No, this isn’t just another excuse to talk about Peggle, an iPod, computer, and now console game that we’re still anxiously awaiting for the iPhone. Rather, it’s a quick set of thoughts on an issue that has become increasingly important over the past nine months of App Store experimentation: what are iPhone and iPod touch gamers actually losing out on as a result of the Store’s current race-to-the-bottom pricing methodology? And how can we get it back?
If you’ve been reading iLounge for any length of time, you know that our editors are simultaneously (a) value conscious and (b) willing to pay a fair premium for truly deserving innovations. The key words here are “value” and “fair:” me-too products can be exciting if they deliver great performance for the dollar, as are truly breakthrough products that take things up a big notch without charging a crazy amount more than their semi-similar predecessors.
This month, PopCap released a Nintendo DS version of Peggle that might—under different circumstances—instead have been released on that date for the iPhone. Called Peggle Dual Shot, it’s one cartridge with both Peggle and its semi-sequel Peggle Nights on board, the second game unlockable by playing the first. More interestingly, it was coded by Q Entertainment, the famed Japanese developer behind Rez, Lumines, and some other well-known, buzzworthy games. As it turns out, Q didn’t just port the game; it added unlockable new levels, plus completely new “Bonus Underground” caves that can help you rack up points and extra balls while taking a break from the standard Peggle action. If you haven’t played Peggle or Nights yet, this cartridge is pretty close to a dream incarnation, with minuses only for the DS’s screen resolution and varied but not 100% satisfying control schemes. All the screens here are from Dual Shot.
iPhone gamers might have a bigger problem with Peggle Dual Shot: it sells for $30, and of course, iPhone games don’t sell for $30. Notably, the original iPod version of Peggle sold for $5, and these days, so does the computer version. PopCap’s other iPhone games, Bejeweled 2—once $10, now $3—and the just-released $5 Bookworm—suggest that an iPhone version for $5 or so would be plausible, possibly expected. But what incentive does PopCap have to release its $30 Nintendo DS game on the iPhone for $5? The answer is more interesting than you might think, and discussed below; click on Read More or the title of this article for the rest of the story.
First, let’s consider how a $30 asking price for Peggle DS might be justified to consumers. PopCap is selling Peggle Nights in Mac and PC formats for $20, adding a bunch more levels, a new character, and the option to download even more free additional bonus levels. Add the original Peggle’s $5 price to Peggle Nights’ $20, then consider the extras that were developed by Q Entertainment, and suddenly the DS version’s $30 price sort makes some sense.
Except that price is actually artificial: the $30 price is based on a roughly 100% retailer markup, and a sense of what some gamers—early adopters, basically—are willing to pay. For the company that actually creates the games, the economics are different. A $30 Nintendo DS cartridge has a lot of costs that aren’t required when publishing an iPhone version of the title: PopCap doesn’t need to pay anything for a cartridge, manual, or packaging, has a lower risk of returns, and no costs to ship products, maintain an inventory, or so on. My understanding is that a retailer typically buys a finished DS game for around $15, marks it up to $30, and tries to sell it at that price until it’s forced to discount, dropping the price until the inventory is gone. Under that model, the game’s publisher pockets around $7.50 on the cartridge they sold for $15, with the other $7.50 going to Nintendo.
Apple’s model is different. Most of those costs don’t apply—marketing aside, a developer only needs to worry about SDK licenses, paying the people who create the game, dealing with App Store approvals, and giving Apple its 30% cut. None of these considerations is trivial, but by comparison with Nintendo’s or Sony’s development concerns, they’re not bad. Consequently, a Nintendo developer can choose to pocket $7.50 on a $30 DS game, or get the same $7.50 on an $11 App Store game. This might explain why Electronic Arts was originally hoping to see $15 prices for App Store titles; at that price, it would actually be doing $3 better per iPhone game sold than per DS game. At $20 per game, it would be making almost twice as much as on a DS game. All without providing the consumer that box, manual, or any sort of resale value, say nothing of a decent control scheme. Sorry, I digress.
In any case, virtually no game in the App Store is selling for $20 or even $11 these days, which puts developers in a tough position: either discount titles and hope to make profits on the sheer volume of instantly addressable iPhone and iPod touch owners, or cut features to correspond with the lower pricing. By and large, and despite the number of games that are appearing in the store, the really big game developers seem to either be trimming features—say, levels—or holding back their great titles from iPhone release altogether. For those who do participate, the new idea appears to be that they’ll keep spooning out additional content or quasi-sequels (Toy Bot Diaries 1, 2 and 3, etc.) in an effort to make additional dollars later.
Which leads us to Peggle for the iPhone. Even at this late stage, with a month or so left before the game’s release, Popcap isn’t making any guarantees on what the game will actually contain, but based on the above, you can guess what might wind up inside if it sold for $5, $8, or $10. You can also imagine what would happen to sales if PopCap tried to sell it for $10 or $15—people would freak out. So since consumer buying behavior isn’t going to change overnight, it may be time for a new pricing strategy for developers: Lite, Normal, and Deluxe. Lite would continue to be free. Normal would be $5. Deluxe would be $10. You’d be guaranteed to get a full game out of the Normal version, like Peggle, but a much-expanded version for $10, like Peggle DS. Obviously, this would only work for developers who actually had the talent and wherewithal to create two times the full game for a Deluxe version (read: almost anyone who has been making real console and handheld games in the past), and companies that tried to sell their current trashy $5 titles for $10 would be widely and deservedly pilloried. Everything else could settle into the sub-$5 category, and occasional Deluxe game sales could bring their $10 pricing down to $7 or $8. Or even $5, on special occasions.
My gut feeling is that this model would work a lot better for developers than what some of them are no doubt considering after the iPhone 3.0 Event: nickel and diming for all sorts of additional in-game content. Consumers are already feeling nauseous over the prospect of “buy this stereo for $1” and “buy this shirt for $2” dialog boxes, so keeping in-game transactions simple, linked to either upgrading from a free game to a paid game or a paid game to a deluxe game, would be both profitable and truly preferable for users. On the flip side, should the “buy this” boxes become common in iPhone games, it could easily work against the platform—just imagine the commercials showing someone actually playing a full Sony or Nintendo handheld game alongside someone clicking on iPod touch dialog boxes to the sound of a cash register.
Readers, what do you think?