E.g. I just bought a game 85% off on Steam (for a discounted series and I own all the previous titles). Assuming the publisher makes no profit from this sale, how do they make future revenue from me?
In: Economics
Digital products are a little unique, the first copy takes huge amounts of time, effort, and money to make, but every copy after that is free.
If a company spent $100 making a game and thought they could sell 10-12 copies they need to price it at $10 to make their money back. After they sell the 10th copy of the game, everything is profit even if it’s only $0.01. But what if they only sold 5 copies? They still need to sell $50 worth of games to make their money back, maybe 10 more people would be interested in the game for $5
There are many reasons for a sale, altruism and recouping losses as above, but the biggest reason is for promotion. Maybe it’s a multiplayer game, more people playing keeps he game alive, and in-game transactions are future profit. Promote the brand, promote the next game, the next season, etc. unlike traditional advertisement, putting an old game on sale generates money rather than costing. There is no downside.
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