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Bar-sur-Loup Provence France

Bad managers asking the wrong questions, number 367

Guillaume de Fondaumiere, founder of the studio that did Heavy Rain, just gave an interview where he complained about the used game market and how it was eating into his profitability. In fact, he said that the one million used game sales represented a loss to him of between €5 and €10 million.

Wow. There is so much "gaaa!" there I'm not sure where to start.

Dude, 3 million people played your game. 2 million of them paid a price you yourself say is "...probably too expensive..." to do so.

So, with a little clarity, let's ask the real questions:

1. How many of those extra million players would have paid full price if there was no other option?
- If my understanding of royalty rates is correct (~15% to the studio), de Fondaumiere is claiming that at least half if not all of those million players would have purchased it new at a €60 price point.
...okay, raise your hand if you believe that. And in Santa Claus.

2. What is better, 50% more people enjoying your product, talking about it, and wondering about the next one, or draconically trying to maintain a price point and margin expectation that is clearly out of line with what your customers are willing to spend?

Did de Fondaumiere stop for one second and think, "Maybe at €40 we could have sold 4 million? Or 6 million at €20?" In a business that has essentially zero variable cost and enormous network effects that is a serious question. Yet he shows no indication whatsoever that he is thinking about the price/reach/community trade-offs. In this day and age, that seems to be a critical question for a studio director given the evolutions in game distribution and pricing.

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Bar-sur-Loup Provence France

December 2011

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