Game Design, Programming and running a one-man games business…

The inconvenient truth about indie game sales revenue

cliffski

Did you know that 95% of the money an indie game makes comes from when that game is on sale and highly discounted? Some pundits put this at more like 97%, although I do hear that other people claim it be 98%, which is nonsense because we all know that 99% is the real figure right? After all, we’ve all seen those exciting steam charts with those big spikes haven’t we? And sales are just GREAT, people on twitter and other social media go bananas over them. they have mini-games and memes. Everybody knows that the way to make money is to put a game on sale! sale! sale! not just 95% off, how about 99% off…etc.

SaleSign

Exciting stuff, which is slightly undermined by it being dead wrong. Like most slightly autistic numbers geeks, I can’t help but crunch the data. Lets look at Democracy 2 sales on a large online portal.

The game was priced at $19.95.  Clearly this is total madness for an iconic, old, 2D strategy game, so presumably nobody bought it full price?

Actually 52% of it’s money came from full-price sales. And that’s a low-ball figure because there was a launch discount (which I don’t even do any more). I suspect it could have been higher. This was an old game, already sold for years from my site, so the real hardcore fans already bought it, yet 52% of new customers grabbed it at full price.

At 25% off, 15.5% off the income was generated

At 50% off (bargain!!!) 17% of total income was generated

at 75% off (amazing!!!!!!) 14% was generated

I see those big exciting spikes in sales reports as much as the next person, but it terms out we humans SUCK at making sense of charts like that. We also get lured by the thought of lots of players, rather than actual income.

Another thought worth considering is that at price X, you sell copies to everyone who would be happy to pay X or more. So what that means is that when a game is 75% off, a fair chunk of those buyers might have bought at full price. They aren’t going to donate the other 75% of the money later. Maybe only a few of them are in that position, but you need four sales for each of them to match the revenue…

Sales make money. Sales are good, they allow you to sell to people on the fence, or with less cash. I’m not knocking sales. But when your entire marketing strategy is based around discounts and sales and shoveling your game out as cheap as you can go, you have to ask yourself if you actually ever checked that strategy was working.

 

14 thoughts on The inconvenient truth about indie game sales revenue

  2. Did you see those posts Valve made awhile back when they were in the early stages of experimenting with sales on Steam?
    They pretty much came to the conclusion that sales sell more copies at a relative rate (you sell more but make the same) if not heavily marketed.
    However if you generate a lot of hype for the sale (like Valve does) then the sale makes much more money than at regular price.

    This all comes back to how pricing something is based more in psychology than any imaginary “fair” number people try to apply to things.

  3. “They aren’t going to donate the other 75% of the money later.”

    Vaguely related to this idea, the dev of Influx noted something in a retrospective of their game:

    “One awesome thing about the Humble widget is that you can tip, and people actually do – in several cases we had strangers tipping $90 on our $10 game”

    Obviously, this is going to be a rarity, but it’s a curious thing to consider. I wonder if Steam placed a “donate to the dev” button on the library or store page of games, if it would get much action.

    (quote taken from: http://impromptugames.com/?p=483 btw)

  4. If your game includes online play, then the increased player pool may have a higher priority than the revenue, particularly if your sales have plateaued at full price.

  5. I agree in theory, but how many of those 75% off people fall in love with your game for the simple fact that they bought it? Indie games, like any other game, are a gamble. There are a lot of bad AAA games, as well as a lot of (arguably) bad indie games. So sales are a chance to try out a new game with minimal risk. If you love it, you are much more eager to pay full price upfront for a sequel. Although these type of repeat buyers are harder to quantify, I would think an indie developer wants to get his game in front of as many people as possible. Sales help that.

  6. The system is going to eventually crash & burn with the expectations of buyers when it comes to sales and discounts. Only the most impatient of players are going to buy new games released on day one because, let’s face it, we’re all using Steam to buy our games for the convenience, and it’s going to be on sale pretty quickly.

    For all the good these game bundle sites and portals do for the players who don’t want to spend a lot of money on a decent game, there is also the negative effect of player expectation. I own hundreds of indie games and, I’m ashamed to admit it, a lot of them I’ve hardly looked at because they’ve been lumped in with bundles or were just so damn cheap that it was worth the risk to pick them up without research because I’d probably get round to taking a look at them one day.

    Sure, you could argue that I might not have been someone who would have bought that game at full price anyway. This makes sense because, from the developers perspective, they have made a couple of pounds out of me when it would have been nothing if the game had remained full price. But sooner or later even the most impatient of us are going to realize that it’s maybe not such a good idea to buy that really cool game right this minute. Remember doing that last week and then noticing that it was 20% cheaper three days later? If you buy a lot of games – and someone like me, with the attention span of a gnat – usually does – then you’re losing out on a lot of savings.

    As someone who used to be pretty selective about games, I have to admit that I am turning into a sheep. I am not alone.

  7. You make some pretty unusual games. Which is good, but it means it’s not unreasonable to expect pretty unusual sales numbers. GSB and GTB have some mass appeal, but I’d say the Democracy series has considerably less.

    Consider the extreme case: Some obscure Commercial Vehicle Simulator that pays the developers’ bills adequately when it sells for 89 Euros plus another 29 Euros for each of its 2837 DLCs. I contend that it would probably not make a whole lot of money if those prices were temporarily dropped to $2.99 and $0.49 respectively in a Steam sale.

    I would be interested to see research on how many people, when a Steam sale comes around, buy super-cheap games and never play them. There’s a trope that on the last day of every sale the entire PC gaming world buys 20 games like this, but it’s possible that that segment of the market is actually trivially small. But you’d think that if it WASN’T trivially small, Gratuitous Space Battles (in particular) would be highly appealing to such buyers. Democracy, not so much, but spaceship zaps and booms, sure!

    There’s also the “for this price, why bother pirating it?” market segment. Again, I’ve no idea how big it is, but the total PIRATE “market segment” is pretty god-damned huge for every game of any popularity, and any of them that decide to be paid users instead because you dropped the price to ninety-nine cents must qualify as free money, right?

    (I’m saying all this mainly to other readers rather than you, Cliff, because you’ve unquestionably thought about it more than any of us have, and I know you’ve done Steam sales and a free-weekend thing and so forth as well.)

  8. Democracy 2 is a terrible example to support your point — but maybe the only example that does support it? The game was released in 2007, and I suspect — as is the case with most games — that a large percentage of its sales happened around release. That’s 6-7 years ago. A lot has changed since then — sales weren’t as prevalent back then. Democracy 2 is also a really, really niche genre. Niche genres are known for selling (and being able to sell) at higher prices and not be as influenced by sales as other, more mainstream, genres.

  9. What you’re describing makes perfect sense. When a new game comes out and I’m sure I want it I usually pick it up at launch or shortly after. GSB was like that. I got it a couple weeks after it came out (I later bought the Collector’s edition on sale to get the DLC). Wasteland 2 is a day one for me when it finally releases. Distant Worlds Universe? Day one purchase.

    But lots of games look like they might be interesting but are maybe in a genre I don’t normally like or from a dev that has a questionable history. Or maybe got bad reviews but looked like they might be my sort of game anyway. So I just wait until they are on a crazy sale or in a bundle. If I end up not liking the game (which happens more often than not) I’m only out a couple of dollars.

    1. I want Distant worlds and almost bought it day 1 but then I looked at the price – 59.99 (discount 17% right now is 49.79).

      This is too much money – My raises at work don’t keep up with inflation the last 10 years so I consider the 49 dollar price more or less full price – consider that it will go on a better sale in a month or two I can wait. Also consider that game came out in 2010 – 4 years ago. WHY would I pay what clearly is an overpriced game?

      60 dollars for a 4 year old game is outrageous. I noticed in Cliff’s example 52% of sales were full price of 20 bucks. 20 BUCKS. I’ll pay 20 bucks for a game maybe up to 30 if I consider it triple A but no more – only a fool would pay more when the game will be a lot cheaper shortly.

      Steam has taught me a couple of things – games go on sale – usually with massive discounts. Game companies have significantly reduced costs to get the game to the masses unlike 10 years ago when they were in store space. You had to transport that game to the store which had a cost, make a box for the game which had a cost, manual which had a cost, various middlemen which had a cost.

      Now just steam takes a cut and you got rid of all the other people that were taking a cut of the profits. Game should not cost 60 dollars when they first come out and I rarely pay them.

      Having said that the one type of game I will pay full 60 price for is MMO’s. Not because I think they are worth it (I just bought Wildstar) but because I want my Character name – this to me is important and I am willing to pay more for this. I’ve used the same character for many many mmo’s because if I’m interested in the mmo I make sure I get early access and log in right away to reserve various names – don’t care if I can play due to server lag or whatever I just want those names.

      1. edit – this Distant worlds just got released (I was looking at the wrong release) but I still say the cost is too high.

      2. Games are very very hard to make and take a lot of time. The higher the production values the more people it takes to make the game and the more time it takes. Those people are highly skilled and thus make above average wages. That’s why games cost a lot of money. If everyone waited for the sales then developers wouldn’t stay in business very long.

        I paid a lot for Distant Worlds because I love the game. If the developer is going to keep working on it and patching it and eventually make a sequel then I need to support him. In return for that support there have been three excellent expansions that added lots of new content and features. I’ve probably put 200 hours into the game.

        Another thing is that Distant Worlds has no competition. There isn’t another game that does what it does. So if you like the game and want to play it you have to pay :)

        I’ll agree with you that a lot of games aren’t worth $60.00. But that’s because they are super short or poorly made or both. Alien Colonial Marines was fun for $7.00. I’d have been pissed if I paid 60.00 at launch.

        1. The problem is I have 240 games on steam right now – mostly gotten on sales for cheap – a lot of which I haven’t played yet (sure some are classics I bought on sale for my kids to play when they are a bit older that I loved the first time around like monkey island).

          Games do cost money to make – now however the money is made on the shear number of gamers that buy your game rather than high prices and low sales its low prices high sales. Never before have the so many people been able to see the game you made so easily. All sorts of costs have disappeared with the online game buying system. You now only have 1 middle man (steam).

          I’ve bought most of Cliff’s games and find them very good value (cost vs playing reward) but I would never pay anywhere near 50 – 60 bucks for them.

          One of the biggest problems I see is the number of games on steam right now – I can’t log in and look for new releases everyday just because they change so fast now – I got stuff to do like raise a family and go to work. They need to tone it down a bit. I’m also very concerned about the growing number of unfinished games that are coming out and are removed by steam after huge public outcry – I’ve decided I will no longer buy a early release game again no matter the price of it – too risky. It’s too bad that a few bad ones have ruined it for others.

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