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Tomn -> RE: The Good Health of the Wargaming Niche (4/24/2013 2:54:21 PM)
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Hello, chaps. It's nice to see an official statement on this matter, and I do applaud your willingness to try and engage with what is, I will readily admit, the sometimes fickle and volatile public. That being said, I must respectfully confess to some skepticism regarding some of your beliefs (and let me state for the record, in case there’s any confusion amongst more ardent defenders, that I entirely recognize that I am pitting my opinion against theirs and that theirs has more hard data behind it – I simply hope to present a perspective they may not have considered).
The biggest point of disagreement, I think, is the question of how much untapped demand there is. If there is a large pool of untapped demand, then lowering prices (permanently for all new and old games, not as a temporary discount) will produce additional profit for Matrix and their devs and keeping them high is essentially turning down that extra profit. (For those who think that higher prices automatically lead to higher profits – there’s an optimum price point at which extra customers coincide perfectly with profit per sale to create the maximum profit for that company. Pricing above this point leads to more lost sales than profit per sale justifies, while pricing below it leads to more lost profit per sale than the extra sales brings in.) If, however, no such pool exists, then lowering prices simply lowers profits. Iain apparently doesn’t believe that pool exists, and if he is correct, his position is unassailable. But, not to put too fine a point on it, I have my doubts on the matter.
To explain my position, let me turn to Steam. Steam is commonly thought of as the Holy Grail for a great many indie niche developers – successfully getting onto Steam is something of a springboard to fame and fortune undreamed of in bygone days. Why is this so? It’s not simply because Steam prices low – rather, it’s because Steam offers unmatched visibility. Steam processes an enormous amount of customers and players, almost all of whom check the Store page for new releases. Unlike a traditional retail store, Steam has no limit on storefront – any new release, no matter how small and niche, will be on the front page for a significant amount of time, waiting for anyone curious enough to poke through it. As such, tiny niche developers who would normally have struggled to find customers will find that even 1% of a very large number is still quite large and very, very profitable for them. The revolution Steam provides doesn’t simply come about “because it’s digital” – it’s information-based. It effectively provides its games with enormous amounts of free marketing. Many customers are paired with something they love which they would never have found in a traditional retail store.
This is key. The problem with all but the most truly obscure niches is that they can’t easily find prospective customers, but the vast visibility that Steam (and others) provides ties that problem up quite neatly and throws it away. Even small niches balloon remarkably when exposed to the gigantic billboard that is Steam’s front page. And wargaming is not a very small niche at all – after all, it can clearly support an entire major publisher dedicated to it. To claim, then, that Matrix Games has ALREADY captured the vast majority of anyone at all who might be at all interested in more complex wargames seems a little far-fetched to me – was Matrix Games’ marketing so efficient and so well-targeted as to have successfully found and scooped up everybody willing to put down money on wargames in the pre-Steam age?
The Steam Greenlight you brought up actually suggests otherwise. Certainly you’ve gotten a lot of “downvotes,” but it’s important to realize what those downvotes mean – nothing more than that those people would not be interested in buying the game. As a niche publisher, this should be familiar territory – nobody is expecting you to outsell Call of Honor Effect 4, after all. What is much more important is how many people voted yes, they would buy the game. 40% or even 20% of enormous is still quite significant, and very strong for a “niche” product. How does, for instance, the number of upvotes compare to your sales figures for the game? If they approach parity, that’s tremendously good news. Even if the upvotes don’t come close to your actual sales figures, it’s worth remembering that Greenlight, after all, represents itself a fraction of total Steam customers who bother to muck around with Greenlight and who were fortunate enough to come across the game. As those upvotes represent your potential customers, they are what truly matters, while downvotes simply denote how many people would prefer to see something else produced – and since you were never hoping to win over everyone who ever played games on the PC, they’re irrelevant. It’s worth noting, for instance, that Steam itself states that they select games not based on some upvote/downvote ratio, but simply based on how many upvotes they got.
Not only that, but as you say, you've managed to gain an extremely impressive 44% growth figure. That is, of course, excellent news and very promising as far as the future of your company goes, but doesn't it also suggest that there are a significant amount of new customers to be found outside of your existing fanbase? Where, if not, are these new sales coming from? And can more be lured in with a price more competitive with industry standards? Such questions seem like they could be very interesting to your company's bottom line if answered fully.
I believe, then, that the possibility of a large untapped demand cannot be easily dismissed, and if this is so, the possibility that Matrix Games could garner more profits and greater success through lowering their prices to something more in line with industry standards cannot in turn be easily dismissed. It isn’t a matter of being “niche” and not “mass market” or any other such distinctions, but rather a simple question of “How many customers who would have bought and enjoyed the game are turned off by what are ridiculously high prices by industry standards?” It is my opinion, backed by what I have mentioned above, that the answer is “enough to justify a lowering of prices.”
But of course, you can’t rely solely on one verbose stranger’s opinion to run a business. Harder facts are needed before one can justifiably make a decision. As such, I am happy to hear that you’re willing to undertake such experiments as Steam Greenlighting and a sale of older games with RPS. I think you will find that in this bold new age, you will be pleasantly surprised by how many old assumptions have been overturned. I do ask, however, that in your cooperation with RPS, you do not rely WHOLLY on RPS. For a niche such as your own, visibility matters. Prepare the sale and shout it loudly on the streets, talk up anyone you can grab hold of no matter how confused and tell them all about your brave new experiment in lower pricing. If you dare, you could even hint that success in this experiment could lead to further and more permanent changes to the pricing system. Don’t just throw it at RPS and sit back and say “Well, I guess we’ll see what happens,” march forward and push it to the limit! I’m hardly an expert, but I strongly suspect that the response to such would be remarkably positive – I know mine would be.
That’s the main thing I want to say, and I hope you didn’t find it too presumptuous – if you did, of course, you can simply ignore me. That being said, there’s a few lesser points which I’d like to touch upon in passing.
- People who bought a game “because it’s cheap” tend not to badmouth a game very much, actually, in my experience. What they tend to say is “Eh, you get what you pay for” and move on, chalking it up as a loss and forgetting about it. They might even say “Well, it’s not for me, but maybe some more hardcore RPG/strategy/wargame fan like my friend here might like it.” It’s when the price is high and they’re forced to justify their expenditure where they start getting nitpicky and violent about problems (“Dangit, I did NOT pay sixty bucks to wait ten danged minutes for every turn to load!”)
- While there MAY be something in people valuing what they pay more for, I have to ask – are you really using cognitive dissonance to improve customer perception of value?
- What, ultimately, is more important to you - customer perception of value, or developer income? That is, if it should turn out that lowering prices can dramatically improve sales, would you be willing to do so even if it turns out that existing customers may suddenly start valuing the game less than they used to?
- I couldn’t help but notice that your essay had a certain level of “us vs them” thinking – “they” said we were wrong, “they” said we couldn’t make it, “they” said we were doomed, but we showed them all! Now, I imagine this sort of thinking is quite justified if you’ve been taking a lot of flak for various reasons and have nevertheless managed to turn a profit , but do you feel that this sort of “siege mentality” might be affecting your ability to make a rational and objective analysis of your situation and your options?
Thanks again for listening, and taking the time to answer. Good luck in your endeavors.
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