Develop Jury: Who should control digital prices?

This week’s Jury Service discusses how developers, publishers and platform holders work together on deciding the price of downloadable games and content.

Given the flexibility and popularity of price deals on the likes of iTunes, Steam and even Kindle, we asked developers:

Should platform holders give developers more responsive control over game prices on PSN, XBL and the Wii/DSi Store?

You can read all the opinions that we received, in their entirety, below.

(Develop would like to again thank this week’s panel who participated. Jury Service will be back next week with a new question for the industry. If you’re a developer who’d like to take part in future debates, ping an email to rob.crossley@intentmedia.co.uk.)

Order!

Develop Jury Service#7

Should developers have more responsive control over digital game prices?

Adam Green, Managing Director, Assyria Game Studio:
I think the reality is that the platform holders are the ones with the majority of the data on sales, and therefore are in the best position to judge the most suitable price in order to make the highest return… Which is ultimately in everyone’s best interest. In addition having one body set prices, or having "tiers" of price points helps prevent obvious under-cutting which could damage the market for everyone.

If the data was freely available then I think it would be great to let developers set their own prices in all instances, but the reality is that the data is largely kept secret and this is unlikely to change in the near future…

I have in the past managed to get a hold of some platform holder data which indicated my own approach to price points (on a particular platform) were quite frankly a terrible idea; and would likely result in a far lower return than the ideal price point indicated within the data (based on the sales data around 50% less revenue). Assuming I am unable to get a hold of this data as a developer in most instances, I would almost prefer that those with the knowledge make the decision, as opposed to me as a developer with no solid grounding for a decision essentially taking a punt on it…

Obviously this in part depends on your relationship with the platform holder as to whether they are likely to act in your best interests… If your game is similar to that of a recent game within the platform holders first-party portfolio then you could argue there is a conflict of interest in that they will make a higher return on their own products and would therefore benefit from your game not selling so well/ taking sales from theirs. But in general they stand to benefit from increased sales just as much as you as a developer, and they have access to the data to allow them to make the best decision…

In terms of "weekend discounting", I think this would benefit from being more of a joint agreement between developer and platform holder. With the developer perhaps specifying the date and duration of the promotion, and the platform holders deciding on the price (again as they are likely to have more data on it and be able to make the best call in terms of discount pricing).

In terms of which platform holder is likely to be most happy altering prices… I’ve found Sony really great to deal with, they always seem very approachable and happy to have a chat or take a look at what your working on. Which is really refreshing as a new studio such as us with not much of a back-catalogue to show off.

In conclusion; assuming sales data is not likely to be made available, the platform holders are really in the best position to control pricing in order to get the highest return possible. Having the platform holder in charge also protects the market by stopping under-cutting prices damaging the market… While as a developer it’s always nice to feel in control of your products, sometimes it is best just trusting those with the greater experience and knowledge of the particular market…"

Andrew Smith, Developer, Proper Games:
I absolutely believe that giving developers fuller and more responsive control over their prices would be a positive move for the industry.

The funny thing is, this model is ages old – the shareware ‘system’ back in the days of Wolfenstein and Doom was a proven success whereby people offered free content and then let players pay for full access – if they liked what they saw. This is currently being heralded as an exciting new way to do business (under names like ‘Freemium’, among others) but in all honesty the only reason this style of business went away (or rather was never allowed to flourish in the case of consoles) is because of platform holders and publishers holding all the power. On PC this model is still seeing great success in hidden object and casual games, especially through portals such as Big Fish Games and their ilk.

It is widely known that Steam (as well as other similar services) and the information it makes available to developers mean that seemingly crazy sales and weird experiments with free weekend deals has had some credible success. The value of bringing your old game to the front of a digital store and back into the consumer’s minds is not to be underestimated.

Similarly, it allows your marketing team (if you have one as a developer) to get some really interesting information and data on sales and consumer behaviour.

I think the biggest win for developers would be the freedom with which they’d be able to experiment. Should they want to try and model their business on shipping a lot of cheap to make and cheap to buy games – much like a lot of the iPhone games – then they can. Based on the figures they’re then exposed to the developer can steer themselves towards their strengths, following trends on an incredibly detailed scale, swiftly reacting to circumstances as they see fit, and as is best for their business.

Above all, they’ll be able to survive longer with the information and their new-found power, and more games companies alive and well hopefully means more jobs, more games and a higher quality product in the increasingly competitive market this would help to create. For too long these decisions have been in the hands of platofrm holders and publishers, and frankly they are probably not the best suited entities to truly taking advantage of this new digital market; generally they’re too stuck in traditional bricks-and-mortar mindsets to stay on top of things in this new and fast moving area.

And there’s my personal rub – this is a great opportunity for developers to make money, build quality product and broaden our market, but because of out-dated thinking and the ties that bind us to those old ways a lot of potential is being wasted.

Ed Daly, General Manager, Zoe Mode
Yes of course. While I understand a fear that flexible pricing may mean a race to the bottom, surely the logic and principles around pricing theory that applies to all other forms of commerce hold true for XBLA, PSN etc. Though some parameters from traditional pricing concerns don’t translate to the digital space (eg. we have infinite stock), without the ability to run pricing experiments in a real market we can’t learn how to balance unit price and volumes to maximise revenues. Smart pricing tactics should mean more revenue for developers and some great deals for gamers, many of whom would otherwise spend their money on something else.

James Brooksby, Studio Head, Doublesix
The simple answer is yes. We have had control over our PSN pricing for our game and all the packs, themes, Home contents and have fluctuated prices according to demand and campaigns.

Our best example of this is that we put Burn Zombie Burn into a half price promotion around the Christmas holidays and sold seven times more sales than the previous month. Now that is good business! However, I do think there should be a level of restriction regarding banding and minimums. I would not like to see too many £3.32 games, 3.49, 3.99, 2.99 is better.

And on minimums, I believe that the consumer is already getting great value for money. I would hate to see a price war that ends up with games diving towards zero price points as we have seen elsewhere, there is no business in it apart from for students and people making "CV games" and in the end the consumer/gamer will suffer.

Martyn Brown, Studio Director, Team17:
If your project is being funded by someone else (and likely published) then it’s difficult to argue that the developer has the right to name the price because they may not be fully aware of all the costs.

In our own experience, we’ve been happy enough with the opportunities to either name or discuss pricing on all the digital formats.

Owen Daly-Jones, Director, PlayableGames:
Why not link pricing to loyalty. So if a gamer buys one title from the same publishers / developers or an earlier title in a series then perhaps they can get a second at a discount.

This could be an interesting thing to do as currently one advantage of physical media is that I can trade in a title after playing it, effectively getting a discount off another title. In the digital domain there is no trade-in value and being a loyal game buying customer is not rewarded.

Patrick O’Luanaigh, CEO, nDreams:
I absolutely agree with developers controlling the price of digital content. As any publisher’s sales team will tell you, the ability to alter and play around with pricing is very important.

Fortunately, we’re given quite a lot of freedom over pricing as a publisher inside PlayStation Home, and it’s great – we can price content at the right level depending on the scope of each project. With the App Store, the ability to alter pricing allows short-term promotions which can dramatically increase revenue and the number of people playing your game.

I’m a strong believer in allowing content creators to play around with their pricing and see what works. One of the best things about developing for Facebook and other online networks is that we’re in charge of the entire finance chain; we can set our pricing as we want, and then watch the money (minus a small percentage to the PayPal or whoever) come directly to us. It’s very refreshing.