The Industry Average Game Price Dropped to $5-$10: Have Casual Games Become Fast (Junk) Food?

The major game portals are offering downloadable games for less than $10. In the past, it was said that $20 is the “industry average”, but now it seems that $5-10 is the industry average for downloadable casual games. This means one hamburger (junk) meal now costs the same as one average casual game. Hopefully the downloadable games are not seen as junk…

Big Fish Games has their games pass that let’s users buy games for only $6.99 (volume discount). Amazon is now selling games for $6.99 or $9.99 (those are Reflexive games). Playfirst offers games for $9.99 (with game pass). GameHouse is selling games for as low as $5.99 (with FunTicket). And if you check out other big game portals you’ll see similar prices.

James C. Smith – Producer/Lead Programmer points out that:

Customers see the sames game on many or all of those systems and compare the prices.

You can buy Jewel Quest II…

* …for $12.99 as a boxed copy from Amazon.com (or about the same from Target or Walmart). This is a typical price for a casual game in retail
* …for $2.99 as an iPhone app. This is a typical price for most iPhone games
* …for $10 as an XBLA game for 360. Typical for playform
* …for $5.99 as a subscription download from Big Fish (It’s actually $6.99 by the way)
* …for $9.99 as a digital download from Reflexive.com
* …for $9.99 as a digital download from Steam (they don’t actually have Jewel Quest II but most casual games on Steam are $9.99)

When people are used to paying $10 or less for download games on Wii, XBLA, iPhone, and retail they are going to hesitate to spend more for a PC download. I really don’t see this as a portal price war. It is portals catching up with mass market expectations.

After a bit of thinking, I have to admit that I agree with James here. It cannot be said that this is only about a portal price war. It’s more like “price war” against other (non-casual/downloadable games) markets. By lowering the price casual games have better chances to gain a bigger market share in the games market. It could very well be that this move (price reduction) can actually bring more people to the casual & downloadable games market.

New PC games cost $50ish when you purchase them as digital download. New Playstation 3 games cost even more. When people see that more and more casual (and indie) games are being sold at $5-10, the chances are that some of these folks will start to think if they really should be buying more casual type of games. (the moment that average Joe Gamer’s parents get to really know this option, you can rest assured they will be happy to buy casual games for their kids)

Does this hurt portal sales?
I don’t think so, in fact, I think it can be the opposite if they gain bigger market share (and can increase the volume). There’s some price testing done, and some games have bought more revenue with smaller prices. Some games have sold more with higher price. It depends about the game and the offering. Since portals are selling almost all games with the same price, there’s no much room for individual game price testing. On the other hand, portals have been extensively testing the prices and have came to the $6.99 / $9.99 price point because it’s optimal for them. They might be selling more copies, and if this lower price helps them to gain more market share (away from consoles, non-downloadable games – and even totally new markets) it can mean bigger profits for casual developers.

So, developers will profit?
Well… yes and no.

It’s true that development costs have gone up. It’s true that more developers are getting under the wings of big portals. It’s true that direct selling can get trickier. It’s probably true that developers will start to think more about alternative ways to generate revenue (free game, ads, micro-purchases etc.) It’s also true that if portals manage to expand the whole casual games market size (which is quite likely, although it’s difficult to predict how much it will grow) then it can be good for developers.

If there’s 200 million buyers instead of 100 million buyers in line for games, then naturally it can help gain more sales. Of course it can mean that there will be even more developers fighting for the crumbs (so to speak), but I believe the portals are moving alongside with the customer and helping them to buy more.

It’s a massive switch. It’s a big change to go from “$20 is the industry average” to “$5-10 is the new average”. I truly hope that those $5-7 price games would come with some sort of game pass system (which basically means “volume discount”: you need to buy games worth $60-70) and hopefully the game pass could benefit developers too. It sounds healthy price reduction, and makes sure people stick to buying more. We’ll be much wiser about the effects by the end of year 2009.

What about customers?
One thing is true for sure: customers benefit. Now you can go and buy 2 games for the price of one.

Now we developers hope that the customers really do that…

Update: Jake gives some points about this issue in his blog.

You Know What Big Fish Games Affiliate System Is Missing?

I’ve been the member of the Big Fish Games Affiliate program for some time now and have promoted the program a bit every now and then. The good news are that the income has been steadily increasing (and effort put on promoting that stuff has been steadily decreasing…), the bad news are that there’s some fundamental issues with their system. It’s “okay”, but it could be much more.

Here’s some ideas that could improve their affiliate program so that people would really start promoting their games:

  • They should give detailed statistics: I guess average Guy Gamer doesn’t care how many people have played their games or whatever, but I’d say that the bare minimum essential data BFG should offer are visitor count info, clicks, pages where they go, reports about conversions (which games were sold, how many downloads) and basically the information that would help affiliates know which games are selling well. It should also give information about lifetime sales (which games the customers have tested, which they bought, when they joined through your affiliate link).

    Now almost all the info you get is close to “how many friends you have” and “how much $$$ you have earned so far”. (I know there’s bit of reporting about 2 week sales, but that’s crappy. (Right now it says to me that “Sales origin: X% from BFG, Y% my site(s)” – that’s virtually useless information, especially since “top selling games for your account” shows empty.

    I know some of this stuff can be partially handled with own systems (like “click count”, but that’s still very little and doesn’t give any information about conversions).

    Affiliates could even start spending ad money to promote the affiliate offerings if they could have more control over their accounts. When affiliates are happy, BFG is getting very nice flood of traffic (and money) from the affiliates. It’s their interest.

  • Improve the Affiliate portal: I have my own portal (took almost 5 minutes to set up). The portal is okay, the template is nice… but it’s lacking options. I’d want to clone BFG portal. I’d like to have more power to customize what I show and where (okay, I know how to program PHP but that would be something where I won’t be going – it takes time anyway). Also, they have got XML feed issues every now and then (not a biggie, but still). I realize the portal version is 0.7 (or something) so things are getting better, and I believe they are working on this.
  • Better tracking of affiliate network: I have network of people who have joined through my affiliate link but I have pretty much no idea where they joined, who they are or whatnot. I have no way of checking if there’s certain person that joined through my affiliate link. This way I could even offer incentives for people to join the PNP network through my affiliate link (and validate if they did) – and this would benefit BFG as well.

The better sales conversion reporting alone would give tremendous power to estimate “where the money comes from”, and thus would help decide how to promote the program. Now you hope to hit something when promoting the program.

I like the program (and I think it has potential), but there’s some essential features that would need to be polished to make it work really good.

P.S. I wonder what they are going to do with the My Game Space page… check out the latest news (from January 01/2008 – “Coming Soon: new rewards!” Coming soon – brand new rewards for you to choose from! Keep checking back for more updates.)