Thursday, April 06, 2006

An Oversupply of Points of View

What people think of the same data varies dramatically based on the situation they are in. It's a fact of life, and one of the reasons that communication is such an awesome, world-conquering tool. For example:

Here is a post from a smart guy about oversupply.

I didn't reply, because I dislike replying weeks after the original post. But I would like to comment on it.

Simple summary: Supply and demand. Demand is what we normally concentrate on increasing, so that our prices and/or profit can go up. But we usually ignore the other half of that equation: we don't muck with our supply.

For those of you who haven't noticed, all non-Nintendo consoles for a considerable length of time have followed the "less supply leads to higher prices" philosophy. Whether this has worked is questionable, but it's probably more than half due to the difficulty of producing the hardware, rather than trying to increase prices.

In theory, it sort of could work. If people want what you're giving, and there's not enough of it, they'll pay more. The problem is, if people think you're being a dick and trying to drive the price up, they'll mock you and not buy you at all. Like, say, the XBox 360.

Right now, all games have an unlimited supply. Games which use micropayments also have an unlimited supply of the things you micropay for. Either way, it's the demand that drives the game, and you set the price to match it.

The only way I can think of to have a game with a limited supply is to offer "tiers". For example, a massively multiplayer game. Any number of people can play in one of the worlds, but the other worlds are limited to, say, 150 people, invite-only.

SecondLife has supply variation in their land sales. So it's possible. The thing is, it has to be done without alienating the populace. Linden Labs (SecondLife's owners) have had to dance very nimbly to keep people from rioting about the problems with the land limits. This is for something that actually is a hard limit due to hardware restrictions, and it's still difficult to get people to accept it.

Anyhow, it's an interesting topic. Anyone have anything to add?

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