Game Geek Speak

“$40 for lips couch, selling like hotcakes.”
–Sebastien de Halleux, PlayFish, speaking about Pet Society

Whoa. I would *never* have priced a virtual couch at $40. Not because I think virtual goods are not worth money, but because my personal sense of value tells me that it’s not worth that price. But there are a lot of factors in play on that decision: my sense of what is fun, my desire to “show off” to other players, my personal income, and so on.

The big lesson here is, as someone famous said, “Value is what it’s worth to a customer; price is what you charge for it.”

We simply can’t comprehend what our players might be willing to pay or do based on our own judgment. I think, especially as indie developers who might not have as much business experience, it’s really hard for us to imagine the value of our products and then price accordingly. I see this a lot in downloadable games with prices like $3 or $5 or $9. If players love your game enough to pay even $1 for it, they probably will pay a lot more (price wars not withstanding).

Online games such as MMOs and social games implementing a virtual goods business model have a similar obstacle. When pricing virtual goods, pick a price that you think nobody would ever pay, then double it. Heck, I’d probably have to quadruple it! I would find it hard to image someone paying $10 for a couch in Pet Society. But to hear that it sells like hotcakes for $40 shows that I could be losing a lot of revenue.

So, start with a high price. You can always come down. Nobody complains about a price drop. You can also test price points with analytics to find the sweet spot.

Virtual Goods News reports that:

Over the weekend Tapulous head of business development Tim O’ Brien announced that the company was successfully monetizing pirated copies of its iPhone game Tap Tap Revenge 3 by selling the pirates virtual goods as in-app purchases. Tapulous estimates that Tap Tap Revenge 3 has been downloaded 2.5 million times, but that 1 million of those downloads are pirated copies.

Ok, first of all, if you’re pirating a $.99 game, that’s pathetic and you are a loser. Full stop.

But, it’s nice to see that you can upsell pirates with virtual goods.

Pirated copies can still communicate with the Tapulous network and their in-game virtual item shops still work. According to O’Brien, this has lead to some pirate users spending far more than the app’s initial cost on virtual items like additional songs and avatar customization pieces.

So, what if–for non-pirates–you offer the app/game for $.99 (or more, if it’s not on iPhone), and then if the potential customer balks and decides not to buy, you could then offer to give them the game for free?

At least then you have a chance to monetize them later in the cycle. Pirates would have nothing to pirate, and chances are you would end up making more money in the long run even if you give away a majority of copies. (I’m assuming, too, that there’s no physical COGs and it’s exclusively digital delivery.) It sounds like a decent idea and a great experiment to try.

(P.S. My time is being consumed with a non-game business venture right now, but I want to try to blog short little ones like this to keep myself in touch with my most beloved game development universe.)

The microtransaction bug seems to be going viral these days among the Flash community. There are a growing number of companies offering managed payment services to Flash developers: they handle the dirty backside, and you give them content and share the income.

I personally think that it is worth it to build your own system (and I’m usually the guy saying, “Use the middleware, fool!”). But I think it depends on the scale of what you are planning. In my case, I want total control, and I want to own access to my customers so that I can continue to communicate with them. I also don’t want my games to become advertisements for a payment service.

I don’t view virtual item sales as just a sales channel. It’s also a gesture that means a player cares about and is emotionally invested in the game, and I want to maximize that relationship to make my players happy, long-term customers. Without access to my customers, the payment service is crippling my business. I don’t know that all these systems insulate the developer from his/her customers, but that is a major issue to bear in mind.

These Flash-specific services could be really useful to someone who is making much smaller scale games and wants some add-on sales or someone experimenting with virtual goods in an effort to diminish reliance on ad revenue. I’m not reviewing any of the services, just announcing that they exist. I haven’t investigated them all very deeply, but I will be poking around.

75% – andrograde.com
70% – www.nonoba.com
60% – www.gamersafe.com
60% – www.mochimedia.com
50% – www.heyzap.com

Which is best? It depends on your goals and plans. If you’re just making little quickie games (90% of Flash games), then any of the above would work. If you have a more broadly scoped business plan, you might want to steer clear and look into services that are not Flash-specific and spend the time/money to do the integration yourself.

You can’t really swing a dead cat without hitting somebody’s virtual goods payment platform anymore. I mean, there’s fatfoogoo, Gambit, TwoFish, TrialPay, Mochi Coins, PayByCash, LiveGamer, UKash, Kongregate (in November) and on and on and on. I just scratched the surface there.

It’s really getting crowded! With my new game project in production, I’m starting to wonder which one I can trust to still be around in a couple of years. There are so many, I can’t see the market supporting them all.

Some of them are “big accounts only” type companies, where you can’t find pricing or really any information on their websites without calling them. And they expect you to be a million-dollar funded company. Those types will be servicing EA and UbiSoft and other large companies. Whether they are around or not doesn’t matter to me because I won’t be their client anyway.

The others are scrappy and service small companies. These are the guys I’m likely to do business with, but also the ones most likely to bite the dust when the shakedown happens. They just won’t all have the customer base to make it through a financial storm on top of vicious competition due to overcrowding.

Anyone have experience with these companies? Which ones do you like, and what services make them stand out? Some offer great looking metrics and other perks. I’m in the market and looking right now.