We’re always interested to read about new ideas for business models or to see how big companies are playing around with old concepts to try to keep up with the ceaseless tsunami of technology. And in no space is this more exciting – nor is revenue more of a sticky issue – than online.
Last week we wrote about why news sites need to look for more creative advertising solutions than CPM, which is no longer enough to buoy them, and the week before we examined freemium, the latest fad idea running round the web scene with promise of being the next big business model (whereby you offer most of your content for free, then make your money from the small percentage of users who are willing to pay for a luxury version of your service or add-ons to it).
Now digital games creator Eidos Interactive is looking to disrupt its industry’s traditional revenue model by releasing its next offering with an ‘honesty box’ pay policy. Fans of the latest edition of the hugely popular Championship Manager will be able to pay as little as 1p to download the game – or up to as much as they feel it’s worth.
The Times’s Ian King gives an insightful round-up of the pros and cons of Eidos trying this out:
“There have to be doubts about whether the scheme will work. Gamers, it is argued, are less prone than music fans to pay for content that they have sampled earlier through downloads. But the idea is less harebrained than it seems. As with Radiohead, which had already made many millions from their albums when In Rainbows was released [using the same ‘honesty box’model], Eidos has done well out of the Championship Manager franchise and so has little to lose from this experiment.
“And, crucially, the new game will carry ‘live’ downloadable updates through the football season, six of which will cost users £5. The model is similar to that successfully adopted by games such as Halo on the XBox 360, where, after the initial sale, repeat business comes from a hardcore base of gamers who have to buy new downloaded content to keep up with their friends.”
In a way, this is not so very different from the thinking behind freemium – except that Eidos has the added advantage of bringing revenue in right from the very outset from all users, even if that does only add up to 1p for some of them. (Remember that of course they don’t need to make a set margin per unit sold for the game as it is just downloaded, leaving them with no material costs, just the cost of developing it in the first place.)
It also, of course, gives the company an invaluable bit of market research – how much fans value the Championship Manager brand. And how much they would ideally like to pay, if any price was possible. This gives Eidos an incredibly solid grounding for pricing future editions of the game – if they return to a traditional pay model at all, that is.
We’ll be keeping our eyes on how this pans out, and we salute Eidos for trying out something bold with their modelling. As businesses struggle to figure out how to make money for content they provide online and squirm around the lethal piracy that permeates the web, it’s experimentation like this that’s necessary to find a clear way forward.