Over the weekend I released a game that represents many hours of work, most from my own spare time: an indie puzzle game for iOS titled Connectrode. The release of the game is a big moment for me and I could probably write 1,000 pages about its development...! But instead I'll restrain myself and just use the game as a springboard to blog about some related game development topics I've wanted to blog about. Today I'll talk about the business side of things... and especially the state of the iOS App Store.
I'm selling Connectrode for $.99... and though that price is a fact I've long accepted, that doesn't mean it's one I'm happy about. The fact is that the current state of the App Store left me no choice but to sell my game for $.99. Why is that the case, and how did the App Store get that way? Is the price erosion that's occurred there an inevitable fact of digital distribution, or could another system have prevented that phenomenon? Is my game really worth less than a pack of Altoids?
I absolutely believe that I've made a very high-quality puzzle game, worthy of comparison to classics of the genre such as Tetris and Dr. Mario, as well as modern gems like Drop7. I'm also very proud of what I've accomplished just in designing a fun abstract puzzle game: creating any type of gameplay that is truly "easy to learn, difficult to master" is a difficult feat. I'm also very proud of the work that my ragtag team of Austin-based indies has done in creating excellent art and audio for the game (I particularly love the music, by David Pencil, who did the soundtrack for Penny Arcade: The Series season two).
Yet the fact remains: I'm selling the game for less than the cost of a burrito! How did things come to this?
The current state of the iPhone market has been described well before, and it's been this way for a long time: read How to Price Your iPhone App Out of Existence from 2008, or this post from 2009 by Adam Saltsman about Canabalt pricing instead. (Small world: Connectrode uses the Flixel iOS engine that Adam's company used for Canabalt and which he was kind enough to later open-source.)
But the bottom line is that I have little choice but to release for $.99, and I feel a bit dirty about it... and not just because I'm giving away a quality product virtually for free. I see developers launching quality games at $.99 as increasingly damaging, not just to the iOS market, but to the entire games industry. Reggie of Nintendo raised these concerns, and I think that such statements are more than just Nintendo lashing out at its mobile-game competitors: it's the perspective of a company that's been in this business a long time, pointing out business practices that really are not only unsustainable, but actively damaging.
A big part of why this problem came about is simply that many small indie app and game developers are not very business-savvy. Their understanding of economics goes as far as "if I sell my game for less than this other guy, I'll probably sell more; and since it doesn't cost me anything more to make each copy, I can easily make up the difference in volume."
There's several flaws with this logic, and one of the big ones is that price sends a signal.
- If game A is $5 and game B is $1, customers are going to take this alone as a sign that game A is of higher quality, and worth more, than game B.
- Even taken alone, if game B costs $1, customers just aren't going to perceive it as valuable. We can't sell games for less than a pair of socks forever and expect people to treat what we're producing as works of real value (commercially or otherwise).
My concern (and Nintendo's) is that this perception is carrying over beyond the mobile app market; when polished games stuffed with dozens of hours of gameplay (such as Angry Birds) are being sold for less than a box of Kleenex, how long can we expect people to continue paying $60 for a AAA that provides dozens of hours of gameplay?
We're not just eroding prices, we're eroding the public perception of the value of what we do.
So what would a digital-distribution market look like where this decline wouldn't have happened?
A lot of people complain about the App Store being too much of a closed platform, and that it is too tightly controlled by Apple. But my contention is the opposite: Apple (who really does know better) should have controlled the market more, to prevent the classic "Tragedy of the Commons" which has run its course. The market could have been healthier for everyone if Apple had not let developers simply release their game for the minimum price. Instead they could have:
- Required developers to release their games for something close to the maximum price the market would bear, say $10 (depending on the scope and nature of the game).
- After a while, encourage the developer to put the game on sale for $5 briefly; and help the developer arrange for the game to be sold in "value bundles." Note that these are always couched as being a sale; this sends a completely different message to consumers that doesn't degrade perception of the game's value.
- Eventually, as time passes, the price on a game could be gradually dropped, until it reaches a "bargain bin" minimum price of $.99.
This is the strategy that 99% of businesses actually follow in pricing products, because 1) it actually captures the most money in the market and leaves the least money on the table; and 2) it maintains maximum public perception of what the products are worth. And guess what, one digital distribution market has done exactly this, to terrific success: Steam.
Unfortunately when it comes to business decisions, I have to be a realist, not an idealist; I decided to release my game for $.99 because that's the reality of the current App Store market, and because I believed I had a product whose quality gave it a chance of being one of the lucky few. Pricing my game higher wouldn't accomplish anything to stop this trend... But what I can do is try to draw attention to the problem; point out the alternative pricing strategies we developers could have followed; and hope that future digital distribution markets learn from the mistakes of the App Store.