Sunday, July 13, 2008

A question of value

If I were to ask you what you think the value your game's content was, what would your answer be? I think most developers would answer somewhere between 10 and 25 pounds (or 20 and 50 dollars US). It's what they would likely consider a fair price for their services rendered, and that's perfectly understandable.

The problem is that they don't set the value of their output, the public do. And the public have always placed the value of content at one number:


When paying for entertainment, the public are always paying for one of three things: Tickets, memorabilia or convenience. Tickets as in entry to an event. Memorabilia as in merchandise. Convenience as in the ability to use their content as and when they choose. So, for example:

  • A ticket to go see Led Zeppelin
  • T-shirts for the event
  • An album of greatest hits that they can pop on and listen to whenever they choose
It's not the actual thing that they'll pay for so much as the toll to get to the thing, in otherwords. This is largely born out by the radio and television industries' realisations back way whenever that people wouldn't actually pay to listen to radio shows or watch TV shows. Instead they developed the first business models that gave content away at the value which the public perceived (i.e. for free) and instead made the toll a business-to-business transaction in the form of advertising. And I think we can all agree that that model has been nothing short of a roaring success for those companies that could scale that model appropriately. Add in the extra ticket incentive of cable television and there you have it.

So, to games.

Currently most games sell themselves on the convenience model. The discs that the people buy to put in their Xboxes represent the equivalent of the album. Except not all discs will fit all boxes, a situation that fragments the market in a bad way and keeps games effectively on the sidelines culturally. While the industry wrestles over which format to support (and these are especially uncertain times in that regard), it effectively produces a natural cap for the consumer that does not want to be confused and suspicious.

The convenience model for games therefore has its limits, because the prices for new games are quite high compared to other forms of entertainment, and the selections are small. Thus the only predictable course for the industry overall is to continue building self-enclosed toy empires that extract value as much as possible from each step of the chain. The Nintendo model, basically, of which the only step that's still missing is for Nintendo to bite the bullet and open a set of retail stores. As things stand I can't see why they wouldn't.

Another fairly popular model is the ticket approach. In this model, the game is kept away from the player until he pays a toll to access. World of Warcraft is an example of this model in action, as is arcade gaming or interactive TV "pay to play" services (small disclosure: I currently work in that end of the industry). Ticket models have a significant advantage over that of the convenience model in that they can encourage repeat or continuous purchasing form the players. For their £8.99 a month, players play as much as they want, and Blizzard eventually make out extremely handsomely as the players eventually end up paying far more than they would have had they been individually purchasing the game plus updates.

Aside from the fairly small trade in gaming merchandise such as plastic figurines and cross-media applications like Halo novels and the odd movie tie-in, the main kind of memorabilia sale in the games industry is through the exclusive edition, in-game property (i.e. micro-transactions) and that sort of thing. People like a sense of ownership, particularly of something tangible.

The key thing to understand from all this nugget-wisdom above is that regardless of your feelings (as a developer or would-be developer) about piracy, your sense of self-worth, your feeling that things should have a value and so on, the public essentially doesn't care. A game is essentially the same thing to them as an album or a movie. It lacks a tangible quality and, being ephemeral, doesn't feel like it has any intrinsic worth.

Don't be depressed, because this is something that you can use to your advantage. It's just about realising that just because they think it has zero value does not mean that it is worthless. Here are some ideas:
  • Build a game based on ticket sales
  • Build a game based on sponsorship and promotion
  • Build a game in which the basic PC version is free, but you charge for the convenience of an iPhone version
  • Build a game in which tangibles mean something
  • Build a game which you distribute freely, but charge extra for support, etc
  • Sell a premium version of your game in a box with quality tat for 50 pounds a box
And so forth.

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