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On Universal Combat Pricing

[Jan 30, 2004, 12:32 pm ET] - Share - Viewing Comments

In apparent response to 3000AD's Derek Smart's complaints about the price point for Universal Combat (story), DreamCatcher sends along a brief statement describing their stand on the decision to market the game as a value-priced product:

A DreamCatcher Spokesperson says “Our pricing strategy has been set in the best interests of the title and more importantly the consumer. Universal Combat provides terrific value to the consumer at $19.99 and we are happy to be able to deliver that value.”

DreamCatcher does not expect to comment further on this matter.

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49.

Re: I'll throw old Derek a bone here

Jan 31, 2004, 12:36

Chris

This is a very strange situation because Derek and the publisher have interests which coincide: They both want to make as much profits as possible off the game. Of course, that isn't the same as setting a very high price for the game because demand curves slope down! Disagreement over pricing suggests only a few possible scenarios: 1. The contract is not sensibly written, leading to divergent interests over decisions such as pricing. This would be the case, for example, if Derek gets a fixed fee per unit sold rather than a fixed share of the profits, although in that case the publisher would prefer a higher, not lower, price than the Derek. 2. Derek and DC have have different expectations over demand for the game. Derek thinks that $40 will maximize profits while DC thinks that $20 will maximize profits. 3. Derek doesn't understand elementary economics and simply thinks that higher price --> greater profits. 4. Derek may recognize that price=$20 maximizes profits but also thinks a budgetware release will harm his repuation. His reputation is one aspect where his interests and DC's don't coincide. In other words, he's willing to lose profits in order to gain the prestige of a higher-priced game. My guess is that the explanation is rests on points 2 and 3. Regardless of the explanation, Derek's public temper tantrum and promise not to support the title is impossible to interpret as anything other than yet another epic business blunder.

Subject

Comment [quote="Chris"Jan 31, 2004, 12:36]This is a very strange situation because Derek and the publisher have interests which coincide: They both want to make as much profits as possible off the game. Of course, that isn't the same as setting a very high price for the game because demand curves slope down! Disagreement over pricing suggests only a few possible scenarios: 1. The contract is not sensibly written, leading to divergent interests over decisions such as pricing. This would be the case, for example, if Derek gets a fixed fee per unit sold rather than a fixed share of the profits, although in that case the publisher would prefer a higher, not lower, price than the Derek. 2. Derek and DC have have different expectations over demand for the game. Derek thinks that $40 will maximize profits while DC thinks that $20 will maximize profits. 3. Derek doesn't understand elementary economics and simply thinks that higher price --> greater profits. 4. Derek may recognize that price=$20 maximizes profits but also thinks a budgetware release will harm his repuation. His reputation is one aspect where his interests and DC's don't coincide. In other words, he's willing to lose profits in order to gain the prestige of a higher-priced game. My guess is that the explanation is rests on points 2 and 3. Regardless of the explanation, Derek's public temper tantrum and promise not to support the title is impossible to interpret as anything other than yet another epic business blunder. [/quote]

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