[Image Credit: Martin Abegglen, Flickr]
If there’s one word that excites PC gamers, it’s “sale.” Humble Bundles and Steam promotionsoften drive people to buy more games than they know what to do with, which can be lucrative for game developers. Still, it’s not so clear ifsales are a good or bad thing for devs.
Will your sales be cannibalized? Are bundle sales worthwhile? When should you put your game on sale?
Let’s find out.
Likely the biggest fear developers face when deciding whether to put their games on sale or not is cannibalization: will they be selling their game for less to people who would otherwise pay full price? It’s difficult to definitively answer the question since A/B testing isn’t exactly feasible in this situation, but we’ve found some postmortems written by game devs that suggest cannibalizationisn’t that much of an issue, if at all. In fact, sales appear to act as CPR for revenue.
Orange: Copies Sold Per Day,Dark Purple: Cumulative Revenue
Take indie gameDustforce, for example. Sales started off strong when it launched, then tapered off over a four month period.
By the time April rolled around, sales had dwindled to “a dozen or two sales a day.” In May, however, the game was included in a Steam Midweek Madness promotion at 50% off, and Dustforce for Mac was released (along with a custom level editor and server). Between May 1st and 3rd, the game brought home $95,505 in revenue thanks to 17,462 sales, more than they had sold in the first three days of their initial launch. “Of course, at 50% off, the revenue was a bit less, but it was still an instant 37% boost in lifetime revenue.” After the event, sales returned to roughly their pre-promotion rates.
Orange: Copies Sold Per Day,Dark Purple: Cumulative Revenue
Note that Humble Bundle sales numbers only account for copies of Dustforce that were activated on Steam.
In September, Dustforcewas included in Humble Indie Bundle 6, which resulted in an enormous boost in sales. Between September18th and October 2nd, the game had sold 138,725 copies and pulled in $178,235.
Discountsalso breathed new life into the Diablo-style game Torchlight. Originally launched in October of 2009, a Steam Summer Sale helped it hit its second-most successful day in terms of sales.
Steam sales stats for indie game Monaco provide some clearer insight into how much an issue cannibalization is.Despite the fact that Monaco was included in370,034 Humble Indie Bundles, its sales on Steam during the same period of time didn’t flatline or suffer.
“This chart shows gross revenue of sale on Steam (not Humble Bundle) over the last 31 days,” Pocketwatch Games Founder Andy Schatz explained in a bog post. “The Humble Bundle started on the 18th. Despite the huge number of units that we sold in the Humble Bundle, it doesnt appear that our presence in the HIB affected our day-to-day Steam revenue.”
“Why is this? My guess is that customers tend to be loyal to sales channels. Customers that buy from Humble Bundle tend to only buy indie games from there, and customers that buy full priced games on Steam probably dont know about or dont care about Humble Bundle.”
The evidence we’ve found suggests that promotions provide bursts in salesonce a game’slaunch momentum has died down. In other words, sales promotions breathe life into revenue rather than eat away at future profits. If you’re an indie dev with limited reach, discountsare an indispensable tool for getting your games in the hands of people that wouldn’t have seen it or weren’t willing to give it a shot.
Success stories from other developers might not be enough to reassure you that putting your baby game on sale is a soundidea. If you’re still not convinced that sales are largely a good thing, remember that they’re not necessary. You could avoid discountsentirely like developer Jason Rohrer, who took a Minecraft-like pricing approach to his game, The Castle Doctrine. The game’s final price was set at $16, but it underwent a two-phase sale period before reaching it. During alpha testing there was a 50% discount, then launch week only had a 25% reduction. Since the end of its launch period, The Castle Doctrine has remained at $16 and hasn’t had a single sale.
“For the fans, this is a great thing, because their die hard fanhood is rewarded with a lower price, almost like a secret deal for those who knew about the game before anyone else,” Jasonexplains. “When the price goes up later, they feel smart. Most importantly, they don’t feel torn between supporting their favorite developer at launch and saving money. They can do both.”
“So, the rising price model is really just an inversion of the sales model,” Jasonadds. “You get revenue spikes later in the life of the game, right before announced price hikes, which are very similar to the spikes induced by putting a game on sale. But there are no surprises, so no one feels screwed by the process.”
This methodalso addresses the devaluation concern: people may refuse to buy a game at full price if they know it’ll go on sale eventually, and they might drive prices down across the board in the long run. What’s more, it helps grow a community of players early on, which is important for games with online multiplayer like The Castle Doctrine.
On its first week on Steam, The Castle Doctrinesold 6,546 copies, earning $78,562. Since the start of its alpha in March of 2013 tothe end of its launch week (January 29th, 2014), the game sold 8,919 of copies directly through its website, which accounts for $73,077.
Since The Castle Doctrine launched almost exactly a year ago, we asked Jason how the game has fared. Here’s what hehad to say:
The Castle Doctrine has now grossed $151,077 on Steam, with 10,657 units. Off Steam, through my own website, it has grossed $84,405, with 9,649 units. Many of those off-Steam sales were at the lower price (the price rose over time). After all fees, the net for The Castle Doctrine is $182,597.85.
But here’s the important thing. How many people actually played the game? I can see how many people logged into the game at least once based on the number of houses that were created on the server for the Steam accounts: 10,541. That’s 99% of the Steam purchasers actually playing the game. If the bulk of those purchases were made during sales, I’m certain that percentage would be much lower.
Now, compare this to my previous game, Inside a Star-filled Sky, which did participate in lots of Steam sales over the years, and made a good portion of its revenues through sales. It has now grossed $91,155 on Steam, though look at how many units were sold on Steam: 18,689. Way more units, way less money. Off-Steam, that game sold only 4,047 units and grossed $33,759.61.
There are other differences between those two games, including price point and media attention. But clearly, not participating in sales does not spell financial doom.
If you’ve decided to put your game on sale, figuring out the right timing is crucial. Since it’s typical for games to make a large part of their profit during the first few days and weeks that they’re available, you’ll likely want to hold off on putting your game on sale until a few months have passed.
It’s during this pre-sale period that you’ll want to market your game as much as possible. (YouTube’s a great way to spread the word. Here are some tips on how to do it.) Once your sales have tapered off and your marketing efforts don’t appear to be making much of a dent, it’s time to consider discounts.
If you’d like to take advantage of each and every sale that comes your way on Steam, you’ll want to launch your game at the beginning of the year. That way you’ll be ready for the second half of the year, when Steam sales often appear in the Summer, Fall and Winter.
In bundle sales your game is grouped with a few others ata ridiculously low price for a limited time, and — in some cases — customers pay what they want, so long as they meet a minimumprice. AndwithHumble Bundle, customers can choose how much of their money goes to charity, game devs andHumble Bundle itself. Thesepromotionsmight seem even riskier than a regular Steam sale, but from what we’ve seen there’s much more to be gained.
Pocketwatch Games’ Monaco, for example, made $215,000 by participatinginHumble Indie Bundle 11. During the course of the promotion 493,000 bundles were sold, 370,034 of which included Monacosince it was only given to those who beat the average price ($4.71 per bundle). Impressive stats, but it means that each copy of Monacowas sold at somewhere around $0.50.
Still, these are purchases that likely wouldn’t have occurred otherwise. IfMonaco wasn’t a part of the Humble Bundle, its sales trajectorywould likely have remained relativelyunchanged — barring marketing and word-of-mouth miracles — consideringit had launched 10 months earlier. What’s more,Steam sales didn’t take a dive as a result of the bundle promotion.
Green:Cumulative Net Income
After one year of sales, the Dustforce devs made $489,404 in profit of$668,490 in revenue.
For Dustforce, Humble Bundle boosted sales and revenue more than its participation in Steam’s Midweek Madness and Holiday sales. What’s more, participating in a bundle with the popularity ofHumble Bundle might be more effective at marketing your game than a Steam Sale. At least it was for the Dustforcedevs, who noticed an increase in Steam sales after the bundle sale, but not after the Steam promotion. “With such a huge boost in the number of people playing Dustforce, the amount of daily sales jumped up from under a dozen to around 50 or 60 copies per day,” says Hitbox Team’s Terrence Lee.
That said, it’s important to set yourexpectations according to the popularity of the bundle’s organizer. Expect to see plenty of sales if you’re part of a Humble Bundle, but temper your expectations if you’re in a sale organized by a smaller organization.
If you’re wondering exactly how revenue is distributed in Humble Bundles, the Pocketwatch Games team says it “typically ends up being the default distribution of 65% developers, 20% charity, 15% humble tip.”
Naturally, Steam is the best place to put your games on sale. It already hasan audience of sale-hungry gamers — all it needs is your game. These are the biggest sales Valve’s marketplace hosts:
Valve also holds Daily Sales, Mid-Week Sales and Weekend Sales, as well as other promotions throughout the year.
Humble Bundle is the king of bundle sales. Customers can choose what percentage of their money goes to developers, charity and the Humble Bundle company itself.
Bundle Stars is fairly active and uses Steam to fulfill its games.
Groupees sells bundles with games, music, ebooks and videos. Developers can even distribute their games on Groupee using keys Desura, Steam an GOG keys.
Indie Royale was started by the folks behindDesuraandthe blog IndieGames.com. As its name implies, it focuses on independent games. The majority of titlesare provided via Desura, but some are available through Steam instead.
You can take a page out ofJason Rohrer’s playbook and put your games on sale through your very own store, which you can do using Binpress. That way, you won’t have to send 30% of your revenue to Steam or another marketplace.
If you’ve put your game on sale, let us know how it turned out in the comments. Did we miss a good place to put a game on sale? Let us know and we’ll add it above!
Posted in Game Development