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Telltale: Digital success is about revenue, not volume

Mon 16 Jan 2012 7:55am GMT / 2:55am EST / 11:55pm PST
Online

CEO Dan Connors criticises the industry trend for sacrificing price points for volume

Telltale CEO Dan Connors has spoken out about the digital market's obsession with volume, and argued that even online it's revenue that matters.

"Daily average users, monthly average users, number of install, it's all very sexy, but the amount of dollars attached to the user is where, from a business standpoint, the rubber meets the road," he said in an exclusive interview.

He was also critical of the trend on Apple's App Store to dramatically cut prices to boost downloads.

"There'll be a giant sale on iOS where a major company may offer up its entire library for 99 and some of that includes $59.99 retail products at console. So someone just sold $600 million dollars worth of content for $7 million, and considers it a success."

Connors knows digital, having worked with the episodic business model since 2004, and his thoughts are echoed by other online developers like InnoGames and A Bit Lucky.

In the interview Connors also revealed his amusement at digital being seen as a new thing for many large publishers, and explained that whether they know it or not, most digital games businesses are using an episodic model.

"They're just calling it different names, there's a DLC campaign for everything and there's multiple DLC campaigns for everything so they're just installing a bigger initial chunk and then building off of it. Free-to-play with microtransactions is in a way episodic as well, it's just additional content to keep the player engaged."

"We're the only ones who still call it episodic, but I think it is what everyone's doing."

Connors was one of the three founders of Telltale Games, which has always focused on episodic content and digital distribution. Its franchises include The Walking Dead, Tales Of Monkey Island and Sam & Max.

11 Comments

James Prendergast
Research Chemist

734 429 0.6
When he's talking about "worth"... is he meaning the value of a product for the consumer or the value of a product in terms of cost to make? If it's the first, then you can't dictate what things are worth to your consmers - they are the ones that decide that.

Posted:2 years ago

#1

Dave Morris
designer

4 0 0.0
All things being equal, if you're in the entertainment business it's better to make $1 profit from each of a million customers than $20 from 50,000 customers. Of course, if you drop your profit to $1 or less and you still only have those 50,000 customers, that's a problem.

Posted:2 years ago

#2

Chris Page
Developer

1 0 0.0
what isn't being taken into account here is mindshare of users. As in if more users enjoy the experience they'll consider buying your next product, and better yet tell more of their friends to try your games. And specifically for mobile apps cross promotion to other products for sale. Then to top off all of this there is yes, a personal drive that is being cast aside here that more people playing your game the happier as a company and as a group of developers you are. Sure you can't directly monetize it, but the morale of a company as well plays a role if you want to try to grind even that out.

It really goes without saying this situation of "the best economic model" for the industry isn't so straight forward and so easily commoditized into simple boxes.

Posted:2 years ago

#3

Pier Castonguay
Programmer

189 106 0.6
So,.. did they or didn't they like Steam selling all their games in a pack for 15$?

Edited 1 times. Last edit by Pier Castonguay on 16th January 2012 5:00pm

Posted:2 years ago

#4

Shaun Farol
Studying Computer Information Systems

40 12 0.3
@Pier Castonguay
I guess not. Their rationale must have been something along the lines of: "How much money did we throw away by selling our games so cheap?!"

The thing is, and this is something oft overlooked when comparing promo pricing sales vs regular sales, how many of those customers would have still bought your game if it wasn't discounted?

Also as Chris pointed out mindshare is very important. Sell your game discounted today, reach a wider audience now, and tomorrow there are more people who might be interested in your eventual sequel.

Edited 1 times. Last edit by Shaun Farol on 16th January 2012 7:46pm

Posted:2 years ago

#5

Jeffrey Kesselman
CTO

112 0 0.0
What he's saying here is that DAU, MAU and the other numbers that don't corrolate in any provable way to revenue are nonsense. And he is 100% right.

"We lose $10 on every sale but make it up on volume" might be an IPO strategy, but its not a business.

The lashback to the idea that you can make money by giving things away is beginning and sanity is starting to return to the industry. The fact that Zynga went out for their IPO at 1/10th the value people were claiming they had just pre-IPO, and then could not maintain even that share price, is a telling sign.

Edited 1 times. Last edit by Jeffrey Kesselman on 16th January 2012 10:25pm

Posted:2 years ago

#6

Greg Wilcox
Creator, Destroy All Fanboys!

2,146 1,060 0.5
Jeffrey, you're a genius. Seriously. I've been arguing that point for a while to deaf ears, but it seems it's getting some traction. Even a drug dealer knows to raise prices once people get hooked on the free samples, not lower them and then bundle MORE drugs in at a loss.

For a lot of folks out there it seems to be sell your game cheap, and yes, it'll do well... but then people will want that sequel (which takes longer to do and costs more because you've added improvements based on feedback) for the same price or less.

Posted:2 years ago

#7
It's not insanity using the freemium model if you are the only person doing it. The problems happen when everyone starts to do it because the BIG advantage is lost i.e. a way to gain market share so people can discover your product which you can then upsell to.

What we're seeing now is the inevitability of using the freemium market in games. Iwata will be proven correct.

Posted:2 years ago

#8

Nicholas Pantazis
Senior Editor

1,017 1,462 1.4
I think there's a difference between a $1 sale on iOS and a $10 sale on Steam. The big difference being perceived value of the consumer-base. On iOS most gamers don't believe they should ever pay more than $5 for anything. It's why Infinity Blade, at $7, has still only sold $30 million in revenue between two entries (and anyone who follows console and PC gaming knows that's nothing for such a major release).

On PC if you're selling a year old $50 game for $10, people go nuts for it. Tens of thousands if not hundreds of thousands who would have NEVER bought it suddenly do, just because it's a $50 game being sold for $10. Some of them will barely even play it, but that's tons of acquired revenue that you'd never see otherwise. Even pirates buy games on Steam sales, penetrating a market that basically never paid you a penny otherwise. Sales also increase a game's mindshare. Not only do the people who buy it potentially enjoy it and look for more games from the developer, but the very presence of the game on the Steam store where millions see it increases its visibility, and permanently boosts sales on the game (according to Valve themselves).

Posted:2 years ago

#9

Mike Amerson
President & Co-Founder

2 0 0.0
Good discussion.
I agree with John Owens. When all developers jump to one side of the ship it tends to capsize on itself. This is true with most things though. Look at MMO's a few years back. After the success of World of Warcraft- every developer and their grandma were making MMO's to capture a piece of that pie. Also, as Chris Page has stated- It's not all about direct revenues. There are several ways to monetize in the freemium market. For My games on IOS (My Virtual Girlfriend and my Virtual Boyfriend). We have nearly 1 million players across 2 of our free games. Some of that translates to sales, but what we have been really taking advantage of is the player base- that alone is worth something if you know what to do with it. For example: We sell ad space within our apps to promote other apps. Other companies are even offering to purchase my games because of that install base and that they intent to use them to market other games they make.

Posted:2 years ago

#10

Tim Carter
Designer - Writer - Producer

554 270 0.5
Yes, the movie industry learned this long ago.

For years and years the ticket price for a movie was the same, regardless of how old it was.

Posted:2 years ago

#11

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