Opinion: Console Downloadable Games? Too Cheap
February 4, 2008 12:00 AM | Simon Carless
[In this editorial, Gamasutra publisher Simon Carless makes the argument that the original downloadable console games for Xbox Live Arcade and the PlayStation Network are priced too inexpensively for creators to be completely viable as a continuing business model.]
So, I'm going to imagine that this may not be one of the most popular opinion pieces I've ever written, given that it advocates that all you wonderful XBLA and PSN consumers should be paying more for your downloads. But here's my underlying thesis - that after the 'honeymoon' period when there are only a few titles on the services garnering larger amounts of downloads, the $10 average pricing for downloadable console titles may not enough to sustain indie developers - especially given that games are often barred from appearing on rival networks.
In fact (and this is especially true in the case of PlayStation Network downloads, which are often priced ridiculously low compared to the amount of work that's gone into them) console downloadable pricing seems to have started as a loss leader for hardware companies, as they set a precedent with first-party financially supported titles in order to persuade consumers to buy their game systems. And now we've got stuck in a bad price point for creativity.
Of course, the difficult thing here is a frame of reference in estimating sales for the various systems. One good arbiter is the info that ThatGameCompany's Flow has sold 120,000 copies on PlayStation 3, at least as of September 2007. As one of the most-promoted and most critically acclaimed titles on the system, with only around 30 titles available, this is a good high-end figure for PSN sales, I think, especially given lower installed base and a less obvious downloadable game element to the PlayStation Store.
As for Xbox Live Arcade, the generally held view is that early XBLA titles were pretty much guaranteed 50,000-100,000 purchases, thanks to the small amount of games on the system - even if an original IP indie title. And well-known franchises can still do well - it's been claimed that Worms HD sold 200,000 copies in just the first couple of months.
Probably the best documenter of Xbox Live Arcade sales - as long as their calculations are on the money, and they look close enough to me - is the VGChartz Xbox Live Arcade countdown, which is created by extrapolating MyGamerCard info. It reveals the vast majority of games spanning 15,000 to 400,000 sold.
However, a lot of the swift-selling games are from the early days of Xbox Live when there were plenty of hardcore adopters and little choice. There's now over 110 games on the service - and the results can start to be pretty obviously seen in recent charts. There are some great indie success stories in there, but there are now so many games available that recent titles are slowing down majorly.
For example, Switchball has allegedly sold 41,439 since its November release, and Mutant Storm Empire a disappointing 24,708 - with the high score tables I've checked out for the game indicating it might be even less than that estimate. The most famous example is Jeff Minter's Space Giraffe, which was confirmed at almost 10,000 downloads in less than 2 weeks, and seems to have limped along to an estimated 17,103, with an overall gross of $85,515.
Another mistake some people make in looking at these possible '$$$' numbers is presuming that this means a 'profit' of that much. Let's take Mutant Storm Empire as an example, with $247,078 listed as revenue in the VGChartz estimates. But obviously, Microsoft takes a percentage of this for allowing you to put your game on XBLA. Let's say that percentage is 30% (a figure given by Team17 since they self-published Worms - it may differ for 'first-party' games). This leaves $173,000 in revenue flowing to the developer.
But there's an immense amount of complexity and necessary payment in both testing and localizing an Xbox Live Arcade game, and the burden shouldered by developers is reportedly as high as $50,000 per game in terms of getting proper bug reports, making sure the game is localized into the correct amount of languages, and so on and so forth.
So that would take the developer cut down to perhaps $120,000 - which is an incredibly small amount for making a complex professional game from scratch with multiple development staff. If you go through a publisher (with THQ and Sierra being two of the ones signing up XBLA titles recently), the numbers look even worse, with many of those titles clearly not paying for themselves.
Having said that, there are some notable success stories - such as PinballFX, which looks to have grossed $2,494,772 so far, according to VGChartz. And XBLA execs were revealing 156% average financial return over 12 months for Xbox Live Arcade titles published so far in August 2007. But I'd love to know what that figure is now over all games and especially over non-remake, non-retro titles.
The problem, as I see it, is that setting a $10 precedent for what are often complex, multi-mode, multi-level games presumes that you can pretty easily get to 100,000 units sold - given that you only get 70% of revenues and that most games probably cost in the low to mid hundreds of thousands of dollars if you're actually using hired staff that you pay and take a year to a year and half to make it including (lengthy!) approval processes. Given the amount of games flooding onto the service, I'm not sure that's quite so easy now. And it's just going to get harder.
Casual PC games cost $20, and are often as or less sophisticated than console downloadable titles. Why is it that games that try to price themselves at $15 on Xbox Live Arcade are considered 'out of line'?
Having said that, of course, the average developer makes only $8 (40%) on a casual PC game download, and the average XBLA developer would make $7 (70%) on a $10 Xbox Live Arcade game. But the complexity of having to make fully featured online modes for consoles, the cost of devkits and console-experienced staff, and so on makes a major difference - as does the months of testing that get done at the end of an XBLA cycle to meet rigorous standards. And it's likely that Microsoft is eating some significant costs there by being so generous with royalties.
By far the best example of taking a stand on pricing on PC is Bit-Blot's 2007 IGF Grand Prize winner Aquaria, a complex story-based action title which can nonetheless be compared to a number of XBLA games, which the developers are selling for $30 on their website - meaning that they get 100% of the money when you buy it, actually. So just 10,000 sales for them would be the equivalent of selling nearly 50,000 copies of your game at $10 on Xbox Live Arcade. The Aquaria folks have die-hard fans who will pay that fair amount. And $30 implies value, and less disposability. In fact, you may play the game longer if you shelled out a little more for it. You see where we're going here?
Of course, we're not suggesting that those simple retro remakes need to cost that much - on name recognition and ease of creation, $5 (or maybe, hey, $8 or something) works perfectly well for them.
But I honestly believe that the best way for folks like Jeff Minter to make money to keep going is to play to the fanbase and charge accordingly. I bet you he would have seen at least 10,000 purchases of Space Giraffe, even at a $20 price point - and it would have put him in a much better financial position to keep making games for his fans ($200k grossed instead of $85k). This method is what Japanese super-niche console game developers do when they put out their bricks&mortar retail titles for $20 more than the average game (perhaps with some fun extras along the way).
OK, but here's the capper. Microsoft's GDC keynote is coming up, and Chris Satchell has hinted at an XNA community publishing platform for the Xbox 360. If (and this is a massive if) it's going to be as easy as making a game using XNA Studio and pushing it out to the masses with a price tag attached, then we're going to get a massive array of games at a gigantic array of pricepoints.
It might be incredibly disruptive, but it also might encourage larger pricing diversities. If the concept can fix or even bypass some of the complexities of the testing and approval process, it'll mean that swiftness to market could bypass a lot of the worries listed above.
But this still merits the question - who is going to be man enough to step up with a prominent project (let's say, picking one out of the air after an IM chat with a buddy, Castle Crashers) and say 'No, guys, this game is really worth $20, and you're going to get that much enjoyment out of it'? I think it should be done (over and above titles like Puzzle Quest sneaking up to $15), and I think it would help stabilize the console downloadable ecosystem, even if users might not appreciate it up front. But heck, we all know it's probably too late.
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20 Comments
I am in total agreement Simon. Not that I am crazy about the idea of games costing more, I still would have gladly paid $20 for most of the XBLA games I've purchased.
alice | February 4, 2008 3:59 AM
"And Carcassone has been a smash hit, showing $4,326,360 in revenue (before cut and other costs)."
I wonder if VGChartz took into account that Carcassone was made available for free for the Xbox Live 5th anniversary? Presumably the developer was paid by Microsoft for the giveaway though.
Marvin | February 4, 2008 4:23 AM
What a fascinating and well-written read. I agree totally with your analysis, but the pricing issue is one that has plagued games for years.
I own a large number of XBLA titles (far more than I do "full priced" 360 games), but I honestly don't believe that more than a handful are worth $20+. As a consumer I'm afraid I don't really care what it cost the developer to make, or how many years they had to spend in the approval process, those are business decisions they should have been well aware of from the start. I look at the game purely as a game, irrespective of platform or delivery method, and compare it with any other game that is vying for the contents of my wallet if the price is similar.
XBLA titles are a very mixed bag indeed. Some of the games on the service amaze me and I wonder how they could do them so cheaply - your article points out they probably can't :) Puzzle Quest I had no issue paying for, it's a sublime game and has given me more enjoyable gaming hours than Halo 3. But if it had cost the same as Halo 3 I'd never have bought it. There is are very real psychological and perception of value based issues with digitally owned content.
Equally I wish I hadn't wasted points on tripe like Double Dragon and Asteroids - my nostalgia taking over my common sense there (I bet a large number of their sales were based on similar reactions!)
I do think that it isn't the price of the game that finally effects the total overall sales - it's the game itself, and a good one is always going to shift units one way or another.
Richard | February 4, 2008 5:50 AM
You're right about Carcassone being free for a while and VGChartz not flagging that properly, Marvin - I'm removing that example, I thought that was a bit odd!
simonc | February 4, 2008 6:30 AM
damn it, all those numbers are going to spoil our post-mortem!!
It's stupid that there are that many XBLA games out there -- there are literally only maybe 2-3 that are any good! (plus another 2-3 that are available on other platforms)
I'd prefer a much smaller roster of ONLY GOOD GAMES at $5 each. I guess this is more akin to PSN (still haven't got a ps3), however I think even they have the problem of only 2-3 non-crap titles. Why is it so hard for people to only release GOOD GAMES?
I agree that it seems as if hardware manufacturers consider the downloadable games as more of a way to add value to their platform rather than a source of revenue from sales.
Also, I'd much rather have everyone playing our game for free rather than a few thousand playing it for $20.
raigan | February 4, 2008 6:51 AM
Would this not be easily sorted by time-limiting the games. Indie publishers may get two bites of the cherry if they can then re-issue at a later date for a lower value. All the while XBLA would have fresh content and developers could rely on their 50,000 to 100,000 sales each week as the average buyer is focused on less options.
This example worked quite well with Nintendo's virtual console release of Super Mario Bros (lost levels) for me, I am glad I grabbed it when I did just in case I want to play it.
mark1bdi | February 4, 2008 7:40 AM
Simon, I think you are greatly underestimating the cost of putting the game out there. Also, you engage in my pet peeve: you misuse "beg the question".But otherwise, I'm in agreement. If MS didn't use that ridiculous points system, then that might help. But the issue is really getting people to buy something that they cannot resell. If I buy Assassin's Creed at $60 and can resell it when I'm done for $40, then I paid twenty bucks for the experience. I'm not going to pay the same for Poker Smash as I would for Assassin's Creed.
Zack | February 4, 2008 8:35 AM
n my opinion, part of this is a problem that Microsoft has created by imposing file size restrictions. If a game like Lumines Live came out and they could make it all one package for $25, I would have been fine with it. Instead they had to charge $15 for the base, and then charge extra for the skins... all because the base package hit the 50mb limit. Games that have a greater content value could charge more if they offered more, and games that offer less could charge less. Instead they are kind of stuck.
There are games that I loved playing (Heavy Weapon, for example), and had it costed $20 like it does on PC... I never would have bought it, but for $10 it was perfect.
I guess it's a matter of perceived value. As I sit here, I'm trying to think of which games I would have still bought had they costed more money. None pop into my head immediately.
Is that because I am used to only paying $10 for XBLA/PSN games? Or is that because what makes these services so appealing is the microtransaction aspect to them?
Phil | February 4, 2008 9:04 AM
n my opinion, part of this is a problem that Microsoft has created by imposing file size restrictions. If a game like Lumines Live came out and they could make it all one package for $25, I would have been fine with it. Instead they had to charge $15 for the base, and then charge extra for the skins... all because the base package hit the 50mb limit. Games that have a greater content value could charge more if they offered more, and games that offer less could charge less. Instead they are kind of stuck.
There are games that I loved playing (Heavy Weapon, for example), and had it costed $20 like it does on PC... I never would have bought it, but for $10 it was perfect.
I guess it's a matter of perceived value. As I sit here, I'm trying to think of which games I would have still bought had they costed more money. None pop into my head immediately.
Is that because I am used to only paying $10 for XBLA/PSN games? Or is that because what makes these services so appealing is the microtransaction aspect to them?
Phil | February 4, 2008 9:15 AM
I think the biggest problem the gaming industry has in terms of overall growth are the prices of games.
Throughout history all media did not become popular until the prices fell. Though literacy rates had risen greatly in the years before, books did not make it into most homes until the invention of the dime novel (which were about $2 in todays dollar). DVDs did not become popular until they dropped from $30-40 each to $15-20. $10 DVDs of old titles sell as well as new titles do. The music labels are struggling now because lots of people have reevaluated what they believe music should cost.
The games industry has good examples of this also. The Deer Hunter games sold millions at the cheaper price of $20. The Nintendo Wii is selling better than others and the cheaper price is a big reason why.
If the games industry wishes to break out of it's core audience it will need to lower prices.
The reason XBLA has been as big a success as it has is it's price.
Eft | February 4, 2008 9:51 AM
I think simon got the cost about right.
raigan | February 4, 2008 11:23 AM
I'm a little surprised more XBLA games aren't being designed with extra content downloads in mind from the start. Then, if you felt your dedicated audience was large enough, you could try to get a bit more money through an expansion.
For example, Small Arms offered an expansion pack that added extra characters and stages. You got a full game for the regular price, but you could get more game if you then bought the expansion.
On the other hand, Lumines didn't have a good content split, and it made their expansion look like a bit of a rip-off to some. And there was less incentive to buy the skins pack.
But so many games offer nothing at all. (Though I'd bet some would blame it on Microsoft's side, saying they make expansions difficult and expensive prospects, particularly for small developers.)
Baines | February 4, 2008 4:33 PM
It's a great analysis. I only see one "flaw" (if you could call it that). From the consumer perspective a game purchased on XBLA can only be played with one user account. If anything happens to that user account that game is gone.
I personally view any purchased online content as an "extended rental." Mind you _I don't have a problem with this_. However I don't expect to pay full price for a rental either. I haven't been caught by copy protection gone bad, but I know people who have and it's a pretty frustrating experience. It's certainly a factor in a full-digital purchase.
Chad | February 4, 2008 7:57 PM
Fantastic analysis, as always! Like many, I'm sure, it's certainly something that's been on my mind since I saw that Rez HD was selling for a measly $10. I would have easied ponied up twice that! On the other hand, I balked at immediately ponying up $30 for Aquaria, even though I'm sure it deserves it. I certainly wouldn't say it's overpriced, but that I'm too lazy to finish the demo (or that the demo was, in fact, too generous).
I'm not sure how much this factors into the article, but what about iTunes-based game sales? Especially since their price points are lower than the average original XBLA game, and potentially have a much larger audience. I'd be quite interested to hear how sales numbers and profit percentages for that platform factor into your perspective.
Glenn Turner | February 5, 2008 12:40 AM
People are greedy. We're always going to prefer the lower price tag to the higher, without any regard to developers. While I empathize with the struggling programmer trying to put bread on the table, he also shouldn't be surprised if I end up buying the cheaper games over his own. Can you imagine the response if all of XBLA's games went up $10 tonight?
Like others have mentioned, I believe the reason XBLA and the like are popular is because they have a multitude of cheap games on there. It's basically ingrained into our minds that each pricing level has to come with a certain amount of quality. If I have to pay $20 for a download among the rest of the $10's and $15's, it had better be the best damn game there.
That example of "$30 implies value" is kind of funny. Does Simon mean to say, "If it costs $30, you know it's gotta be good"? If you have to remind yourself of how much you spent on a game to squeeze every last bit of enjoyment out of it (i.e., get your money's worth), maybe you should re-examine the reasons you bought it.
You can try for independent releases without a real publisher as Simon suggests, but you better hope your business model is spot on to cover the loss of sales. Shifting the price vs. sales isn't as easy as changing a math formula.
Space Giraffe sells 17,103 copies and makes $85,515 gross ($5 per sale). You say he could've charged $20 and sold 10,000 copies, but how certain would you be that it would sell that much? I want to know how many copies of Aquaria have been sold, but they haven't released any numbers yet.
Occasional reviews and word-of-mouth can only go so far, unless your game is God's greatest gift to man.
D | February 5, 2008 12:41 PM
I know a lot of people who pirated Aquaria BECAUSE in their opinion it simply wasn't worth $30 which btw is rather much for an indy title. The ugly truth is that if you can go to a store and pick up a big but older title for a budget price (around 10 to 20$) you will choose your DLC very carefully if it comes with such an high price tag as 30$. Imo, in most cases 30$ for a download is simply too much.
Slang | February 5, 2008 4:07 PM
"I know a lot of people who pirated Aquaria BECAUSE in their opinion it simply wasn't worth $30"
Pffft... what a lame excuse.
Tobias | February 6, 2008 2:33 AM
@Tobias
Lame excuse or not, many of those would probably have bought it for aroung 15 to 20. Still, Aquaria is doing good though it probably would be doing better at a lower price.
My point is, raising the price on some really good DLC might work but it definitely won't work on all of them. Especially in the case of XBLA where the data dies with your hardware (yes, I know you can redownload - but for how long?).
Slang | February 6, 2008 3:14 AM
I think from a straight numbers (and developer) point of view you have a point...but I also think you ignore all sorts of psychological factors in making that point.
First of all, and the most obvious when dealing with Downloaded games, there is no physical proof of ownership. I don't care what I hear about downloadable content being the future--the fact is that people like physical property. No industry has successfully managed to convince people otherwise. Sure you have iTunes, but even that is a small slice of music sales.
In other words, as a developer you have to find someway over that initial barrier. Price is one of the best ways to do that, because people instinctively feel that if they aren't going to get a disk/box/manual the game must be worth less money.
The next barrier is audience. Do you think the average gamer even knows Aquaria exists? I doubt it. Xbox Live and PSN games are more likely to be noticed, but even there independently developed games face an uphill battle. People don't know about them. They don't recognize the names, they don't see a trusted publisher's logo. They're in essence being asked to risk their money on an unproven property.
How much money can developers ask before the public decides the risk isn't worth it?
This is an important point that affects even major titles that don't have recognizable brand (Psychonauts anyone?).
Ultimately for independent developers I think it's almost more important that they get their name out there then that they make a huge amount of money.
Matt | February 14, 2008 3:22 PM
I actually have to disagree with the analysis. While I can certainly see some of the games at more expensive price points, a lot of these games have been making >$1,000,000 gross even at the $10 or less price point.
It is very important to remember that, regardless of market precedent, the law of demand still applies. The higher the price, the less people will buy a game. Since the distribution costs are so incredibly low, it can often make more sense to sell lots of copies for small amounts than a much smaller number of copies for a higher price. This is especially true when it comes to building a solid fanbase.
I can say that for my personal spending, $5-10 is something I can buy based on having fun with the demo with little consideration, but a $20 purchase is something I would have to weigh against other options. While I won't say it definitively, I would wager coming under this "impulse buy" price point leads to much higher success.
Bill | February 24, 2008 10:04 PM