Are developers undervaluing themselves with launch discounts?

PC game prices, particularly on Steam, fluctuate from a few pounds to the high-end £40 to £50 mark. But one of the biggest things Steam has become known for amongst consumers is its massive game sales.

This can see deep discounting on the majority of titles, even those released just a couple months before, by as much as 50 per cent.

These discounts prove so popular that sales of an individual title can increase tenfold, while also making a developer’s title stand out from the crowd.

And game sales are becoming more prevalent on an ever-increasingly crowded Steam store as a tool for developers to get their game noticed, even at launch, to maximise game sales. These can take off ten or 20 per cent of the cost, sometimes even more, for early adopters.

But are developers undervaluing themselves with such early discounts?

The price is right

Investigate North CEO Christian Fonnesbech said when releasing its unique narrative investigative title Cloud Chamber, the team had no idea what to expect from sales, and after a recommendation from Valve to use a launch discount, the team had no regrets.

“Selling anything on the digital marketplace is a complex interplay between the customer‘s awareness of your product – have they heard of it before? – the exposure it gets on the digital store, what the product is and so on,” explains Fonnesbech

“The main reason to run a launch discount is to get more visibility at launch because you get featured in the ‘Special’ section. Games also tend to have a noticeably better conversion rate – converting from visitor to paying customer, that is – especially when it’s an indie game without a major marketing campaign.

“A product on sale has a much higher chance of being sold on Steam – and a 10 per cent discount doesn’t affect the income that much.

“This could be part of the nature of selling through massive online stores – such as Steam, the App Store and so on – simply because it is so easy to disappear in these massive databases.

“It could also be because there exists some kind of ‘discount culture’ among Steam customers – or it could simply be because the discovery algorithms, or the interface design of the store, on Steam favour discounted products.”

Ashley Gwinnell, director of Toast Time developer Force of Habit, said that if the discount at launch was just ten per cent, he would consider it a “healthy discount”, but any bigger and it could have a negative impact on future sales.

“Large 50 per cent discounts may signify lack of confidence,” he said. “Large discounts too early on are often detrimental to long-term sales. That said, the rampant sales culture of Steam is possibly bad for everyone.”

Standing out

Gwinnell added launch sales are a way of rewarding early buyers, but noted that devs aren’t allowed to discount Steam titles or change the price during the first two months of release.

“This encourages consumers to buy early, as they know it won’t be discounted again for some time,” he said.

Indie developer Dylan Loney, behind fantasy RPG Words for Evil, said that for his first game, setting a launch discount was not a matter of confidence, but “reacting to what Steam has become”.

“There are so many fantastic games on Steam that you can get them for next to nothing; if I don’t set myself competitively, people will just go after the next good deal,” said Loney.

“It was very difficult to settle on a price. Objectively, I can look at the game, assess its features, dock it for any pitfalls, and assign a value that seems fair. But then you remember the immeasurable hours and all the personal investment it took to build, and things start to get emotional.”

Fonnesbech added: “On Steam, players would rather buy a $10 game with a 50 per cent discount than a $5 game at a full price.”