In economics, there is a well-known curve called “demand curve”, which describes the qualitative or quantitative law that the price of goods and the quantity of demand are inversely proportional; given a price point on this curve, it can be calculated immediately Revenue from selling the product at this price. For the game industry, this is a very critical curve: because games are completely non-essential, all the income of a game comes from the understanding of player needs and game design. Theoretically, our game designers can find the answer to this curve for every charge design in the game: What is the price of this design? What customer groups is he facing and how many are there?
Every revolution in the form of payment for games actually changes the appearance of this demand curve through completely new ideas and design models, before expanding the game industry to today’s scale. Of course, if you start to draw the demand curve in the economics textbook, this article will become very difficult to read. To make this curve easy to read, I added actual data coordinates (percentage for users) to this graph, and changed the price and number of paying users to logarithmic axes.
In order to facilitate everyone’s understanding, I used the $ 60 business model of the paid game as the analysis object in the first picture. Since the PS era (1995), the pricing of games in the United States, the world’s largest market, has basically stabilized at around $ 60, because this price is the highest price for the overall sales of the game. Of course, if you consider all potential gamers as a whole, people who are willing to pay so much money to buy games account for only 1-2% of all players … In the United States, this price balance point has not changed in nearly 20 years , And the development cost of the game has increased by nearly a hundred times in these 20 years. In order to allow more people to buy games to cover costs, paid game manufacturers are constantly developing new business models. Contents such as DLC, season tickets, and limited editions can increase the payment amount of a smaller number of core players, which is the rectangular profit at the top of the figure; manufacturers are still in various forms of special prices in developing markets such as discounts, special sales, and China and Russia. To lower the price of the game, let players with lower payment ability join the ranks of paying players, this is the rectangular profit on the right side of the figure.
Readers familiar with microeconomics textbooks may know that this picture is almost the game version of the classic “price discrimination demand curve”. By producing different content and controlling the discount cycle, the manufacturer sells the game to players with different payment capabilities at different prices to obtain maximum profits. If there is an economist here, he may have already praised: Ah, how standard is the virtual goods such as games, they can make more profits through price discrimination!
So, where is the space for free games? Now let’s look at the changes in the demand curve brought about by the first paid revolution, which is the “free game item charge” model. In order to make this picture more concise and understandable, I replaced the logarithmic axis with a normal one. The general textbook price strategy on the previous picture, on this picture, becomes a little income in the lower left corner … Whether it is above or to the right, there are extremely new income ranges that are extremely amazing. In the new business model, whale players can spend as much as US $ 1,000, US $ 10,000, or even US $ 100,000; and free players can also enjoy playing as much as they want. This looks like a perfect business model! The era of paid games is coming to an end!