Monday, February 1, 2016

How to sell a Video Game

As some of you may have heard, I'm currently working on producing a little Android game with a friend. The interesting bit is whenever I talk about the game, there's two questions that are almost always asked: "What's it about?" and "How are you selling it?". The first is quick and easy: It's a little town building game. The second, while also quick to answer, is interesting because it is being asked. Not too long ago, if one were selling a game, it'd be sold the same way every other game would be sold. Now, things are a bit different.

Games are traditionally sold like any other product. A producer constructs a game, a store buys the game from the producer, and the store sells the game to a customer. One price for everyone, barring the occasional sale and markdowns due to age of the product. Additional content to a game, such as a new campaign or a map pack, would be sold similarly. This made a lot of sense for the time, especially as a substantial portion of any game's price was tied up in the physical bit of the game. Cartridges weren't cheap, especially later on as they were used to add additional capabilities to the consoles. Now, I can download a game for maybe pennies. Development time is expensive, not the actual content itself.

Importantly, I think it should be said that selling to customers should be a 2-way deal. Both sides should be happy, and a good sales strategy should take that into account. Only a few are really built around "exploiting" customers, with the other strategies being variations on the same principle: get the best product to the customers at a reasonable cost. A developer needs some way to get money if he wants to produce content. Finding a better way to gather that money allows him to make more content for those same customers to consume and gain a better life.

Moving back to how games are sold, even though the traditional market still functions traditionally in many respects, some new aspects have crept in. Most especially, smaller direct transactions have entered the market. Often termed "microtransactions" or "DLC" (downloadable content), these come in many different shapes and sizes and have fundamentally changed how game markets. Sometimes, some games have even completely eschewed the traditional market structures in favor of newer models. On the mobile market, at least for Android, you've seen the traditional market disappear entirely.

So, why the interest in these new models? In large part, they're done to cut out the middleman and allow for variable pricing. Any given store will usually take a good chunk of any sale for their cut. Steam takes about 30% of any sale for themselves, and last I knew sales in a more traditional store would take more. Not having to pay that bit is huge, especially give that modern software for handling money transactions safely is fairly cheap in comparison.

Explaining variable pricing is more complex, though it is covered in any basic economics course. Essentially, the idea is that game producers have a monopoly on the sale of their game, and so can charge any price that they choose. The cost to produce each individual item sets a general floor for the cost, but given it costs pennies to actually sell, the developer can ignore that, and so only cares about the demand curve. A demand curve is simple, for any given price of the product, you can expect some number of sales.

Here's an example. Say we know for certain that this graph is accurate. What price do you sell your game at? If you only have one price available, you look at where the price x items sold creates the biggest value. Here, that's the $20 mark, where you'd make $4,000. Great huh? But there's a better way. What happens if we sell to everyone at the $30 mark, and sell to everyone else at the $20 mark? You'd make $5,000 instead. That's a good amount more money, through no change in product. The trick, then, is how to actually make the sale such that some customers pay more than others.

Traditionally for many types of products, the common ways to do this are through sales and brands. Some people will pay extra for a brand name, while others don't care and will buy the same, unmarked product. Sales are another, where savvy customers wait for the right time to buy, while others don't care and pay extra. Both work, and are used to some extent in video gaming, but there are better ways, some exclusive to gaming.

These methods, I'm sorry to say, will have to be explained in an other post. As always, if you have questions or comments, please make sure to leave them and I will get back to you. I hope you enjoyed this bit, and make sure to check out my youtube channel at

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