Demand Curve

There’s probably a more scientifically rigorous way to map out a demand curve. Sophie’s graphs are in chronological order, and they show an upward trend over time, so I don’t want to draw too much of a conclusion without being able to control for publicity. I’d love to see the graph for conversion rate over price. But it’s still really interesting data. The results from the pay-what-you-want sales tell you what people want to pay, but this tells you what they will pay.

The values are marked with blue markers. The red line is the number of sales you’d need to make a constant amount of revenue (the mean daily revenue for the week). In other words, the red line is what we’d predict if pricing had no effect on your profitability whatsoever.

Here’s a graph of total revenue for each price point, with a log scale for price, because $77 is a huge outlier!

I also did the dweeby thing and tried to fit a price elasticity of demand coefficient to it. If it’s as low as -1.0, (which is total revenue staying the same despite price changes) then video game consumers are as price sensitive as people buying soft drinks. If it’s as low as -1.5, then video game consumers are as price sensitive as people buying air tickets for overseas holidays.

Kelly checks her work items. Uh oh, a client freeze. The KickStarter milestone’s been slipping and the money is starting to run out. Right now, showstoppers are exactly what they don’t need.

Thank god Jack’s the one on the forums trying to pass a vote on paring back the milestone requirements. If he can’t get the ‘No’ vote lower than 43%, refunding that percentage of the users will send them insolvent. It takes preternatural calm to operate at the intersection of community management and project management.

She takes a deep breath and pulls from the QA repo. There’s several thousand session recordings in here, but her filters only show the busted ones. Sure enough, there’s a new fork in the replay tree and it’s red. “Watchdog violation: Over 1000 frames since input was last polled”. The offending fork doesn’t look much different from its sibling forks: same sequence of button presses, slightly different timings. If not for the freeze, the QA guy on topiary duty probably would’ve coalesced it into the sibling test cases.

Hmm, the work item has a VM image attached, but with everyone pushing changes like mad throughout the morning, she’d rather repro on the current codebase. She enables the audit log on the client that’s allegedly going to be the victim of this scenario. She taps the tip of that red branch and her PC’s displays take on the appearance of a surveillance system as the various game clients start up one by one and begin replaying the session that lead to the freeze. She rouses the cat from her lap and heads to the kitchen for a coffee.

Five minutes later, Kelly plops back down, coffee in hand. Bingo, it’s still busted. The game phase coroutine is stuck. At least it’s deterministic this time. Looks like the player was in the middle of dismounting their horse when the game froze. The coroutine’s waiting on the end of the dismount animation, but it never comes.

Oddly enough, the player’s current animation isn’t dismount. Where the hell did that value come from? Kelly has her IDE generate a data flow tree for the state variable. Her PC grinds away at rerunning execution from the last checkpoint.

The character animation state machine was a mess of amateurish hacks they’d picked up at auction from a somewhat unluckier project that’d gone belly up. They’d come to regret cutting that particular corner.

Aha! The state is passed around as if the authors were laundering a drug fortune, but the root of the problem is that a grapple interrupted the dismount. This isn’t supposed to happen. Dismount is sacrosanct.

Who implemented grapples? She squints at the fine print in the blame margin of the editor window.

“Radko (12/10/21): Fix exploit where jumps cancel grapples“

Hmm, where in the world is Radko Stamboliyski? Remote contractors had been going AWOL since the finances starting looking bad. They haven’t been able to get in touch with him for a week. He could be anywhere in Bulgaria. Hell, maybe the Bulgaria thing was a lie all along? Either way, she’s not getting an explanation for that commit.

A quick check in the animation timeline reveals the problem. The annotation that suppresses the animation being interrupted stops a frame short of the end. Argh! First frame inclusive, last frame exclusive! When will people learn.

One frame glitch. That explains why it survived until now. Hardly seemed worth the panic. Looks like the fangirls might get their Renaissance action-romance after all.

Inspired by:

• Slightly Mad Studios living up to their name
• The Inform 7 Skein
• Reversible Debugging

All dollar amounts are in US dollars. Let’s start at the comprehensible scales and work upward:

$1000 (or 1 person-week)

A week’s worth of labour is enough for a tiny prototype with a single game mechanic, like the ones I’ve been posting here. With the simplest concept and the smallest scope, you can still create something delightful. Petri Purho created the Crayon Physics prototype in under a week.

A typical week might involve a day for brainstorming/mock-ups, a couple of days to code it and fix the (worst) bugs, a day to test it and tweak the details and a couple more days to slap some rudimentary art and sounds into it.

$10,000 (or 3 person-months)

(Assuming an indie author subsisting on $40K annually)

Everyone has heard the proverb that the last 20% of a project takes 80% of the time. If you’re looking to achieve commercial-quality polish, that may actually be an underestimate. On Flick Kick Football*, getting a fun prototype with mostly final controls and some rudimentary obstacles to kick around was only the first 10% of my work on the project. The other 90% was spent addressing the multitude of details that kept that basic prototype from fulfilling its full potential. Menu systems, tutorials, title music, animated flourishes to draw the eye, leaderboard integration and so forth.

If the game has to be polished, advance one power of ten, do not pass go.

* I don’t know what Flick Kick Football’s precise budget was, but it had 5 digits.

$100,000 (or 18 person-months)

(Assuming a $70,000 average salary, as reported by the Gamasutra salary survey)

OK, so we’ve accounted for the 10-fold increase that comes from polish. What if the game isn’t a simple single-mechanic game? What if there’s an element of exploration? There’s a gulf between games that take place in a few reusable arenas, and games where the player progresses through a game world. With the latter, you need to develop tools like level editors, and you need to build environments with them. You develop more variations on the core gameplay to keep the player occupied throughout their journey.

Back in the good old days, you could make an Xbox Live Arcade game for this much. Jonathan Blow has stated that Braid cost $200,000 in living costs and art contracting, so it’s a touch large to be the example here. In terms of pure labour, there are also some large open source games that are at this scale.

$1,000,000 (or 15 person-years)

This was big-budget, back in the early ’90s. At this scale you have teams of specialists. Take Doom for example, a year-long development with 3 coders, 2 artists, 3 level designers, a composer and a couple of admin folks.

Projects in the millions can spend more on technology, building/buying rendering, physics, sound and scripting engines, tackling tricky features like network multiplayer and streaming levels. Art teams start to benefit from specialisation into modellers, animators, texture and concept artists.

You can still put out a minor retail game for this much, though people will bitch about the graphics incessantly.

$10,000,000 (or 150 person-years)

If you’re making a blockbuster console game for the core gamers, you’ll be spending tens of millions.

In first person shooters and action adventure games, it’s striking how quickly the player moves through the environment. They’ll typically spend under a minute in each room. Nobody likes to see the same room, cut ‘n’pasted over and over, so it’s typical to produce hundreds of rooms worth of environment geometry and texturing, all lushly detailed.

With this sort of production effort, you want to be very sure that the design is going to be work, and you have the right content creation tools. To achieve this, there’s a long preproduction phase – sometimes more than a year – to really explore the possibilities. After producing a promising looking vertical slice, dozens and dozens of staff pile on to the project. There’s lots of outsourcing to achieve this. Where there is outsourcing, there’s the associated bureaucracy of managers and producers.

Take Killzone 2. There was a presentation at GDC ’09, KILLZONE’s Art Tools and Techniques, that went into a lot of detail about their team composition and schedule. Here’s the breakdown:

• 50 Testers
• 48 Artists
• 27 Coders
• Approximately 25 modellers (they said they outsourced, so there was some guesswork here)
• 17 Level designers
• 14 Environment artists
• 13 Producers
• 10 Other technical (whatever that means)
• 8 Visual design
• 7 Animators
• 6 Special effects (making particle systems and the like)
• 5 Audio
• 4 Human Resources
• 4 IT support
• 3 Lighting
• 2 Cinematics
• 2 Tech art
• And a partridge in a pear tree
• 245 staff total

There’s no information about how long each of these people were on the project, but we can make some educated guesses based on the length of time they spent in each production phase.

They spent a year in preproduction putting the art pipeline together and producing a trial level. Let’s say the code team and a third of the art team were there for that year, at a cost of about $2 million.

Then they spent 18 months in full production. That would’ve cost more like $16 million.

Then I assume there was a 6 month beta test, which the code and test team would’ve remained for. That’d cost $2.5 million.

And that’s how you spend $20 million.

$100,000,000 (or 1500 person years)

I’m not sure if anyone has actually ever spent $100 million on developing a single project. Realtime Worlds had another project called MyWorld eating into that aforementioned $100 million. It’s not hard to see why there’s a lack of examples: you have to be among the highest selling retail games of all time just to break even. Some projects have come close though:

• GTA4 is said to have cost $100 million, but that figure includes marketing, so the actual development budget could be as low (!) as $50 million.
• Half Life 2 spent over 5 years in development, but it cost a piffling $40 million.
• The 3D Realms incarnation of Duke Nukem Forever was cheaper still, burning through $20 million. While absurdly late, at least their team size was restrained.
• The notorious Shenmue cost $70 million. What a bargain.
• Tabula Rasa is rumoured to have cost $100M, but the details never got aired in public, so we can’t be sure.
• Lum has inferred from some comments made by an EA exec that Star Wars: The Old Republic might break the $100 million barrier. Once again, we can’t be sure.

Only MMOs tend to get anywhere near $100M. Instead of being just a mere software development, MMOs combine some of the most expensive aspects of building a theme park, running a large online service, and policing a city. You also don’t want people cancelling their subscriptions, so there’s an incentive to make the game as long and as large as possible.

Let’s take World of Warcraft. We’re told it cost less than $100M, but its success ($800M annual revenue) is the most frequent justification offered for spending $100 million. (Not that it’s not a wise justification)

In Warren Spector’s master class videos, Blizzard co-founder Michael Morhaime says “We started working on WOW in ’99, and we released it in ’04″. As for the team size, Blizzard did a presentation at Austin GDC ’09 with some excellent statistics.

• 32 coders maintaining 5.5 million lines of code.
• 51 artists with 1.5 million assets.
• 10 producers.
• 135 people in total on the development team, not including sound, testing or cinematics, which are shared between project teams.

This was the live team as of 2009, not the development team prior to launch. Let’s make a wild unsubstantiated guess that getting WOW to launch was 200 people working for 5 years, or 1000 person-years.

But hang on, you point out, that’s only $70 million. The really shocking part comes from the on-going costs of their operations team:

• 2056 game masters / customer service reps
• 340 in billing
• 149 in network administration
• 121 in technical support
• 67 in quality control
• 66 community managers

I’ll grant that this team is so huge because WOW has so many customers. Nevertheless, you need at least somebody on this team for launch. Realtime Worlds were swinging for the fences, so they could well have had a sizeable operations department anticipating an influx of players.

So there you have it. $100 million. Enough for a truly, truly gigantic game.

2D Boy are doing their fellow developers a fantastic service here. If you’re trying to price your games, you couldn’t ask for more pertinent data.

Here’s a histogram of unit sales versus price:

Here’s the same data, multiplied out to find the revenue versus price:

Look at that peak at $5! Looks like iPhone App Store-style pricing might be here to stay.

From the survey, here are the reasons why people chose their prices:

The segment of reformed pirates is about 10%, which is disappointingly small, considering the very high piracy rates that 2D Boy have alleged.

It’s interesting to see a significant number of people using this as an opportunity to pick up the game for a different platform, especially since if you bought it from 2D Boy back when it was first released, they gave you download links for Windows, Mac and Linux. I’m tempted to interpret this segment as people who bought it from WiiWare, disliked the imprecision of the wiimote, and bought it again for PC to play it with a mouse.

The graph gets far more interesting if you break it down by the price chosen:

Now, bear in mind that a large majority of the revenue came from prices $5 and over. The grid’s right-hand half is where the money was made. Notice how nearly 40% of that side chose their price because they wanted to reward 2D Boy for using this business model. If pay-what-you-want becomes the norm, it’ll no longer be a novelty, and those customers will start paying what they feel is affordable. The novelty factor could be boosting 2D Boy’s revenues by up to a third.

The survey also asks how much the game should ordinarily sell for. You get an entertaining graph if you put that against how much people actually pay:

See, this is why market research surveys are full of shit. People will tell you one thing and then act completely differently. There’s a general consensus that World of Goo is worth at least US$12, but on average people paid US$2.03 for it.

It’s said that a thing’s only worth what people will pay for it, but if you give people a bargain and a fair price, and they’ll take the bargain.

Blurst hasn’t met our expectations.  More specifically, Blurst’s traffic has not increased to levels where it will pay for itself. … We are halting development of our 8-week projects and beginning longer-term development on Off-Road Velociraptor Safari.

Flashbang Studios are the guys that single-handedly brought Unity 3D out of obscurity. They created Off-Road Velociraptor Safari, which spread all over the web. For people outside the Mac sphere such as myself, it was a showcase of the technology. As far as I know Unity weren’t paying them to build games on the platform, but they should have been.

To confuse their branding situation further, Flashbang created Blurst, a site which collects all their Unity games together with the same user and highscore table system. They embarked on a plan to create a new game prototype every 2 months. It resulted in some superb stuff, and they’ve been a huge influence on what I’m doing with Mostly Tigerproof.

(Except for their plan to grow into a portal with an army of repeat visitors, of course. Pretty unlikely I could pull that off! Mine’s more of a portfolio site.)

It’s a slight disappointment to see them pick Off-Road Velociraptor Safari for full production, but totally understandable given its brand recognition. If you ask me, Blush is their best work. It’s the same basic game mechanic as Velociraptor Safari, but the camera is more helpful. It also has much greater focus: there’s only one goal, fetch eggs and feed them to a spooky glowing orb. Compare that to Velociraptor Safari: when I play that, I’m torn between dinosaur hit ‘n’run, corpse fetching, orb collection and driving stunts. If you play only one Flashbang game, play Blush.

The trouble with Blurst was the low frequency of new games. A consistent style and level of quality is peachy, but to make it in the portal business you’ve got to have a game for every occasion a visitor wants to kill time. That means 3rd-party games. Perhaps this product-centric business model will suit them better.

For example, take this case study prepared by an ad network called Mobclix. It’s about an iPhone app called Shotgun Free. It makes shotgun noises in response to being shaken as if it’s a pump-action shotgun. (Idiotic, huh?)

The app displays ads across the bottom of the screen for a scanty 15 seconds per ad. You wouldn’t imagine that many people would see, let alone click on an ad while they’re making gun gestures with the whole device! Surprisingly the ad network behind this game is trumpeting a superb 6.5% click-through rate for this game.

If you believe any of these users intentionally clicked, I have a bridge going cheap. While they’re loading the shotgun, their pinky finger will be in the neighbourhood of the ads. The developers are making money off poor ergonomics!

You don’t have to be on the iPhone to take advantage of wayward clicks. The only times I’ve ever clicked on an ad at Kongregate have been during frantic gameplay.

You can only fool the advertisers for so long. Eventually they’re going to realize that visitors sourced from Mobclix never stay on their site for any length of time, and that their purchase rates are terrible. They won’t know why, because advertisers never deal with developers directly, but they’ll invent some explanation. Maybe they’ll assume that gamers are the wrong audience. Maybe they’ll think there’s click fraud. Whatever they conclude, it’ll force down Mobclix’s advertising rates.

I can see two outcomes:

1. Conventional wisdom forms among advertisers that game ads just don’t work. Ad rates dwindle to nothing. See MochiAds for a preview of this: they’re paying $0.20 CPM. A million page views is worth a measly $200!
2. Ad networks insist on stringent requirements on how ads are presented.

I’m not relishing either possibility because I’ve been really enjoying the fruits of the ad supported Flash scene. I’d hate to see their livelihood dry up, or their creative options dictated by ad networks.