Opinion: Console Downloadable Games? Too Cheap

In this in-depth, stat-filled editorial, Gamasutra publisher Simon Carless makes the argument that the original downloadable console games for Xbox Live Arcade and the PlayStation Network are priced too inexpensively for creators to be completely viable a
[In this editorial, Gamasutra publisher Simon Carless makes the argument that the original downloadable console games for Xbox Live Arcade and the PlayStation Network are priced too inexpensively for creators to be completely viable as a continuing business model.] So, I'm going to imagine that this may not be one of the most popular opinion pieces I've ever written, given that it advocates that all you wonderful XBLA and PSN consumers should be paying more for your downloads. But here's my underlying thesis - that after the 'honeymoon' period when there are only a few titles on the services garnering larger amounts of downloads, the $10 average pricing for downloadable console titles may not enough to sustain indie developers - especially given that games are often barred from appearing on rival networks. In fact (and this is especially true in the case of PlayStation Network downloads, which are often priced ridiculously low compared to the amount of work that's gone into them) console downloadable pricing seems to have started as a loss leader for hardware companies, as they set a precedent with first-party financially supported titles in order to persuade consumers to buy their game systems. And now we've got stuck in a bad price point for creativity. Of course, the difficult thing here is a frame of reference in estimating sales for the various systems. One good arbiter is the info that ThatGame Company's Flow has sold 120,000 copies on PlayStation 3, at least as of September 2007. As one of the most-promoted and most critically acclaimed titles on the system, with only around 30 titles available, this is a good high-end figure for PSN sales, I think, especially given lower installed base and a less obvious downloadable game element to the PlayStation Store. As for Xbox Live Arcade, the generally held view is that early XBLA titles were pretty much guaranteed 50,000-100,000 purchases, thanks to the small amount of games on the system - even if an original IP indie title. And well-known franchises can still do well - it's been claimed that Worms HD sold 200,000 copies in just the first couple of months. Probably the best documenter of Xbox Live Arcade sales - as long as their calculations are on the money, and they look close enough to me - is the VGChartz Xbox Live Arcade countdown, which is created by extrapolating MyGamerCard info. It reveals the vast majority of games spanning 15,000 to 400,000 sold. However, a lot of the swift-selling games are from the early days of Xbox Live when there were plenty of hardcore adopters and little choice. There's now over 110 games on the service - and the results can start to be pretty obviously seen in recent charts. There are some great indie success stories in there, but there are now so many games available that recent titles are slowing down majorly. For example, Switchball has allegedly sold 41,439 since its November release, and Mutant Storm Empire a disappointing 24,708 - with the high score tables I've checked out for the game indicating it might be even less than that estimate. The most famous example is Jeff Minter's Space Giraffe, which was confirmed at almost 10,000 downloads in less than 2 weeks, and seems to have limped along to an estimated 17,103, with an overall gross of $85,515. Another mistake some people make in looking at these possible '$$$' numbers is presuming that this means a 'profit' of that much. Let's take Mutant Storm Empire as an example, with $247,078 listed as revenue in the VGChartz estimates. But obviously, Microsoft takes a percentage of this for allowing you to put your game on XBLA. Let's say that percentage is 30% (a figure given by Team17 since they self-published Worms - it may differ for 'first-party' games). This leaves $173,000 in revenue flowing to the developer. But there's an immense amount of complexity and necessary payment in both testing and localizing an Xbox Live Arcade game, and the burden shouldered by developers is reportedly as high as $50,000 per game in terms of getting proper bug reports, making sure the game is localized into the correct amount of languages, and so on and so forth. So that would take the developer cut down to perhaps $120,000 - which is an incredibly small amount for making a complex professional game from scratch with multiple development staff. If you go through a publisher (with THQ and Sierra being two of the ones signing up XBLA titles recently), the numbers look even worse, with many of those titles clearly not paying for themselves. Having said that, there are some notable success stories - such as PinballFX, which looks to have grossed $2,494,772 so far, according to VGChartz. And XBLA execs were revealing 156% average financial return over 12 months for Xbox Live Arcade titles published so far in August 2007. But I'd love to know what that figure is now over all games and especially over non-remake, non-retro titles. The problem, as I see it, is that setting a $10 precedent for what are often complex, multi-mode, multi-level games presumes that you can pretty easily get to 100,000 units sold - given that you only get 70% of revenues and that most games probably cost in the low to mid hundreds of thousands of dollars if you're actually using hired staff that you pay and take a year to a year and half to make it including (lengthy!) approval processes. Given the amount of games flooding onto the service, I'm not sure that's quite so easy now. And it's just going to get harder. Casual PC games cost $20, and are often as or less sophisticated than console downloadable titles. Why is it that games that try to price themselves at $15 on Xbox Live Arcade are considered 'out of line'? Having said that, of course, the average developer makes only $8 (40%) on a casual PC game download, and the average XBLA developer would make $7 (70%) on a $10 Xbox Live Arcade game. But the complexity of having to make fully featured online modes for consoles, the cost of devkits and console-experienced staff, and so on makes a major difference - as does the months of testing that get done at the end of an XBLA cycle to meet rigorous standards. And it's likely that Microsoft is eating some significant costs there by being so generous with royalties. By far the best example of taking a stand on pricing on PC is Bit-Blot's 2007 IGF Grand Prize winner Aquaria, a complex story-based action title which can nonetheless be compared to a number of XBLA games, which the developers are selling for $30 on their website - meaning that they get 100% of the money when you buy it, actually. So just 10,000 sales for them would be the equivalent of selling nearly 50,000 copies of your game at $10 on Xbox Live Arcade. The Aquaria folks have die-hard fans who will pay that fair amount. And $30 implies value, and less disposability. In fact, you may play the game longer if you shelled out a little more for it. You see where we're going here? Of course, we're not suggesting that those simple retro remakes need to cost that much - on name recognition and ease of creation, $5 (or maybe, hey, $8 or something) works perfectly well for them. But I honestly believe that the best way for folks like Jeff Minter to make money to keep going is to play to the fanbase and charge accordingly. I bet you he would have seen at least 10,000 purchases of Space Giraffe, even at a $20 price point - and it would have put him in a much better financial position to keep making games for his fans ($200k grossed instead of $85k). This method is what Japanese super-niche console game developers do when they put out their bricks&mortar retail titles for $20 more than the average game (perhaps with some fun extras along the way). OK, but here's the capper. Microsoft's GDC keynote is coming up, and Chris Satchell has hinted at an XNA community publishing platform for the Xbox 360. If (and this is a massive if) it's going to be as easy as making a game using XNA Studio and pushing it out to the masses with a price tag attached, then we're going to get a massive array of games at a gigantic array of pricepoints. It might be incredibly disruptive, but it also might encourage larger pricing diversities. If the concept can fix or even bypass some of the complexities of the testing and approval process, it'll mean that swiftness to market could bypass a lot of the worries listed above. But this still raises the question - who is going to be man enough to step up with a prominent project (let's say, picking one out of the air after an IM chat with a buddy, Castle Crashers) and say 'No, guys, this game is really worth $20, and you're going to get that much enjoyment out of it'? I think it should be done (over and above titles like Puzzle Quest sneaking up to $15), and I think it would help stabilize the console downloadable ecosystem, even if users might not appreciate it up front. But heck, we all know it's probably too late.

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