When Your Pay What You Want Experiment Is Too Successful In Ways You Didn't Expect

Business Models

from the challenges... dept

One of the interesting things to come out of the recent brainstorming session we had with artists and entrepreneurs had to do with the lack of really open discussions about experiments that fail. On the entrepreneur side, every so often you see someone write up a “post mortem” of a failed startup. But it’s rare to see artists post a “what went wrong” discussion. This is completely understandable. Most people don’t want to focus on what went wrong, and greatly prefer to focus on what went right. Admitting failure in any sense often has a stigma attached to it — and while entrepreneurs can “walk away” from a failed startup, giving them some distance, for artists, a failed experiment in their artistic career (which is often “their life”) isn’t so easy to walk away from. And many of the artists in the discussion agreed that they could probably learn a lot from the failures of others, such as how to approach things differently and what not to do themselves. This is a topic I’m hoping to explore more in the future, as any reports of “what went wrong” really do seem worth looking into.

This one isn’t completely a “what went wrong” story — it’s more of a “what went too right and we weren’t prepared for it” story. The folks at Good Old Games, who we’ve written about a few times before, recently put up a pay what you want bundle for Larian Studios’ Divinity anthology of games. The setup is very clearly influenced by Humble Bundle. You can pay what you want, and if you beat certain levels you can get more things. There’s also a leaderboard, and hitting certain checkpoints opens up new content for everyone.

Sven Vincke, of Larian Studios, recently wrote a really interesting post about how the “pay what you want” results were quite different than they expected. Despite having the examples of Humble Bundle and others for what happens when you do this kind of thing, Vincke still expected that people would pay very little for the game — but that they’d get wider distribution. And they planned accordingly — with the various “unlockings” based on the number of supporters, rather than the amount raised. But things didn’t work out that way.

When the PWYW was conceived, we thought that we’d have a lot of sales at the absolute minimum, which basically is 1 cent, and this assumption was actually never challenged. The idea of the PWYW campaign was to on the one hand celebrate 10 years of Divinity and offer Divinity virtually for free (1 cent really is low), thus increasing the installed base of Divinity fans, but on the other hand also to put the Developer’s Cut in the spotlight.

The Developer’s  Cut (and Beyond Divinity) were made part of the campaign as a kind of bonus and to not completely ruin ourselves, we introduced the rule that to access the Developer’s Cut, you needed to be in the top 10% of customers. Whether or not that was a sound strategy is a different matter and open for debate, but that was the idea.

What happened however is that for some reason, people started looking at this like some sort of Kickstarter (this was the very first time something like this was done on GOG), and in the very first hours of the campaign, we saw the average pricing go to heights we never expected. Somebody even paid a 1000US$ for one of the games!!!

Yes, that seems like a reason to celebrate, but it also meant that the key plan — to get the games more widely known and distributed — wasn’t working as intended, and the plan to unlock certain content at key supporter levels was looking unattainable. However, adjusting midstream might make people think that the whole thing was a flop — when that wasn’t the case at all. Clearly they were getting more support dollarwise than they expected, but the number of supporters was much lower. So they finally decided that the best way to handle this was just to be incredibly transparent about it, and explain why they were changing the levels to unlock stuff:

Because in reality, it is doing well – it’s just doing the opposite thing of what we expected. From a revenue point of view, we’re seeing the best results we’ve ever seen on GOG in such a short time span for our games. But that wasn’t the initial idea

So in the end we realized that there wasn’t a way of fixing this without admitting that we just predicted everything wrongly. And if we’d want to still offer those videos (and tech demo of LMK) as a reward for people keeping on participating in the PWYW campaign, then we’d have to lower the different tiers.

Which more or less is what we’re doing this evening. We’re going to lower the tiers to numbers that we think fit the current trend more or less, except for the last one, which we’re putting high on purpose. Well actually, I’m putting it high, because all the others in the team wanted to put it lower. But I decided to be stubborn

One of the things that I think is important to remember about all of these different business model experiments is that they are experiments. We still don’t know what fully works, and lots of stuff goes wrong. Sometimes it’s a complete failure, and sometimes (as in this case) it’s just different than expected, so pieces of it don’t work the way they planned. But, the main reason many of these programs work in any way is that there are fans who really like to support the content creator, and when the content creator opens up and explains the situation honestly, that only increases the loyalty and the connection. That’s what likely happened here as well. While this one really is a success story, it’s still great to see an examination of “what went wrong” in the midst of success — and it would be awesome to see more of this kind of analysis.

Filed Under: case studies, expectations, experiments, pay what you want
Companies: good old games, larian studios