Thursday, July 10, 2014

Yes, Pre-Orders are Bad for the Industry. Stop Telling Yourself Otherwise.

Image: Gawker

This started out as an "explain like I'm five" translation of a recent Polygon article on the same subject, but by the time I finished, it felt worthy of a blog entry. Enjoy the copy/pasta:

Companies want to ensure they will get their money back from making the game. Instead of waiting until the game comes out for people to tell their friends about the game, they'll give you free stuff for pre-ordering. To them, waiting until release day to find out their return is sort of like you waiting until payday to know how much you're making for that period (this analogy really only works for hourly employees versus salaried). Unlike us, they are putting money into a product and may or may not get that money back, so they need to find a way to get a fix on what their return will look like.

This guarantees that you, the consumer, gets bonus content (or, rather, added value) to your purchase, and the company has a quasi-guarantee of ~$60 coming their way at a pre-determined time. I say "quasi-" because you can cancel the pre-order at any time (unlike Sony). $60 is a hard pill to swallow for a lot of people, and those people don't see value in the game at $60; that's why they'll wait for it go on sale, buy it used, or - like me - rent it. Adding value to the purchase by incentivizing it with bonus content is their goal, and hoping that, with that content, you will see the value in a $60 purchase, and not wait for a sale.

On the surface, it appears they're giving you free stuff for being a loyal fan. Deep down, this is their way of ensuring investors that the games they're investing millions of dollars into will be successful. Moar pre-orders == happy investors == happy CEOs. This also locks you into a particular retailer - Amazon, Best Buy, and GameStop - and makes you a loyal customer, because they'll dish out bonus reward points for pre-ordering. You'll have a pool of reward points, and you can only use them at that retailer. Here’s the important bit: you're not a “loyal customer” to that chain; your wallet has become a slave to that company.