Beating the pirates by being cheap

Everyone knows that you sell more of something when it is cheaper, the economists call it price elasticity of demand. So in the days of budget games for 8 bit home computers we sold, quite literally, millions of games. At one stage at Codemasters we had over 27% of the total UK game market.

But there was also another mechanism coming into play here. At the time piracy was rampant. Vastly more games were being stolen using tape to tape copying than were being bought. But the budget games were so cheap at £1.99 (later  £2.99) that they were hardly worth copying. For a bit of pocket money you could have the real thing.

Fast forward to today and we have a retail boxed PC game sector that is being torn to shreds by the thieves. Many publishers have abandoned the market, sharply reducing the amount of new titles available. And the price mechanism is in play. These games are sold for lower prices than their console equivalents. Partly because there is no license fee to pay to a platform holder and partly to give better value to discourage piracy. But even this is not working.

Because PC games are not controlled by a platform holder the publisher can do what he wants. This means that they can have a second bite at the market by re-releasing games at budget when the full price sales have died down. This is good because even people who have stolen the game previously will be tempted to splash out a small amount to own the real thing. Also it has the benefit of damping down the secondhand market, which has to be good from the publishers point of view. So PC budget gaming has grown to be a significant part of the market.

But now we are seeing a significant shift. Increasingly publishers are not bothering trying to sell a game at full price. Piracy has just made this a waste of time. Instead publishers are going straight to budget. So we are now in exactly the same position as we were with 8 bit home computer games on cassette. Budget has become the only viable business model for stand alone boxed PC games at retail.

4 comments ↓

#1 Robin on 11.25.08 at 11:43 am

“Many publishers have abandoned the market”

Can you name any?

#2 Bruce on 11.25.08 at 12:23 pm

How about Microsoft?

http://thoughtsofarandomgamer.blogspot.com/2008/09/microsoft-to-abandon-pc-gaming.html

#3 BC on 11.25.08 at 1:49 pm

“These games are sold for lower prices than their console equivalents. Partly because there is no license fee to pay to a platform holder and partly to give better value to discourage piracy”

No …that’s PURELY because there is a licence fee to pay to a platform holder.

How about the budget charts do well because they are the only games that can work on the majority of PCs that people own?

How about budget niche games are only possible on PC?

How about games in general are too expensive so things like second-hand sales are a necessary evil to get people to keep buying a variety of games?

#4 Robin on 11.25.08 at 3:53 pm

“How about Microsoft?”

Microsoft have only published ten PC games in the past two years (including expansion packs and rereleases), most of which have been late and poorly converted Xbox ports. They have never had a significant PC presence beyond franchises like Age of Empires and Flight Sim. All of MGS’s resources have been focused on Xbox.

Their PC version of Halo 2 was two years late and required Windows Vista. Do you think piracy is Microsoft’s main problem here?

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