This article focuses more on the casual portal side of the indie games business, but I think that the issue of indie games being too cheap is a shared one between casual indie games and IGF winning artsy indie games. Both have pressure to be cheap and both are often on portal services that take a cut of the price.
http://jeff-vogel.blogspot.com/2009/06/indie-games-still-too-cheap-getting.html
This issue is increasingly relevant due to the iPhone App store, which isn't mentioned in this article. Popcap's highly regarded Peggle debuted at a very cheap price of $4.99, but languished in 60th place on the list until it was price dropped to 99 cents. Only then did it reach the top 10.
It's a bit ironic for me to be criticizing the App store, since in Nintendo DSi threads I've been slamming that service and pointing to the App store as the path to follow, but while overall I like the direction of the App store over the overly slow and selected Nintendo store, there genuinely is a problem with the massive downward pricing pressure on the App store. It's not just the App store though. In any online downloadable store there seems to be incredibly unrealistic pricing expectations and a massive downward push on prices. Every time a notable downloadable game comes out there is criticism about price. When you look at it objectively, prices around $12 are a pittance, and yet that's considered expensive in the downloadable space. This is a problem.
Though highly polished independent games are frequently made by only one or two people, the costs are still frequently over $100,000. When you factor in marketing costs and also that the portals take a cut of the profits it's pretty obvious that these games can't all be 99 cents and hope to easily make a profit.
As this article states, the downward price pressure is in the long term going to push game creators into taking less risks. How on earth could you justify making a polished iPhone game if within two months you're going to be forced into price dropping down to 2.99 or less just to stay visible on the chart?
http://jeff-vogel.blogspot.com/2009/06/indie-games-still-too-cheap-getting.html
I wrote a couple of articles not long ago about how the expected price for Indie games is becoming really cheap. Too cheap to support a thriving, innovative Indie scene. I thought that pricing all games below 10 bucks on Amazon and XNA Community games, sets a dangerous standard and steals the freedom to influence prices that developers need. I got a reasonable amount of abuse for this, because, of course, people hate being told that the things they want are unsustainable.
Which brings us to the new development at Big Fish Games, one of the larger casual games portals ...
Their current pricing scheme, as I understand it, is that you can get any of their games for $6.99. This subscribes you to their service, which charges you that amount per month and gives you another game in return. Of course, you can pay the $6.99, get the game, and immediately unsubscribe from the service, which is what I suspect a number of people do.
So I decided to poke around for a bit and find out how standard this sort of pricing is. At Yahoo games ...
... and MSN games ...
... and GameHouse ...
and so on. $6.95 is currently the magic price. Generally, to get that price, you need to buy a subscription. In other words, use the developer's game as a loss leader to win their private route into your credit card.
So let's run some numbers. A typical deal on these portals is that the portal keeps, say, 10% of a sale for expenses and then pays a 40% royalty. (This is pretty close to what I generally get.) Which means each sale of a game on Big Fish would earn you roughly $2.50. You better hope you're earning more per copy elsewhere because otherwise, if you want a pretty meager payout for your work (say, $100K before expenses), you have to sell forty thousand games. You know how hard it is to move that many copies? PRETTY DARN HARD.
Now, this is the point where generally some Internet knucklehead says, "Well, they have the right to do whatever they want." Yeah, of course. And I have the right to point out the gruesome consequences of their exercising that right.
To have a chance of not getting murdered at those prices, you need to sell a monster pile of copies. This is exactly the situation that punishes serving niche markets, taking risks, and doing new things. And those are exactly the roles people are supposedly looking to Indie developers to fill.
I have been arguing that these low prices will result in a desolate and uncreative Indie games space. Look at the offerings at the casual portals, and I think you'll see that I have a point. PopCap provides some cool, innovative games (they're basically the Pixar/Blizzard of casual games), but otherwise the casual portals are a dry expanse of Bejewled/Zuma variants, simple puzzle games, and milking of established properties. Much like in Hollywood, the need to get a blockbuster to survive delivers a harsh blow to creativity.
Of course, it's easy to say, "But they're casual game fans. They don't want anything challenging. Scrabble and hidden object games are the limit for such simple creatures." I personally think that this is nonsense. But the way we're going, we'll never find out.
So What To Do About It?
First, support and encourage portals that don't force developers to sell their work for a pittance. Like Steam, Greenhouse, and MacGameStore.
Second, if you are writing a game of your own, don't let anyone steamroll you into giving your work away. If a portal is going to sell your work for $6.95, make sure you've written a game that can compete in that market. If not, at the very least, don't give them your newest freshest stuff. I'll let them sell an older game for that price for the advertising and exposure, but only after I've already made good money off of it.
What I care about is having a marketplace where a wide variety of Indies can write a wide variety of games and make a living. The casual portals have their place, but, if you aren't prepared for how little they're going to pay you, they're a trap.
Edit: I should have also mentioned Reflexive games, who are also being admirable in pricing Indies at a level where they can actually make money.
This issue is increasingly relevant due to the iPhone App store, which isn't mentioned in this article. Popcap's highly regarded Peggle debuted at a very cheap price of $4.99, but languished in 60th place on the list until it was price dropped to 99 cents. Only then did it reach the top 10.
It's a bit ironic for me to be criticizing the App store, since in Nintendo DSi threads I've been slamming that service and pointing to the App store as the path to follow, but while overall I like the direction of the App store over the overly slow and selected Nintendo store, there genuinely is a problem with the massive downward pricing pressure on the App store. It's not just the App store though. In any online downloadable store there seems to be incredibly unrealistic pricing expectations and a massive downward push on prices. Every time a notable downloadable game comes out there is criticism about price. When you look at it objectively, prices around $12 are a pittance, and yet that's considered expensive in the downloadable space. This is a problem.
Though highly polished independent games are frequently made by only one or two people, the costs are still frequently over $100,000. When you factor in marketing costs and also that the portals take a cut of the profits it's pretty obvious that these games can't all be 99 cents and hope to easily make a profit.
As this article states, the downward price pressure is in the long term going to push game creators into taking less risks. How on earth could you justify making a polished iPhone game if within two months you're going to be forced into price dropping down to 2.99 or less just to stay visible on the chart?