Finding new markets in old products

Sometimes there are interesting ways to leverage old products with a new lease of life, and none more so than the package that debuted last year, the Humble Indie Bundle.

The concept was elegant, simple, and yet breathtakingly effective: take 5 games from independent developers, offer them to users under a single price. Here’s the clever part: let the user specify how much they want to pay, how much of that amount goes to the developers, how much to the company organising it (and paying for the bandwidth to download the games) and how much to charity. And wait for users to buy.

And buy they did. The first bundle, in May 2010, took five already established, published indie games and packaged them up – and inside a week, $1.25m in total had been paid in by people for the games, of which nearly $400,000 went to charity. That still leaves $800,000 in revenue for the five development groups, so inside a week, each received $160,000 – nothing to be sneezed at.

A second Bundle was released during December 2010, initially running for a week and then extended for a few days to run until Christmas – the final result, a cool $1.8m revenue.

While this might not sound like much compared to the revenues booked by big ticket games from the likes of EA or some of the big console manufacturers, remember that these are 5 independent groups – two- or three-man band sort of developers, so receiving $100,000+ per developer is quite a good return really.

What is rather impressive, though, isn’t really the numbers, it’s the spirit. This was a grass-roots campaign, both times, and once it got started, it just kept rolling quite magnificently – but it’s also innovative. In this day and age, games tend to come with copy protection measures, to prevent redistribution, and as I’ve hinted at before, this is often actually troublesome – but all of the games in the Humble Bundles are actually free of DRM measures, all are available cross-platform (something that is a major factor against DRM since it’s much harder to implement DRM measures consistently across platforms), and people put in surprising figures.

I think it may be a sign of what is to come: it’s visible that there is hard evidence of people not abusing such things as badly as all the media distributors want us to believe. It’s a sign that DRM isn’t necessary to gain a return on games, that it isn’t a requirement to make a profit, and it can even encourage people to buy.

Sure, the argument will be that it’s easier to pirate – and people did, which lead to the organisers kicking off a discussion about it; there were some people genuinely unable to purchase a bundle due to being under-age, or without a credit card/debit card/PayPal etc., whose only choice was to rely on someone else purchasing it for them. There were, of course, some people who felt it was their right to have it anyway, and these people would have pirated it either way, whether as a conventional purchase or through this mechanism.

The media also historically painted the people that donated to ‘pay what you want’ campaigns as though a lot of people would pay the least they could towards it, and some donators did actually pay $0.01, even with the funny picture displayed to those users. It was interesting to see the average contributors by Windows vs Mac vs Linux actually – Linux users typically paying nearly double what the Windows users were paying.

One little trick that the Bundle folks used to encourage a higher price was the carrot of re-adding all the games from the first bundle to the second; if you already bought the second bundle by the time the games were added, it was free, but if you were a new purchaser, you had to pay over the average (at the time this was $7.20) to get the extra games. Sure enough, the average did go up a little over the last few days of the project.

What I’m getting at here, is that there is evidence to support a rethink on how games are distributed, and possibly media on a wider scale; pay-what-you-want schemes don’t always result in masses of people paying the minimum, there were some contributors literally putting in donations into the thousands of dollars bracket, and putting out games – even a new game rather than one that’s already been out for a while – without DRM encourages people to buy rather than not, in what is probably the most perverse course of logic ever (instead of beating people with a stick to prevent them, it seems to work better by relying on their honesty and trusting them)

Who knows, maybe we’ll see more similar deals in the future? Certainly Amazon and Apple are aware of the benefits of DRM-free media…