Friday, July 29, 2011

The Cost and Price of "Free"

I'm going to do a couple of introspective blogs on the industry. This first one is about the cost and price of "free". I'm trying to skirt economics as much as possible, and give you a general gist.

Sometimes I get asked, "Why would you release a game for free?".

Why? Because free isn't free.

The Cost

First, free has a certain expectation associate with it. It's based on what is commonly around and also available for free (or cheap). Right now there are tons of little free flash games. The quality level on them tends to be pretty good on average.

So just for a person to make a similar game at the same quality, you need time and resources. And usually you need money to buy those resources. So if it takes one month for a good programmer and artist to make a good "free" flash game, you still have to consider the resources they had to use:

  • Living expenses, including rent, food, electricity etc, for one month. This can range from $1000 dollars to $2000 dollars and up, even for those of modest means.
  • The cost of the software you need. Its often a one time cost, but it can be very expensive to start out. I paid over $800 dollars for Adobe flash.
  • Licensing fees - Again for Xbox live community, it's $100 dollars for the year, to license Xbox live it's closer to 10K.
In other words. Just to "break even". In the best case you'd have to make back conservatively around $1500 to $2000 a month. In terms of games, thats the "cost" of free. And thats assuming a one month cycle, no slip ups or problems. In real life, there's plenty of slip ups and problems.

Suddenly the cost of free is pretty pricey.

The Price

Going over that "free" zone actually costs a lot more just the 1 cent or 1 dollar you want to charge.

  • People actually have to go out, and make the conscious decision to spend money. (They could just try another free game thats almost as good. Or if they are technically inclined, get a hacked version of the game.)
  • Awareness - Do I even know about this thing? Did someone recommend it to me? Where did I hear about it?
  • Is this a new experience? Even if this is a great game, is this something I've done before enough to be bored of?
  • Decide to spend money over the internet (for which many are still afraid of)
  • Then there's a "goodwill" check. Is this someone I like? Someone I feel good about spending money on?
  • Am I addicted to this thing? Or am I done with the experience? While not a positive factor, it's incredibly pervasive, and game designers tend to try to lean towards "Fun addictive" rather than "gambling addictive".
  • And finally refer to their own financial situation to deem if this is worth while. Did I spend way too much on movies this month? Am I badly in debt and need to start better habits?

These are just a few of the internal checks individuals make, when deciding to purchase flash or mobile game. All this if you even charge one cent.

There's a lot of checks people have to go through, which means the value people get have to be much higher. ALL those factors have to be easier, safer and give enough value to overcome. And to make them easier, safer and more valuable, you need to spend more time and resources on them.

Wrapping it Up

So by releasing a game for free, it's costing a lot, but it's also doing a lot. Those other factors you saw below it helps a great deal with. Like generating awareness, goodwill, perfecting a great gameplay experience, ensuring a new experience, finding and using the most secure means of payment etc.

Plus, you still can be "free" to a consumer while taking ad revenue from sites. (Depending on your games this may not even allow you to break even btw.)

In the beginning it's all about using your time and resources as effectively as possible to dig the smallest hole possible and bring the most value.

But thats why I would release a game for free.

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