Are gamers to blame for buying at discounts?

The discussion around lootboxes has recently taken an interesting spin. Recently meaning: I read about it a few weeks ago and my opinion on the matter needed maturing until now. That spin is:

Gamers are responsible for the existence of lootboxes that need buying for real money because they always buy games at discounts, not at full price.

My first reaction was to call bullshit on that. My second reaction was that there might be some merit to that. My current reaction is to call bullshit on that.

The first assumption about the above statement is that gamers are somehow forcing game developers/publishers to provide discounts, especially discounts that would make the developers “lose” money. The level of bullshit that is wrt. economics of prices itself is already insurmountable, but there’s another angle here, one of expectation on the developers side. Let me tackle the second one first.

The expectation I’m talking about is that the developers expect players to look at their game and if they like it chalk up any amount of money that’s on the pricetag. I admit that in an age where people drop hundreds and sometimes thousands of real-world currency into a game that’s not even finished that may not seem like an unreasonable expectation. The truth is that unless you’re a “AAA” game studio with big name backing, that just won’t happen. And even then it’s most certainly the exception in your gamerbase than the rule. If you are a smaller studio, expecting that people will buy your game at all may already be reaching for the stars.

Back to the first assumption: That gamers expect devs to give discounts. Let’s assume for a moment that that’s true. Let’s go a step further and assume that every gamer out there will only buy if a game is discounted. If you as a developer then “lose” money, you either have a wrong or maybe even no grasp of economics. There’s a german proverb which I leaned in 5th or 6th grade, very early on:

Rabatt, mein Kaufmann, lass dir sagen
wird immer vorher draufgeschlagen.

Loosely translated it means that if you want to give a discount, you absolutely have to up your price by that amount beforehand. It also means that everyone who buys undiscounted is getting overcharged, but that’s not your problem as a seller. Let me go a step further and give you a quick, entirely amateurish lesson in economics:

Let’s say you expect to sell 10.000 copies. That’s probably already a lot, I never sold anything before, but that’s not the point. Let’s also say that your game cost 100.000 EUR to make. That sum comes from paying your artists for graphics and music, your writers for story and text, your voice actors, your programmers for coding and your software licenses. Oh, and never forget your own salary should be in there, too. Doing some basic math that means you absolutely must earn at least 10 EUR per sold copy. Let’s start there. From there you need to add the charge your market takes from you. That’s generally assumed to be 30% from any sale. Using a simple calculation we arrive at:

10.00 = 70%
10.00 / 70 * 100 = 100%
14.29 EUR = 100%

So to receive 10 EUR from a sale where the market takes 30% your game must be priced at 14.29 EUR. BUT: If you want to participate in any sales, and let’s be honest: Doing that might give you exposure in the stores. Exposure that just might get you a few more sales. But we’re still assuming that you won’t sell more than 10.000 copies. In which case you would really make a loss as the discount you provide will be deducted from your 10.00 EUR per sale. So, getting back to that proverb above, we now need to do some more simple calculation. Let’s say the absolute biggest discount you ever want to provide is 50%. In that case your new price becomes:

14.29 EUR = 50%
14.29 / 50 * 100 = 100%
28.58 EUR = 100%

At that price you will always make at least 10 EUR per sale, no matter what your discount is. Will you still sell 10.000 copies? Maybe not, but if you sell 5.000 at that full price, you still will have recouped your 100.000 EUR investment. If you don’t sell enough copies, it was probably not a good investment. Not every game out there makes a profit even though they might have earned it.

And there we are at the third expectation: That people WILL buy your game just because it’s out there. That’s also not something that happens by itself, no matter how good your game is.

And that’s why I call bullshit on putting the blame of the alleged “blame” for a kind of “need” for lootboxes on the player. If you make a bad investment during your games development, then make a bad judgement on the price of your game and finally provide discounts you never calculated for or cannot afford, putting the blame on the players that buy at those discounts is - in my book - bullshit.

Published: December 07 2017