Brokering a truce between creators and consumers

The Humble Bundle has far outgrown its modest beginnings. In its first year of existence, the outfit ran a grand total of three pay-what-you-want promotions for PC, Mac, and Linux indie games. Humble Bundle is now entering its sixth year, and is up to 120 promotions annually, having expanded to ebooks, AAA games, Android games, and as of last week's "Humble Nindie Bundle" for 3DS and Wii U, console games. As Humble Bundle COO and co-founder John Graham told GamesIndustry.biz, even that growth has still been limited, first by the ability of its (then) two-man team to put things together on their own, and by skepticism regarding the very idea behind the company.

"In general, it's taken people a little while to warm up to Humble Bundle and get to know about what we do," Graham said. "We've always had the direct connections to smaller guys in the indie space, but I think at larger companies, sometimes they need to do a little more due diligence and they're a little more cautious to try something bold and cutting edge."

"That was the big experiment, the THQ bundle. And then when we broke the $5 million mark, I think the world saw that AAA content works just fine, too."

Graham points to late 2012 THQ Humble Bundle, the first package where the company deviated from its DRM-free Mac/Linux/PC focus, as a turning point in the way big companies perceived the pay-what-you-want model. The Saints Row publisher may have been more inclined to take a chance on something like the Humble Bundle given its predicament at the time.

"That was the big experiment, the THQ bundle," Graham said. "And then when we broke the $5 million mark, I think the world saw that AAA content works just fine, too. And that was a signal to the big companies as well that maybe we were someone to consider in their plans for marketing, promotion and sales."

The Humble Bundle didn't save THQ. Within a week of the promotion's end, the publisher had filed for bankruptcy. However, it did help legitimize Humble Bundle for a new group of potential partners. While bootstrapping indies can turn to Humble Bundle for a boost in sales and awareness, AAA publishers may have less need of the latter, and more interest in another aspect of the operation. In addition to being pay-what-you-want, Humble Bundle is also pay-where-you-want, letting customers decide how the money they spend will be divided between the game's developers, the Humble Bundle organizers, and a variety of charity organizations that change from promotion to promotion. To date, Humble Bundle customers have combined to contribute more than $59 million to charity.

"I guess we're two offerings for the big companies, both as a revenue proposition but also a good-will marketing play," Graham said. "And depending on where they are in the cycle of their content, those mean different things to them at different times. Maybe someone wants to boost their quarter, or someone wants to do a really fun public event on the internet. It's hard for me to give a one-size-fits-all explanation, but we're the guys that keep our doors open, and now I think have enough street cred that everybody knows we're there and they can reach us if they want to work with us."

As of this writing, the Humble Nindie Bundle is nearly halfway through its two-week run, with more than 56,000 bundles sold for a total haul of $515,000. That number could be goosed significantly, as the site is still promising to add more as-yet-unspecified games to the bundle. It also bears mentioning that unlike most Humble Bundles, this deal is only valid for customers in the Americas, a market which Graham estimated represents about 40 percent of the promotion's community.

"[T]he internet's a really big place, so I find it unlikely that bundles in aggregate have been able to saturate the marketplace of the world wide web."

"Hopefully this is a big signal to the industry that a console promotion will work on our platform, and we'd be excited to try more of these in the future," Graham said.

Of course, success breeds imitation, and the market has seen a multitude of bundle retailers and pay-what-you-want promotions pop up since Humble Bundle hit the scene. Despite the influx of competition, Graham doesn't seem concerned about their collective impact, dismissing notions of any sort of bundle bubble bursting.

"Well the internet's a really big place, so I find it unlikely that bundles in aggregate have been able to saturate the marketplace of the world wide web," Graham said. "In fact, part of the reason the bundle exists in the first place is because we started as independent developers at Wolfire Games and noticed when we did wild and crazy things with our own content, the buzz and excitement driven from the internet caused a rising tide that seemed to lift all ships. It wasn't causing cannibalization, and was just a net positive for us. Having seen that, we felt obliged to keep going, testing the model further."

Graham also downplayed concerns about price erosion, saying pay-what-you-want promotions are just another way for developers to extend the lifecycle of their titles.

"Depending on where you are in your development cycle, you may decide fixed tier feels more appropriate, or maybe I shouldn't go full pay-what-you-want yet," Graham said. "But it is sort of a personal journey for each developer, and they're trying to weigh the perception of their content and trying to motivate customers to buy it. But I feel that each game has its own journey through that cycle. And if your game's really hot, maybe you don't even care and can get every customer to pay whatever price you set all the time.

"I see a lot of our business as almost brokering a truce between the content creator and the consumer, and trying to construct a civil means for everybody to interact together..."

"But oftentimes customers like to have a limited time excuse, be it a Steam sale or otherwise, that gets them over the fence and converting onto a piece of content because everybody likes to feel that they've gotten a good purchase. But it all depends on the circumstance. One truth I strongly believe in is that eventually, even cynics would agree it makes sense to be in a bundle at some point as a source of extra promotion, good will, and additional revenues."

That's not to say the bundle phenomenon hasn't created problems. Graham said that depending on whom you ask, key resellers are a significant concern. It's difficult for a developer to run an effective sales promotion when opportunistic businesses hoarded cheap keys from a previous bundle promotion and undercut any official sale price through their own sites.

"I think that's kind of sad," Graham said. "I see a lot of our business as almost brokering a truce between the content creator and the consumer, and trying to construct a civil means for everybody to interact together that everyone can be excited about. And I feel like the reselling services have left the developers out of the conversation and don't care."

He added, "I don't mean to say there's a war being waged on our platform. I mean rather if you went too far to one extreme or the other, you might end up with onerous DRM all the time, every time on the developer side, and rampant piracy all the time, every time on the consumer side. Certainly there must be a happy middle ground upon which we can build a sustainable game development ecosystem."