I wish I had those numbers, too.
Not having them doesn’t stop me from theorycrafting, though. I think the following is happening:
Just like how in WWE actors can go face or heel, companies can choose one of two long-term strategies to generate their revenue. It’s sort of a gradient and most will fall inbetween the two. It’s self-reinforcing and the more you strut towards one, the harder it is to steer away from it. And they happen to be diametrically opposed to one another:
Goodwill and Trust vs Addictions and Needs
Goodwill and Pro-Consumer - Sales primarily generated by classic trust-based sales
Requires: Mass Appeal; Endurance; Good Conceptual products or services; Better financial skills, Reliability, constant upholding of Goodwill (this is challenging)
Prodigies: Digital Devolver Games - CDP:R (past) - Valve - ZUN
People believe most of your marketing gimmicks
Generally Good Day 1 and DLC sales; nets extra sales from double dipping customers
Leads to reliable Day 1 income long-term eventually, predictable outcome
Comes with good word-of-mouth marketing integrated, free hypetrains
Reduced rate of Piracy and malicious activities
Morale bonus for employees in your company
Just overall good fun (usually) - Getting positive reinforcement feels good
Building a loyal customer base takes patience and time - Some cannot afford that
Being well-intentioned doesn’t mean others will understand those intentions
Still requires a decent marketing team
Ceiling of income / customer exists, which is dictated by what the market values “fair”
Goodwill with customers ist not eternal and can be lost with “mood-swings”
Constantly raising expectations can be detrimental to customer-company relationship
Even if your loyal fanbase loves you, you still have to show quarterly profit margins
You can become big, but you will never be the biggest shark in the tank
Addiction and Anti-Consumer - Sales generated from people without impulse control
Requires: Loaded Customers, Nerves of steel or an ignorant mindset, strong legal team, a certain ambition you are either born with or just aren’t
Prodigies: EA - Activision - Ubisoft - Tencent (Notice a trend? Being ballsy pays if done right)
Nickel and Diming right now and delivering product later is way easier
Leads to surprisingly reliable post-release sales
Can lead to reliable Day 1 sales, too. See EA sports. See Bethesda.
No ceiling of income / customer exists, addicts can be shaken down to bankruptcy
You are not reliant on the emotional whims of others.
You can focus on quartlery earnings without any secondary factors
You need way less customers to make your concept work. A Whale can net 5+ figures
Big Bank is more likely to help you out, loans are generated easier due to compliance
People generally do not believe your claims
Every new product is seen with skeptic eyes before it arrives
Constantly requires new creative schemes to get ever bigger short-term gains
Reviewbombing and hostile word-of-mouth propaganda are annoying
Malicious activities increase, meddling of hostile customers can be tiresome
Employees either dread working for you or develop unhealthy coping mechanisms
Stressful, if you do care about public perception
Being a publically traded company will make you an addict yourself, Wallstreetbets style
You see, at first it might seem like an easy call when we talk about it from our viewpoint. But look at those upsides from the 2nd list. It’s tempting, isn’t it?
There is also a fallacy at play in the Gaming community. The fallacy is the following:
Having a pro-consumer strategy is low-risk.
This is false.
Reality is that you cannot rely on strangers. And as much as we Gamers love to think we’re right(eous), we can be an absolute intolerable, hostile bunch. Many fates have been sealed by Goodwill relationships soured.
Trust-based sales are not low risk. They are actually higher risk, because you have to create the relationship first and then maintain it.
It’s easier to sell an addict what he desperately needs. Even if he hates you from the bottom of his shriveling little heart, he will be coming crawling back like a wretch, to draw a wondeful mental image here.
This is also why so many industries never fully “cure a patient’s ill”. It’s straight up easier to have an unspoken and unwritten purchasing contract in your back drawer. Especially when you sell something superflous. We cannot eat electronics and entertainment can be had anywhere in today’s world.
The idea of losing your Video Gaming customers to movie tickets or their girlfriends cosmetic expenses might sound absolutely ridiculous at first. But I recon it’s a thought that crosses someone’s mind somewhere. And it wouldn’t be unrealistic. Everything is in competition.
Then there’s the fact of reliability to your income.
Balancing upfront sales and follow-up revenue streams. Having all your sales entirely front- or backloaded can work, many make it work every day. But it’s harder.
This is why so many companies try to double dip now. Day 1 sales and microtransaction shop. Subscription services. Etc.
They are looking to get some security, some reliability into their income streams. The desire itself is completely understandable. Nobody wants unreliable income to be 100% of their earnings.
If you were ever self-employed, you know that feeling yourself. The thought along of “Will I get my money this month?” is anxiety-inducing.