Tobold's Blog
Wednesday, August 08, 2012
An order of magnitude cheaper

Computers in general are of not much use without software. And as few of us are able to program everything ourselves, we often need to buy that software. So since I bought the iPad earlier this week, I've been buying a lot of apps (games and utilities) in the App Store. And it struck me how there is an order of magnitude in difference in prices between the App Store and buying software for a PC: An expensive game costs 6€ instead of 60€, a useful "shareware" utility where you pay for the full version after having tried the free one cost 1 to 3€ instead of 10 to 30€, and so on.

Of course an iPad game isn't equivalent to a PC game in terms of polygon count and production cost. But that isn't necessarily a disadvantage for the iPad: Being lower cost, developers can take bigger risks, and create more different games. While the triple-A games on the PC these days are nearly exclusively sequels or games that play a lot like already existing games, you can find a huge variety of all sorts of weird new game concepts on the iPad. I especially like the iPad adaptations of board games, a category which by itself opens up a whole new universe of game concepts.

The price difference is even more striking for utility software, because there is often little or no difference in quality. And that with a smaller market: Apple sold 55 million iPads up to March 2012, and is expecting to sell the 100 millionth iPad by the end of this year; but there are over 1 billion PCs in use. So with a bigger market, why is software for a PC ten times more expensive than for an iPad. The iOS being a far more closed system, requiring less attention to potential differences in hardware might explain a part of it, but does that make software development really 10 times as expensive?

It's the App Store. While the install base for PCs is larger, the market is fragmented. There's countless places to buy software and there's no single place where the potential customers are guaranteed to look. By contrast, every app able to run on a nonrooted iOS device is available at the same (virtual) place. Because development costs don't change much even if you have 100000 users instead of 100, you can charge less per copy to recoup your costs and finance your next project.

On the other hand.. your competitors also have equal access to that same pool of potential customers. Competition for attention (let alone purchases) will be fierce. If your price is higher than the customers' impulse buy threshold, you'll lose them.
One particular point which PC software publishers apply to: the reason for high prices is that PC software piracy is much stronger than on the other markets, and high prices help to mitigate possible losses. I see this explanation in inverviews with the publishers from time to time.
It is curious that you mention utilities as being overpriced on the PC because it is one area that incredibly well served with free software. Unfortunately these great free utilities are often tailored for techies so the general consumer has to pay dearly for a more accessible tool which is not as good.

I think this illustrates a curious feature of the historical PC market. The costs of getting a piece of software to market and collecting money from your customers was such that there was no point trying to sell a piece of software for less than $10. You either gave it away from free or charged $20 or more.

The real revolution of the app store model was that it provided a very low cost path for developers to distribute their software. Suddenly it becomes possible to sell something for $1 and still make a profit.

While I do think the App Store has made $1 software possible I disagree with @Mika that the exclusivity of the App store contributes to lower prices. Exclusivity means the retailer has monopoly power and that is a not a good thing for customers in the long run.

This whole area is still only developing but already thee are signs that prices are lower on the Android market, which allows multiple retailers than on the Apple App store for example often for exactly the same app.
Most PC games are required to deal with retail channels. That mean physical boxes, shipping, shelf space, etc. For Apple, between a digital only retail channel and in app purchases, the overhead is much less and consistent across many applications (although online games have additional overhead).

Given how some smaller game developers who release more content digital only (like Steam), are seeing bigger profits during Steam sales, its possible the PC digital only space will gravitate towards the iPad pricing model.

Sort of like Subscription and F2P MMOs. F2P used to be the realm of browser or low end client MMOs. Next, AAA titles migrated to F2P. AAA starting out F2P will be more normal as time goes by.
mbp said it: the cost of finding customers, distribution and selling is, or used to be, so much higher that you didn't really have any option but to charge a high price.

There was no way to get at a market where the consumer could spend a dollar or two and get an interesting app right there without fussing about demos and such like.

I think once Windows 8 hits we will see prices start to drop in the PC market too. Indeed, we already are seeing that as a result of Steam etc.

It's not the App Store per se, it's App Store-like distribution.
The answer is simple: Because PC users will pay more!
Steam and Activision execs have gone on record recently that they think that Windows 8 will be bad for gaming. True or Self-serving or both; we shall see

Certainly the evolution of the market will be greatly influenced by whether Microsoft sees PC games as like 1995 DOS (extremely open with Balmer shouting Developers! ) or 2012 XBox. Is the Windows 8 additions to be steam-like giving indies much greater success? Or XBox where bug fix versions are $20,000.

@mbp - i like the quote that programmers can find most anything they want on SourceForge and other open source sites and non-programmers can find little.

The most appealing thing is the innovation going on in iOS.

In the long term, Android items should be cheaper; open and all that. In the short term, it is a lot less profitable due to the development/support of 100+ devices to support.

To tie it all up, the PC market is analagous to the WoW market - both have peaked/are dieing, are huge, and will be around for a very long time.


In the US, the problem is networks. Otherwise the cloud would be another alternative e.g. Sony's $380mm purchase of GaiKai. Is a game you run on your iPad accessing a virtual PC in the cloud a PC ap or an iOS ap? (ofc, it's a clud ap if your selling yourself to VCs.)
I have an iphone and an ipad, and I swear I would leverage this magnificent advantage the platform has... if I didn't drown in a sea of shovel-ware clones every time I tried to navigate the app store. The interface for that monstrosity is an horrific exercise in encouraging groupthink: If there's a really good app out there but it's not on one of the category short-lists, you're not going to find it.
First, I can't help noticing that the majority of games for mobile devices is 5 to 10 times more primitive than PC titles.
Mobile devices lack adequate controls (WASD + 2-button mouse) to run sophisticated games. They also lack hardware that can support such games.
Most of the mobile games don't go further then Bejeweled level of gameplay. Ones that do are ports of PC games - i.e. they didn't require full development, just porting.

Of course, the close to "perfect competition" situation also has an effect on price.
Post a Comment

<< Home
Newer›  ‹Older

  Powered by Blogger   Free Page Rank Tool