I don't really have much to add but a personal opinion, but I never felt the 60 or so percent that the portals took from each developer was very fair. I don't even think a 50/50 deal is fair. Microsoft (who only takes a more realistic and much less greedy 30%) has a much better understanding of what it takes to build a whole game compared to just hosting one. But then again, aren't they the ones who started this whole $9.99 trend to begin with? This makes me wish even more that there was a way that this "indie-steam" idea could work and then become popular if nothing more than indie-devs rights to a fair earning percentage on the PC. But these are just ramblings of a newbie who may only know half the story so far.
From what I heard, Microsoft has since raised its percentage a while back. It was 30% originally and some games still have that deal, but I don't believe new games get that anymore. I don't think around 60% is too unfair considering that many games that are sold through affiliate links already give away around 30%, and a portal usually does more to market a game than an affiliate does.
The new question is why deal with Reflexive at all when my understanding is one could go right to "the source" and get an Amazon / Unbox listing?
We can't disclose the details or algorithms of pricing strategies, I'm afraid. Like all pricing strategies we apply though, it's based on objective metrics and is intended to maximize revenue for developers as well as the portal for the long term.
It makes sense for Amazon to drop prices, because they have more opportunities to sell to customers than other, game-only portals. If someone buys a download game from Amazon, they're likely to be open to downloading songs, movies, and whatever else. Amazon knows this, and is willing to drop profits on games in order to grow their audience of download-savvy consumers. I guess it's an open question whether the volume increase will counteract the price drop to the benefit of the developer. It will surely benefit Amazon, though (don't get me wrong--not saying this is inherently bad, just that it's quite likely true)!
Yes, we want to maximize revenue for affiliates too that's what I meant by "portal", thank you for clarifying
My games all seem to be $6.99 too. Well at least December was a good month on Reflexive with some good units sold for $19.95.
Price wars are horrible for any industry. This is ridiculous. This is what happens when deep pocketed parent companies can absorb the front end losses and undercut the competition. If I were a developer and saw my game slashed to $6.99 I would be p!ssed beyond belief right now.
Coincidentally just before Reflexive was acquired by Amazon, I looked into getting affiliate games listed on Amazon's marketplace or whatever it's called. They don't take software, however. (At least they didn't then - could have changed recently.)
Well, soon somebody decides to go for $5.99 (GameHouse does that already)? And then $4.99 Or whadda heck, how does $0.99 sound to you? Advertise world.... here'll come bunch of indies ready to join your troops (Not that I'm complaining... it's simply a major switch that's happening right now).
I checked our game on Amazon. It's $9.99. Unfortunately, it has no visibility. So I doubt we'll see any sales. From the main 'downloads' page, I could not see anyway to browse to our game. I like how Reflexive cycles older games through their front page. Amazon is a bust, for us. If we had released DHSGiT on Reflexive last week, we'd be selling great! We've been #2 on Big Fish's card&board games for a week. We're still on the front page of WildGames, after a month. I.O.N. I went to Reflexive to buy Oasis, but it's still 19.99. I guess Playfirst isn't playing ball. Cyrus Zuo, consider this recommendation for Amazon. Rotate all of the games through their downloads front page, to introduce their customers to the wealth of products that they will otherwise miss!
Actually our hope is that cross-selling should work both ways. If someone buys a song, movie or whatever else, then they are likely to be open to buying a download game. In other worlds, Amazon's broad catalog across very different markets and categories is something that should be a competitive strength in terms of game sales. Honestly, the downloadable game market has been small, and unknown, in terms of where it should be, in my opinion. I'm talking Aunts and Uncles, parents and grandparents. It should not be people playing downloadable games or not - it should be everybody playing them, and just picking the right ones for them. I would even say downloadable games would be a crappy thing to undersell on to attract a market, because there are so many people that don't know they want them yet - it's still something the world needs to discover. A much better loss leader to drive traffic would be toilet paper. Everybody poops after all.
Well, my eyebrows are certainly raised in acute horror. Its a change, and people don't like change. However... Buzzword's never really done much. With it now being priced at $6.99 it'll be interesting to see if the lower price gets compensated with a few more sales. Its no huge loss if it doesn't but it'd certainly influence future decisions. My instinct says I'll see no increase in sales as I couldn't even find my game without knowing its name and doing a search for it. So as difficult as it is for me to withhold judgement, that's precisely what I'm going to do for now. But I (and I hope others, most notably Cliffski) will be keeping an eye on the situation and hoping it all pans out for the benefit of everybody. A change is not always a bad thing. I'm sure this Amazon/Reflexive deal wouldn't have come about if James C Smith thought for a second that he'd be mopping floors in McDonalds by Christmas. So lets try to stay positive about it until we've seen hard evidence to the contrary.
The other downside to this is that the price wars just don't affect the portals, it could also affect direct sales. If the average price of downloadable games is now < $9, then it's going to be harder for developers to sell their games direct at $19.95. Heck, it happens around here already. Some people here shyly admit they often purchase indie games they see here or GT through BFG or some other portal if they have a cheaper price. Anyway niche games seem to be the way to go since you'll be less affected by these price wars. What's ironic is that a lot of developers a couple of years go were being accused of paranoia when they warned of these things. Now it's all happening. Development costs have skyrocketed. Royalties have gone down. Price wars are forcing the average game sale price down. Portals are beginning to dislike carrying games that were already released on other portals. Some portals are beginning give away full-priced games for free that have ads embedded. Developers have definitely been getting the short-end of the stick the last couple of years. I know I know portals say that by "increasing the overall volume" developers make more money in the end. But this assumes game turn-over is fairly low. The problem is game turn-over is so high nowadays that games get prime real estate only for a very short period of time (if at all). Then your games gets thrown into a back-catalog where it may only be accessed by search. I wonder if these games ever have a chance to achieve the volume to make up for the huge price cuts. Also "increasing the overall" volume by dropping prices, devalues games over time. In the long run this isn't good for developers or portals. Hit games will still make lots of money on portals. But like KNau said, I wonder if the "near-missses" or "moderately popular" games on portals are still capable of pulling in viable sustaining income.
...and quite right, too. I'm the first to admit that its going to effect direct sales unless we adjust our pricing to compete. However, if I can pay $20 for something, or go some place else and pay $7 for the exact same product, its a no-brainer. Customer loyalty is a myth when it comes to a 60% saving. Let's be honest guys - we've had many a discussion about "why is everything $19.95?" before. We'd all love to have the balls to go ahead and put out a game at a throw-away price but I'm not aware of anybody that's actually tested the theory. Well, its being tested right now. We can only wait and see if there's a significant increase in sales. But to be honest, the games page on Amazon.com feels a bit half-arsed.