Big Fish Games changes its prices: Our Interview with Paul Thelen

It’s a big day when Big Fish Games, a leading distributor of download games, announces changes to their pricing. In a nutshell, the price for Collector’s Editions is going down for Club Members and the price of Standard Games is going up for Non-Club Members (the details as reported in our news article from last night).

We had the opportunity to interview Paul Thelen, Founder, Chairman, and Chief Strategy Officer of Big Fish Games to get the full scoop on the changes in pricing, to discuss the logic behind such changes, and to even get a bit philosophical about game pricing.

Big Fish Games has always been at the forefront when it comes to pricing and download games. Why are you changing your pricing now?

Consistent with our price changes in the past, we are adapting our pricing model today to further reflect game quality, content age, and the preferences of our millions of customers in North America and overseas.

As you know, we work in close partnership with hundreds of developers and listen carefully to our customers to ensure that we are always striking the right balance for both. We don’t make changes without deep analysis, testing, and consulting with our partners and customers. More specifically, some of the variables we consider include purchase behavior, content type, quality and content age.

Taking this data and various other qualitative and quantitative elements into account suggests that $2.99, $6.99, $9.99, $13.99, and $19.99 is a pricing model that works best now for our development partners and customers alike. We are providing more options for our customers and maximizing revenues to our development partners, which of course will allow them to innovate next-generation, AAA-quality games that will benefit our customers.

There is a big difference between pricing for a Standard and a Collector’s Edition game for both Club and Non-Club members ($3 to $6 difference). What are the criteria for a game to be accepted as a Collector’s Edition versus a Standard Edition game?

Games are selected as Collector’s Editions based on a quality and content depth requirement – subject to quantitative feedback from customers.

Above and beyond our customer-driven, proprietary scoring algorithm, our Collector’s Edition games are required to have an added depth of fun in the form of bonus gameplay and superior usability via built-in strategy guides. Additional features like concept art, screen savers and other bonus features are nice to have but not hard requirements for Collector’s Editions. In summary, the content we accept into the Collector’s Edition program is the best of the best and has a quality level and feature set that – as judged by our customers – make it a great value.

You are gradually introducing the concept of the product life cycle with your tiered pricing for newer and older games (higher price at launch, and Daily Deal price of $2.99 for Club members for older games). What are the time frames between when a game goes from a Collector’s to a Standard Edition to a Daily Deal game?

In our experience, lifecycle management is only one of several factors in creating an appropriate marketing strategy for developers and consumers alike. Game quality, customer behavior and a game’s age all factor into our decisions.

Quality differentiation: $9.99 vs. $19.99

Frequent purchasers: Save 30% including Collector’s Editions

Classic older content: Save 70% as limited-time offers

By raising the price for a standard game to $9.99 for non-Club members, Big Fish will be selling games that are currently selling for $6.99 on other Web sites (with no membership requirement). How will Big Fish justify the higher price (by as much as $3) for what is essentially the same game?

Customers are very sophisticated in their preferences and they understand the value of our Game Club, including daily freshness of exclusive content, exciting special offers and above-and-beyond customer service. Our changes today will reward developers with greater economic value and provide our loyal customers with a greater selection of games and choices.

You are lowering the price of Collector’s Editions for Club Members to $13.99. Will Game Club members be able to use their game credits to purchase Collector’s Editions or will they have to pay an additional fee as they currently do for Collector Edition games?

Game Club members pay $6.99 for standard games and $13.99 for Collectors editions. The monthly Game Club Credit they receive is good for any standard game; members will still enjoy the $6.99 price point for additional games. The ability for subscribers to accumulate two credits and use them on a Collector’s Edition is in the works, but not yet completed, so for now Collector’s Editions are $13.99 for Game Club members.

Collector’s Edition games offer added bonuses such as walkthroughs and wallpapers. What other additional features do you encourage game developers to include in their games?

We encourage our development partners to include features we know our customers value, including bonus content and integrated strategy guides. Concept art, wallpaper, and sound tracks are nice-to-haves but not required as they appeal primarily to very avid gamers.

Does Big Fish have any plans in the future to offer more tiered pricing for different types of games? For example, a different price for a hidden object game with 10 levels and 3 hours of game play versus an adventure game with 50 levels and 20 hours of gameplay?

We of course do not comment on what we have in mind, but we remain focused on making adjustments that benefit our development partners and customers alike. As a developer, distributor and publisher we are eating our own cooking, every day!

Gamezebo has been vocal lately about the impact of pricing on the growth of our industry. On the one hand, lower price expands the market and brings in more potential game buyers. On the other hand, lower prices means developers earn less per game that may lead to lower game quality. As a leading distributor and developer of download games, what are your thoughts about the impact of pricing on the state of download games?

The aligned goal for game developers and distributors should be to maximize revenue while providing sustainable value to customers.

The one issue that your articles have failed to address is the practical reality of price elasticity. If, overnight, you double the price of games, you would not double sales, since fewer people would buy and those who did buy would buy less frequently, potentially so much less that the total revenue per title would drop dramatically. This wouldn’t be a good outcome for developers or customers. This is a very real and present danger, especially true during these hard economic times. The changes in our pricing are designed to create a rational, segmented approach that we feel is a win-win for both customers and developers. More revenue for developers means more innovation, which is good for the industry and customers.

Google just announced that they are launching the Web Chrome Store in October. Google will surely have an impact on flash and Web games. With support of C++ games, what do you think Google’s impact may have on the download games market?

We hope Google is successful in expanding the audience for gamers as other social networks have. The category leaders across each segment of the games business – and more importantly, consumers – would benefit from that expansion.

Any final words for your fans out there?

Indeed… a big thanks to our hundreds of development partners and millions of customers worldwide for your continued loyalty. We are humbled and incredibly excited for our future together!

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