I recently wrote about Economics in gaming. It talked about the difference between buying direct vs. buying at a retailer.
Retail is a tough nut to crack. Especially these days and especially if you're a smaller developer. Retail has gotten to the point where it's dominated by a relatively small number of suppliers in a given industry. So when someone else comes along, it's hard to sell a lot of units of its product.
One of the reasons for this has to do with the concept of sell-in. In the PC games industry, a big name title can tell-in over 100,000 copies. That garauntees its success. I've seem game developers from big companies say "Well, our game is the #1 selling game this month so it must be great." Nonsense.
Overall sales of a product is a function of Initial Sell In X Marketing X Game Quality.
When it's time to reorder games to replace sold units, computer algorithms come into play. Each retailer has their own system for predicting how many units they will need. But it roughly boils down to something like this:
The first week's sales of a game = The subsequent month's sales of the game = the Subsequent 3 months sales of the game = The subsequent 6 months sales of the game = The subsequent year's sales of the game.
Therefore, if you blow your first week sales numbers, you're in big trouble. And that's where sell-in comes into play. If you can get 100,000 units on the shelf first day then you can assure very high numbers of sales.
Galactic Civilizations II's initial sell in was much higher than the original's -- 3X as much (but still only a fraction of the roll out of a huge title). And sales have been unexpectedly strong. But because we're a smaller player, our ability to get units onto the shelves is much less than a larger publisher. We can TRY to get our title out into all retail chains on Day 1 of release but as we've learned (The hard way along with our customers) our ability to actually get....the...units...in....their hands and up on shelves is more problematic.
Hence, we have cases where some stores -- even in the same retail chain -- have the box on the shelves while others do not. Which drives us nuts.
What can save a small title is word of mouth. IF the game is good AND people tell their friends about it then it can make up for a lot of this. This is especially true over time if people continue to do this over time, a title can stay on the store shelves a lot longer than it normally would.
The PC game industry is one of the handful of retail industries in which the user base still holds most of the cards. Users requesting titles, word of mouth, etc. still can trump marketing, advertising, hype, etc. in the long-term.
So our first week's sell-in number was 27,000 units into retail. How many the retailers will re-order for the month of March will largely depend on how many units they move this week. And unfortunately we don't have much control over that because some stores get the product and don't necessarily stock it right away.
The question will then boil down to how many copies Walmart, EB, Gamestop, Best Buy, CompUSA, Fry's, Jack of All Games, and the others move and then how quickly they can re-order and get replenished so that days of being sold out don't count against us.
Update: Don't want anyone to be discouraged by buying direct. I am not saying one is better than the other. What we want people to do is buy the game wherever is best for them. If buying it directly and downloading it is the most convenient way for you, that's great. The developers make 2X as much when people buy direct. This article is just explaining how retail works and why it's so important too.
