built around selling games and making money. Similarly, a gamer is looking to optimize their purchases to get the best value with limited cash. They’ll spend more on a great game and less on a mediocre game. Of course time is also a limited resource, but let’s not get bogged down with all of the factors that go into a consumer’s purchase decision
A Game’s Lifetime
A basic assumption that I’m going to make in this post is that a game’s price is highest upon release (when it is most sought after) and that this price/value slowly decreases over time. Distributors adjust the price as the product gets older to sell more copies and maximize their revenue. There’s a great post here about a video game’s price cycle over 30 years: http://blog.pricecharting.com/2012/03/lifecycle-of-video-games-price-30-years.html
I think intuitively, this makes sense to all of us. I would argue that the indie game developer actually has an advantage over the AAA developers out there since alpha and beta funding is becoming so prominent. I would argue that we can also assume that a game’s value starts low when development first begins and increases as the game progresses and hits alpha and beta milestones. If you don’t believe me, just look at Minecraft. It started as a free demo/pre-alpha and then increased in price over time: $10-$15 during alpha, $20 during beta, and is currently $26.95.
A game’s sales are also somewhat predictable. When a game is brand new or just released, there are massive quantities sold at top price. We see this trend in everything from Halo 4 to a new game on Steam. When the game first becomes available or is considered *NEW* – gamers flock to check it out. Taking all of these assumptions, I have made a theoretical graph that shows off a game’s lifetime sales/revenue (Y-axis) over Time (X-axis)
So here’s what your typical indie game sales graph looks like. I didn’t put units on here since it’s all made up. It really just displays qualitatively what every game experiences during it’s lifetime. The quantities may differ, but this is the typical story:
– You start making a game or prototype and eventually it may be for sale. The first time that you put it up for sale or have a substantial update or alpha release, your sales will increase.
– When your game is even more polished and hits Beta, you’ll see another surge of sales if you’re alphafunding your game.
– Your game’s release (i.e. when it’s widely available) will always yield the highest sales. Your sales eventually taper off and become more consistent and predictable.