Second Wave Game Distribution





When games first hit the market, they're sold on platforms like Steam, generating lots of hype and (hopefully) making big sales in the first few weeks to months. However, after this selling period is up, the sales drastically decrease, seeing very little profits dwindle to essentially nothing as time passes on.

One way they can try to beat this is to lower the price of their games, or increase the frequency at which the game is put on sale.

Another method, which is gaining a lot of popularity particularly on PC games, is through the use of second wave game distributors, such as HumbleBundle and Fanatical.

HumbleBundle is an interesting model, one that benefits consumers, developers, and the company itself all at once. It allows developers to offer their older games, which don't make much revenue anymore, at very low prices, giving them additional sales and an extended period of popularity for their games.





It also incentivizes consumers in different ways, from pick your own prices (tier) to Humble Monthly (which gives you 8-9 random games worth $200 total at the cost of $12). Often times, games that have been worth $40 or $50 have been sold for just $2-3. Civilization V, for example, was once put in a bundle with a value of ~$2.

For the company itself, HumbleBundle has nearly 0 marginal costs, as there are very little costs needed in redistributing only software. Since their creation in 2011, they have seen over 6 million unique customers and made gross revenues of  nearly $200 million.


https://www.gamasutra.com/blogs/KevinHarwood/20141124/230810/Distributing_Through_a_Humble_Bundle.php

https://www.hbs.edu/openforum/openforum.hbs.org/goto/challenge/understand-digital-transformation-of-business/humble-bundle-turning-computer-games-and-charity-into-good-business.html

https://www.quora.com/How-does-Humble-Bundle-stay-in-business

Comments

  1. AnonymousApril 9, 2019 at 1:36 PM

    Nice post! I've never heard of HumbleBundle and found the whole concept incredibly interesting. On first read, what immediately came to mind was a perfectly discriminating monopoly. While Humble Bundle isn't a monopoly in any sense, it essentially makes the whole process of selling games a price discriminating monopoly. Consumers are able to buy at full price to get it earlier, or they're able to buy at a lower price when it goes on sale later. HumbleBundle essentially acts as the lowest price option in which people are able to pay little to randomly get these games.

    https://www.investopedia.com/terms/d/discriminating-monopoly.asp

    ReplyDelete

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