Right but demand runs out.
that's x amount of copies sold at whatever price that could've (should've?) been sold for higher.
Truth is, these PWYW bundles aren't an accurate reflection of supply and demand at all - which is the mechanism that determines what something is worth.
Anyway i'm enjoying Saints Row 3. Damn i'm getting smoked left and right.
Last edited by hamster; 03-12-2012 at 03:36 PM.
Not necessarily: the lower your price, the more it will be in demand from the people who wouldn't have considered it, had it cost more.
It is a complex subject, but let's just simplify things:
For major publishers, the "most important" sales are for new games. Everything else is just new profits.
While these are great games, all of them are over a year old (I assume SR3 is, but someone can check the dates for me). At the very least: They either made back development costs, or were viewed as losses in a previous quarter. So these are in the "yay, profits" category.
So assuming the cut Steam takes/the cost of requesting new keys is sufficiently low, almost all of this is just profits to boost the current fiscal quarter/year's numbers. Which are good by the way the magic stock market works.
Could they make more money? Of course. But it gets good publicity and is getting a lot of "pity" purchases from people who already own everything.
The version they're selling on Humble Bundle is going for an average of maybe €4.50. They've sold nearly half a million units or there about in the last few days? And a lot of people seem to be buying this bundle just for SR3. They need money now, it's helping raise their stock prices and it's making them look a little healthier. Sure, they could've waited to sell at a higher price, but who knows how long it would take them to sell half a million of any of those titles, or even all of them combined.
Here's a blog that explains the supply and demand better than I can:
Basically, by getting every customer to pay what they think is appropriate or are able to pay, they get far more customers and some customers still pay the full price. In the case where the games have been out for some time, a lot of customers have already paid the full price, which makes this model even more attractive. Also, like all sales, this will probably raise the demand for games outward (as people talk about it to their friends who aren't interested) giving them more sales once the bundle is done.
More simply think about it like this: X amount of copies were sold that would have eventually been bought at a higher price. Y amount of copies were sold that would have never been bought. If Y*HBPrice>X*SteamSalePrice, then it was the right decision in both the short and long term. Since most of these games have been out a while and gone through multiple Steam Sales (I'm using this as an example for sales in general), it's likely that Y is pretty high and X is pretty low.
Finally, Metro Last Light is coming out soon. They double their current profit (effectively doubling the average price) from this bundle for every 80k new customers this bundle convinces people to buy it new or for every 120k customers this bundle convinces to buy new rather than waiting until it's $20.
Last edited by Internet; 03-12-2012 at 05:47 PM.
Supply and demand isn't applicable as supply is infinite (therefore price should tend towards zero) which isn't how digital markets work.
All the games were 75% or more off in various Steam sales. It's no co-incidence this happened just after a big Steam sale, where people waiting on 75% off SR3 will have already got it.
It's not even necessary - or even logical in this case without hard numbers - to draw a diagram. At the end of the day it's about price elasticity which is a fairly simple concept: and in my opinion they are under-pricing.
They've sold over half a million copies of this bundle. The minimum people can pay is $1 and the average is over $5. Let's not forget that all that money might not even go to THQ. Everyone who buys the bundles could send all the money to Humble Bundle or to charity and THQ might not see a cent of it.
So if that happens what have THQ actually gained? Well first of all everyone who paid over the average now has a copy of Saints Row 3. As I previously stated, that game was on sale just last week for $10 for it and all the DLC or $7 for just the game. Anyone who has paid over the average either thought $7 was too much and weren't pushed, or they bought the bundle for something else and gifted Saints Row to someone. What does Saints Row have? Well it's got a tonne of DLC available for it. That DLC will be in a bundle at christmas time. If those people who bought the Humble Bundle for Saints Row end up liking it enough, they might buy the DLC at christmas. That DLC money can't go to charity, it's going to THQ.
Additionally, you get Darksiders. Which also has a sequel available. People who bought the bundle even for $1 might like it enough that they go and buy Darksiders 2 (which also has DLC). Again, that money, is going to THQ.
Metro 2033 has a sequel coming out early next year. If enough people who bought the bundle like it enough they might be more inclined to pick up the sequel at launch. Company of Heros is in the very same boat, it's got a sequel coming out.
This bundle is like Nintendo, Microsoft and Amazon selling hardware devices at a loss, with the intention that once people buy the Wii U, Xbox or Kindle, they'll buy software for it, which is where the money is.
THQ are trying to entice people now by selling that bundle at what could be perceived to be a "loss" if we were to assume all 600,000+ buyers would even buy one of those games at full cost let alone all games at full cost, with the hope that they'll like it enough to buy the DLC, buy the sequels and give THQ a much needed cash injection to help it look healthy.
Also, that was just a concept piece to show how pay what you want models can work. Economists use things like that to explain the basics all the time, even the textbooks.
At the end of the day it's a fire sale that makes them look more attractive to potential buyers, with the added benefit of advertising for their new games. Considering how much publishers spend on advertising, I wouldn't be surprised if this was surprisingly lucrative for THQ even considering how much they potentially didn't sell (which was probably low because the games were oldish and had been on sale multiple times for prices approaching the minimum).
Last edited by Internet; 04-12-2012 at 02:29 PM.
Frankly, anyone discussing this or other bundles/games sales on the assumption of rational agents, is doing it wrong.
Last I checked, sales figures only list "how many were purchased" (and only in a vague sense), not "how many people wanted to purchase". Otherwise, the already simple math of economics would actually become as trivial as that which is taught in Intro to Economics.
We can keep hoping that current trends continue, but to pretend there is hard evidence is naive at best.
And WoW is a special case for reasons that should be obvious. Many people play it socially and the like. Ironically, the MMO somehow became the "Bonding" game. Hell, weren't there a bunch of news stories of companies using WoW for "team building" exercises? I actually think it is safe to say that there WERE more units sold than there were "gamers". But WoW also changed the definition of what a "gamer" was, in many ways.
And that is another thing to keep in mind. There is such a thing as target demographics. Paradox could give out free copies of Crusader Kings 2 and there would STILL be a huge portion of the market that wouldn't care. MS could give out free Halo 4 and a lot of people wouldn't partake.
Using the posts in this thread I now feel like I could fix the economy of Africa singlehanded now.
Well, the US market has dropped significantlly since 2008.
UK 2011 vs 2012
The one problem tho with NPD metrics is they are for Retail only, not digital. Other than publically traded companies listing their digital revenues (up), no one really has a good overall sense how much money is there. More and more private game companies are able exist now. Its easy to get a mobile game made and listed. So much now is into digital be it MMOs, F2P, mobiles, etc. Valve is known to have the highest revenue per employee. And they are essentially almost all digital.
Not sure how accurate this is.
But has some sources on the bottom.
The main problem with such stats these days is that it's virtually impossible to get accurate digital distribution stats. Certain key companies like Steam never give away their stats, and without those stats, you cannot create an accurate picture of the whole thing.
Last edited by BlackAlpha; 04-12-2012 at 08:51 PM.