How well is Civ 5 selling

[Hermann the Lombard]

I bought civ 5 at launch because it was digitally distributed by steam. If it was not available on steam or impulse, I would not have purchased it. Come to think of it, with the exception of starcraft II, I have not bought any game that is not digitally distributed. For good or for bad, digital distribution is never going to go away, and I for one have embraced it. I would bet there are other aging gamers like myself who likewise have little time available to head down to best buy every time a AAA title gets released.

OTOH I almost didn't buy Civ V at all because Steam was required to activate it. Steam is a security threat as well as a threat to the stability of a current game. Even when in "offline mode" Steam accesses the Internet on launch, so I disable my internet connection before launching the game. Two of my friends had the game become unusable when they downloaded the first patch, and had to reinstall the game. It saves a lot of time when you reinstall from disk rather than having to download this monster all over again. I much prefer having physical control over the game when--for example--I have to reformat my hard drive or replace my computer. Similarly, I will never download a DRM-protected song again because those become unusable somewhere in the backup/replace/reformat processes.

Yes, I'm a dinosaur, YMMV, and that's your privilege. I lament the passing of record stores (dating myself even more), and of the loss of brick & mortar game outlets...which I don't help by ordering my games online from Amazon!

[wodan11]

The biggest factor in going with Steam, beyond stopping PRE-release pirating, is that brick and mortar retail outlets charge a ton of money for shelf space. With Steam, there is no shelf, no charging for physical space. Thus, the cut back to the developer/publisher is much higher.

Actually Steam does have shelf space. Go to http://store.steampowered.com/ What do we see? "Featured Items" and "Featured Games," a big rolling banner, and sidebar "Spotlight" games as well. You're insane if you don't think Steam charges for that front shelf space. I'd also bet that Steam runs ads where they feature these games, and they would charge for that too.

Digital distribution is certainly cheaper than physical distribution

I'm not sure that's a given.

The real reason digital distribution is attractive to manufacturers is that you don't have to commit to a print run size.

[Ming]

Trust me... it's a given. It's far cheaper to distribute digitally.

[wodan11]

Ming I was the production manager for a game company, I don't need to trust you, I'm fully aware of all the costs.

Trust me: it's not that clear cut when we include intangible and other costs, even so far as opportunity costs. (e.g., Steam doesn't get walk-in casual impulse buys).

[Zoetstofzoetje]

ok, so what is the comparison between the variables in the marketing effort? i'm assuming both have pros and cons that the other overlaps and extends, so where is the equilibrium between both distribution methods?

[wodan11]

Not sure what you mean by "equilibrium." But even by just asking about the "marketing effort" that is only a piece of the full picture. It's really far to complex to even begin to present here, but I don't want that to be a cop out.

In general, going to brick and mortar stores will give about 50% to 2k/Firaxis, 25% to the distributors, and 25% to the retail people. Let's assume that rough rule is accurate, and further assume that the 50% would also hold steady to online distribution.

Now, online, we would have some % going to Steam.

In addition, there's going to be some overhead incurred by 2k/Firaxis for both setting up and maintaining that avenue. A countervailing point is that this may replace some or all of the overhead for the brick&mortar distribution. However, we must also realize that brick&mortar has been in place for years and years and is a (mostly) smoothly functioning process. Online may reach that level of efficiency eventually, but right now I daresay there is a good bit of attention that must be paid to it by 2k/Firaxis' upper management, legal dept, etc. That's a high cost we can't ignore.

Furthermore, back to the overhead, the online distribution itself will have costs that don't have a corresponding analogue to the physical distribution. It's not like Steam buys a X pallets of Y games and writes a single check to 2k. Instead, they process some number of game purchases and have to fully document the sales, and probably write a check each month, to 2k. So 2k now has to manage this variable sales reporting, validate it, and process the variable income. That's an ongoing requirement that they have to do each and every month (as opposed to the one time sale).

I mentioned the opportunity costs... hopefully that's clear enough. And, it's not just the impulse sales, there are other ramifications. BestBuy, for example, has a flyer they put out that features the hot games, and they do it on their own website as well. That's free advertising and free marketing, that generates an unknown number of sales. Simply having an inventory means BestBuy is going to push the games until they are sold. No business likes having capital tied up in inventory. And, having done so, they order more. A smaller amount, but they do order more. They in effect become sales brokers for 2k. What happens when 2k moves to online distribution? They lose some or all of those additional sales.

In a sense, we can't even assume that the total # of sales would be constant, between one hypothetical (a pure brick&mortar distribution) and another (a pure online distribution), let alone between some variable mix of the two. So not only can't we assume it's a simple comparison of production costs, we can't assume the marketing costs, licensing costs, gross income, or any of a number of comparisons are equivalent between the two distribution methods. And ancillary repercussions / ramifications even extend to such things as bundling Steam means alienating a portion of the existing customers, which decreases sales.

If it was truly simple, then 2K would be a warehouse with one employee. I guarantee there's some talented people who spend a ton of time trying to figure out the optimum balance here, all the wheels within wheels, and all of the ripples that echo out from these "simple" distribution questions.

[Mr Justice]

woodan, i would have to severly disagree. i would say i'm not involved in marking or sales or the game industry,
but imo their is no way steam gets away with taking 50% of the sale for them selves. i am of this opionion becuase lots of small developers release their games to steam only and they are often very cheap as well as offering the developers more profit than the traditional distribution methods (darwinia is prime example here).
steam service requires plenty of IT costs (hardware, sommunications and IT support). but traditional method includes production, transport, packaging. and thats all before it hits the retailer. (alot more people make a profit from it, hence higer costs)
i consider marketing a seperate cost, which is paid which ever distibution method is used.
Plus im under the impression that Civ V is still sold in bricks and mortor stores, so 2k have 2 distributions methods.
what i think would be interesting is to see seperate sales figures for each distribution method, i suspect steam would be greater.

[wodan11]

woodan, i would have to severly disagree. i would say i'm not involved in marking or sales or the game industry,
but imo their is no way steam gets away with taking 50% of the sale for them selves.

Sorry, I wasn't clear. I started off by making an assumption, and then proceeded (so I thought) to demonstrate not only that the assumption isn't true, but that the underlying "facts" don't correspond, either.

See... I think people are trying to think it's an apples to apples comparison. It's not. X+Y=Z in the one case, where in the other it's A+B+C+D=E. Not only is X =/= A, but Z =/= E.

i am of this opionion becuase lots of small developers release their games to steam only and they are often very cheap as well as offering the developers more profit than the traditional distribution methods (darwinia is prime example here).

Steam is less up front cost which means less up front investment, which to a new company without a lot of investors or capital, that can be the difference between being in business or having to give up on the product as unfeasible from the get-go. However, I daresay it's also less gross profit. Actually, I'm positive that's the case.

steam service requires plenty of IT costs (hardware, sommunications and IT support). but traditional method includes production, transport, packaging. and thats all before it hits the retailer. (alot more people make a profit from it, hence higer costs)

2k doesn't care so much if some distribution and trucking company has costs or makes a profit, you realize.

i consider marketing a seperate cost, which is paid which ever distibution method is used.

Do you also consider that marketing costs with one distribution method would be the same total $ value as the marketing costs needed for another distribution method?

Because to me they clearly are not.

Plus im under the impression that Civ V is still sold in bricks and mortor stores, so 2k have 2 distributions methods.

Yep, which means that they're probably making less profit with each. e.g., a customer who might have otherwise bought a box game buys online. Yet fixed costs of the box production remain much the same.

what i think would be interesting is to see seperate sales figures for each distribution method, i suspect steam would be greater.

You mean net sales or gross? And, what conclusion do you mean to draw even if it was greater?

[Ming]

Trust me: it's not that clear cut when we include intangible and other costs, even so far as opportunity costs. (e.g., Steam doesn't get walk-in casual impulse buys).

But Steam does get casual impulse buys... You can cruise the Steam site for new and interesting games just like people cruise the aisles of retail establishments. And checking out Steam for new and different games is a heck of a lot easier than leaving your house and driving to some store that might be miles away and only has a limited supply of different games.

[jnh140]

(e.g., Steam doesn't get walk-in casual impulse buys).

Sheesh, i've probably spent much more money than is appropriate just buying various things off the steam menu-- especially older titles that one wouldn't find occupying shelf space anymore.

[wodan11]

So you're saying the # of Steam impulse buys are exactly equal to the number of brick&mortar impulse buys in an alternate universe where Steam didn't exist?

And, regardless, on Steam, we're talking about the core audience anyway. A large percentage of impulse buys you see at BestBuy are people going in to get something totally different. i.e., non-gamers for the most part. (By "gamer" I mean you two... if you cruise Steam just buying games, then you're exactly the people we aren't talking about. )

[Ming]

Changing your tune now I see... you go from "Steam doesn't get walk-in casual impulse buys" to Oh, brick an mortar does more. First, do you have any actual facts to support that? And 'non-gamers" are just that, non gamers. They are more likely to walk into a Best Buy and on impulse buy something else but probably not a game, since they are NON GAMERS. On the other hand, people who cruise Steam are gamers... and if they are going to impulse buy, it's GOT TO BE A GAME. So when you get the chance, try to find some facts to support your theory that non gamers are bigger impulse buyers of games than gamers. Especially a game like Civ.

There are now more digital sales of PC games than brick and mortar sales of PC games. Now you don't have to find a store selling the game you are looking for... you no longer have to drive somewhere to see if they have the game you want. Everrybody, and especially those who live out in the middle of nowhere, can simply go on line to get the game.

[SpencerH]

In a way Wodan has brought the thread back on-topic since the loss of players such as myself who wont buy from Steam me is a "cost" incurred by 2K for using this particular digital distribution (and I'm curious whether that is affecting Firaxis/2K).

[Ming]

And I know people who won't buy games unless they are available from places like Steam online... While it may cost them some sales on one hand, it might generate more sales on the other. I still have to chuckle about some of the "complaints" about steam. While it's not my prefered provider (I always liked D2D far better), I just don't see it as the Devil that many want to make it out to be.

[SpencerH]

I was coming back to finish my thought but you must be an early riser too!

For the most part, it's the Steam client's potential for abuse that I oppose.