Wednesday, February 4, 2009

The Universe is Laughing At Me

Yesterday we hit an unexpected bump in the road. My husband sells computer games. They're the kind you find online and download to your PC to play. It's great - no waste, no messing around with shipping or retailers, just a clean and simple way to deliver games straight to people.

He sells games on his own website, Rusty Axe Games, but he also sells his games through larger "portals"; online companies who advertise like crazy, so get thousands of people coming to their sites every day.

One portal in particular accounts for a lot of my husbands sales and a few days ago, without any warning, they decided to slash prices on every game they carry across the board. Games that sold for $19.99 previously now sell for $9.99 (if they're lucky) or $6.99 - all at the whim of the portal, not the developer.

What this means for people like my husband is that his take - the percentage he earns from each game sold on this portal - has been slashed. He'll be paid a third of what he previously earned per game.

Thank God this isn't our only income stream. But it sure knocked us for a loop. Because as soon as one portal does this, all the rest pretty much have to follow suit or go out of business. Once everyone knows they can get pretty much every game they want for $9.99 on a portal, no one's going to come and buy it for $19.99 on the developers' own web pages. The business model just crashed and burned.

It's hard to know what this means for us long-term. My husband already makes niche games, so he'll pull them out of the portals and only sell them on his own website. That gives him a chance to protect his "brand" and build it up as something worth paying the extra money for.

What it means short-term is that our margin just got thinner. We're still all right, but it behooves us to consider other ways to make money over which we have more control.

I'm just happy I was already working on ways for us to live on less. I'm pretty well prepared to absorb a blow like this. These are interesting times, for sure.

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