10 ms·

Cheap Beer and the Psychology of PlayStation Now Pricing

106 points by adidash 12y ago

VLM 12y ago
The marketing scheme portrayed in the article is valid. However, I could see renting a game to decide if its worth buying, and my decision will be made in less than 4 hours so I have little interest in renting it for a week. I could also see a gaming party where we rent 3 or 4 games and see what we think as a group. Again my interest would be in minimization of total spend, not optimization of hourly cost. Obviously the lowest hourly cost would be poker night or go on a hike and picnic. Also, for an article only two months old, Amazon reports I can buy the game new with free prime shipping for $17.99 which makes the "rent 90 days for $30" rather odd, because less than 60 days later I could buy the game for about half the rental cost.
- lotharbot 12y ago
  Even those who think "I'd decide if I want to buy the game in less than 4 hours" are also likely to think "it's only 2 bucks more to have it for a week" and try to use that as a hedge against the likely scenario of wanting to play a little bit more, but not liking the game enough to buy. It's very rare to find someone who would pick the 4 hour decision as a result of rational process (minimize total outlay to find your favorite game of a group, and buy only the best.) Sure, a few people will take the 4 hour option, but I'd bet their internal numbers show that the presence of the 4 hour option drives a lot of 1-week options -- and they'd rather rent 4 games for a week each ($28 revenue) than one game for a month ($14 revenue).
- z3t4 12y ago
  > I can buy the game new with free prime shipping for $17.99 which makes the "rent 90 days for $30" rather odd I would say the 90 days is the "evil" option, because it makes the others seem like a bargain. There's a lot of psychological in in sales because it's almost impossible to "value" something. All you can do is to compare it to market prices. I especially like the "and get something extra for FREE" trick. :P
  - gcb0 12y ago
    those prices are for kids. only. since the xbox, and passing trhu the app store (e.g. FTL is 9.99 drm free for 3 platforms, vs appstore 9.99 for a single device). everyone with half a brain knows buying online is never the best option. xbox FPS games are around $20 on target and the like. buying on the live network it is $59.99.
- pandaman 12y ago
  >Also, for an article only two months old, Amazon reports I can buy the game new with free prime shipping for $17.99 which makes the "rent 90 days for $30" rather odd, because less than 60 days later I could buy the game for about half the rental cost. The PS Now works on PS4 and PS Vita among other things. The game you will buy for 17.99 will only work on PS3.
  - robin_reala 12y ago
    And certain Bravia TVs, without a box at all.
ewzimm 12y ago
You can see in the graphic in the article that they advertise the price as "from $4.99." I think the ability to advertise a lower price, even if nobody actually takes it, is probably more of a factor. I think people are used to simplifying costs into multiples of 5, so "about $5 with a $2 upgrade option" sounds better than "almost $10."
- evv 12y ago
  That is surely why they have a $5 option, but why 4 hours of gameplay vs 1 day? To make the 7-day rental look like a great deal.
  - ewzimm 12y ago
    Right, which is related to but different from the article, which says that introducing a cheaper option drives people to spend less and choose lower quality for less money rather than paying a little more for better quality. But I am not disagreeing with the original point. I agree that Sony might have a motivation to get people to rent for shorter periods, such as encouraging willingness to try more games because of less money devoted to a single game. But I think the dominating factor is just being able to advertise below $5. But there could be other factors, like making it such a bad deal that people feel better about themselves when they avoid it. In a traditional retail store, you often can choose between multiple brands of the same thing. Different video games have some pretty big qualitative differences, so you can't consider choosing between games to be the same as choosing between bleach. You can usually shop around different stores to find better deals and feel good about yourself about finding a better price. But with digital distribution, when you are the only store someone can shop at, there's no choice and no way to feel good about finding a good deal except for sales. With streaming, there might be occasional sales, but they probably want to keep prices pretty even, so they need to invent a bad deal to allow you to feel good about avoiding it. I don't know if it will last though, and I bet the length will get extended, because seeing that your store is willing to offer you a really bad deal is probably worse than the benefits of feeling smart enough to avoid it. Either way, I would much rather buy used games for $5 rather than rent them for any length of time.
freditup 12y ago
I think another part of it might be that units are inherently less intuitive to us than numbers. Your mind sees the choices and reads "4 7 30 90". And look at that! The 4 option is about $4 and the 7 option is about $7! Both seem quite reasonable! And this is all great until you realize that 4 hours is quite different than 7 days.
backlava 12y ago
Part of the strategy is to emphasize the comparison to on demand movie rentals which get you 2 hours for $4.99.
- ajmurmann 12y ago
  Where is that? Google Play gives you 30 days and Amazon I believe gives you at least 48 hours for a movie.
  - dmcg 12y ago
    Assuming you watch the movie once, it's 2 hours no matter how long it was available for.
    - luckyno13 12y ago
      But $5 for a one time watch isn't too bad if you are only going to watch it once. Otherwise you buy it for $10-$15 and watch it once, and maaaybe come back to it later. With kids movies on the other hand, kids tend to watch their movies more than once so the game changes a bit. $5 for 48 hrs vs 30 days vs $15 for perm access becomes a bit more complicated. I would feel bad for my parents if they had to pay for a TMNT movie each time I watched it :)
lorenzfx 12y ago
Not the point, but for a two year old game (looks like released in 2012) I wouldn't pay more than 30$ to buy it.
- bitwarrior 12y ago
  Nor should you. The game costs $18 brand new on Amazon: http://www.amazon.com/Darksiders-II-Playstation-3/dp/B0056WJA6M http://www.amazon.com/Darksiders-II-Playstation-3/dp/B0056WJ...
lorenzfx 12y ago
I find the second plot looks almost linear, IMHO plotting price/time versus price (or time, doesn't really matter) visualizes the sharp price increase much better
- AgentConundrum 12y ago
  4 hours ~= 124.75 cents/hr 7 days ~= 4.16 cents/hr 30 days ~= 2.08 cents/hr 90 days ~= 1.38 cents/hr This is based on the full 24 hours per day. If you do it based on "usable" time, which I've defined as 8 hours a day, it looks like this: 4 hours ~= 124.75 cents/hr 7 days ~= 12.48 cents/hr 30 days ~= 6.25 cents/hr 90 days ~= 4.17 cents/hr
unsignedint 12y ago
If the highest tier actually was perpetual rather than 90 days, then I might consider it. (I remember that's actually the way OnLive had it.) Though, maybe I'm just not their target demographic of the service as I haven't ever "rented" games in the past.
- PhasmaFelis 12y ago
  They already have a highest tier that gives you perpetual access. It's just buying the game.
  - unsignedint 12y ago
    It's not direct tier though. For instance, you won't be able to buy PS3 games via download on PS4.
redindian75 12y ago
This is similar to the current iPhone 6 gap-jump pricing of 16GB ($199) and skipping the usual 32GB version altogether and going 4x 64GB for just $100 more - $299. If they had done away with 16GB model and started with 32GB, not many would have jumped up to the $299 tier. So its effectively a price increase, as most will likely go for 64GB model as it offers more value/gb. And Apple gets to advertise it as from $199.
robert_tweed 12y ago
This works from the other side too. When you have a range of product options, one of which is very expensive, nobody really buys that one, but it raises the perceived value of the others so people are likely to spend more on average. Both methods work because for most goods, people do not have a good way to estimate what is a fair price, so they use the price distribution of alternatives as a guide to what the price should be.
hm8 12y ago
This was covered in Predictably Irrational by Dan Ariely. It is an awesome book that talks about human behavior in day-to-day life. The best part: it goes on to demonstrate that even the smartest of the folks fall for these tricks in a lot of context.
chippy 12y ago
So what should a rational consumer pick? I'm not seeing that in the article or HN comments. The 30 days option? A different pricing mechanism? Would would that look like?
ConAntonakos 12y ago
A bad deal is a bad deal no matter the cost obviously. But what I find perplexing is why wouldn't people compare against the current market rate to actually purchase said game? If Darksiders 2 is discounted to $10, why would it be rented at $5 for 4 hours? This comparison immediately discredits PlayStation Now's value.
CPLX 12y ago
"I would like a bottle of your second least expensive wine please" - Homer Simpson

106 points by adidash 12y ago

VLM 12y ago

The marketing scheme portrayed in the article is valid. However, I could see renting a game to decide if its worth buying, and my decision will be made in less than 4 hours so I have little interest in renting it for a week. I could also see a gaming party where we rent 3 or 4 games and see what we think as a group. Again my interest would be in minimization of total spend, not optimization of hourly cost. Obviously the lowest hourly cost would be poker night or go on a hike and picnic. Also, for an article only two months old, Amazon reports I can buy the game new with free prime shipping for $17.99 which makes the "rent 90 days for $30" rather odd, because less than 60 days later I could buy the game for about half the rental cost.

lotharbot 12y ago
Even those who think "I'd decide if I want to buy the game in less than 4 hours" are also likely to think "it's only 2 bucks more to have it for a week" and try to use that as a hedge against the likely scenario of wanting to play a little bit more, but not liking the game enough to buy. It's very rare to find someone who would pick the 4 hour decision as a result of rational process (minimize total outlay to find your favorite game of a group, and buy only the best.) Sure, a few people will take the 4 hour option, but I'd bet their internal numbers show that the presence of the 4 hour option drives a lot of 1-week options -- and they'd rather rent 4 games for a week each ($28 revenue) than one game for a month ($14 revenue).
z3t4 12y ago
> I can buy the game new with free prime shipping for $17.99 which makes the "rent 90 days for $30" rather odd I would say the 90 days is the "evil" option, because it makes the others seem like a bargain. There's a lot of psychological in in sales because it's almost impossible to "value" something. All you can do is to compare it to market prices. I especially like the "and get something extra for FREE" trick. :P
- gcb0 12y ago
  those prices are for kids. only. since the xbox, and passing trhu the app store (e.g. FTL is 9.99 drm free for 3 platforms, vs appstore 9.99 for a single device). everyone with half a brain knows buying online is never the best option. xbox FPS games are around $20 on target and the like. buying on the live network it is $59.99.
pandaman 12y ago
>Also, for an article only two months old, Amazon reports I can buy the game new with free prime shipping for $17.99 which makes the "rent 90 days for $30" rather odd, because less than 60 days later I could buy the game for about half the rental cost. The PS Now works on PS4 and PS Vita among other things. The game you will buy for 17.99 will only work on PS3.
- robin_reala 12y ago
  And certain Bravia TVs, without a box at all.

ewzimm 12y ago

You can see in the graphic in the article that they advertise the price as "from $4.99." I think the ability to advertise a lower price, even if nobody actually takes it, is probably more of a factor. I think people are used to simplifying costs into multiples of 5, so "about $5 with a $2 upgrade option" sounds better than "almost $10."

evv 12y ago
That is surely why they have a $5 option, but why 4 hours of gameplay vs 1 day? To make the 7-day rental look like a great deal.
- ewzimm 12y ago
  Right, which is related to but different from the article, which says that introducing a cheaper option drives people to spend less and choose lower quality for less money rather than paying a little more for better quality. But I am not disagreeing with the original point. I agree that Sony might have a motivation to get people to rent for shorter periods, such as encouraging willingness to try more games because of less money devoted to a single game. But I think the dominating factor is just being able to advertise below $5. But there could be other factors, like making it such a bad deal that people feel better about themselves when they avoid it. In a traditional retail store, you often can choose between multiple brands of the same thing. Different video games have some pretty big qualitative differences, so you can't consider choosing between games to be the same as choosing between bleach. You can usually shop around different stores to find better deals and feel good about yourself about finding a better price. But with digital distribution, when you are the only store someone can shop at, there's no choice and no way to feel good about finding a good deal except for sales. With streaming, there might be occasional sales, but they probably want to keep prices pretty even, so they need to invent a bad deal to allow you to feel good about avoiding it. I don't know if it will last though, and I bet the length will get extended, because seeing that your store is willing to offer you a really bad deal is probably worse than the benefits of feeling smart enough to avoid it. Either way, I would much rather buy used games for $5 rather than rent them for any length of time.

freditup 12y ago

I think another part of it might be that units are inherently less intuitive to us than numbers. Your mind sees the choices and reads "4 7 30 90". And look at that! The 4 option is about $4 and the 7 option is about $7! Both seem quite reasonable! And this is all great until you realize that 4 hours is quite different than 7 days.

backlava 12y ago

Part of the strategy is to emphasize the comparison to on demand movie rentals which get you 2 hours for $4.99.

ajmurmann 12y ago
Where is that? Google Play gives you 30 days and Amazon I believe gives you at least 48 hours for a movie.
- dmcg 12y ago
  Assuming you watch the movie once, it's 2 hours no matter how long it was available for.
  - luckyno13 12y ago
    But $5 for a one time watch isn't too bad if you are only going to watch it once. Otherwise you buy it for $10-$15 and watch it once, and maaaybe come back to it later. With kids movies on the other hand, kids tend to watch their movies more than once so the game changes a bit. $5 for 48 hrs vs 30 days vs $15 for perm access becomes a bit more complicated. I would feel bad for my parents if they had to pay for a TMNT movie each time I watched it :)

lorenzfx 12y ago

Not the point, but for a two year old game (looks like released in 2012) I wouldn't pay more than 30$ to buy it.

bitwarrior 12y ago
Nor should you. The game costs $18 brand new on Amazon: http://www.amazon.com/Darksiders-II-Playstation-3/dp/B0056WJA6M http://www.amazon.com/Darksiders-II-Playstation-3/dp/B0056WJ...

lorenzfx 12y ago

I find the second plot looks almost linear, IMHO plotting price/time versus price (or time, doesn't really matter) visualizes the sharp price increase much better

AgentConundrum 12y ago
4 hours ~= 124.75 cents/hr 7 days ~= 4.16 cents/hr 30 days ~= 2.08 cents/hr 90 days ~= 1.38 cents/hr This is based on the full 24 hours per day. If you do it based on "usable" time, which I've defined as 8 hours a day, it looks like this: 4 hours ~= 124.75 cents/hr 7 days ~= 12.48 cents/hr 30 days ~= 6.25 cents/hr 90 days ~= 4.17 cents/hr

unsignedint 12y ago

If the highest tier actually was perpetual rather than 90 days, then I might consider it. (I remember that's actually the way OnLive had it.) Though, maybe I'm just not their target demographic of the service as I haven't ever "rented" games in the past.

PhasmaFelis 12y ago
They already have a highest tier that gives you perpetual access. It's just buying the game.
- unsignedint 12y ago
  It's not direct tier though. For instance, you won't be able to buy PS3 games via download on PS4.

redindian75 12y ago

This is similar to the current iPhone 6 gap-jump pricing of 16GB ($199) and skipping the usual 32GB version altogether and going 4x 64GB for just $100 more - $299. If they had done away with 16GB model and started with 32GB, not many would have jumped up to the $299 tier. So its effectively a price increase, as most will likely go for 64GB model as it offers more value/gb. And Apple gets to advertise it as from $199.

robert_tweed 12y ago

This works from the other side too. When you have a range of product options, one of which is very expensive, nobody really buys that one, but it raises the perceived value of the others so people are likely to spend more on average. Both methods work because for most goods, people do not have a good way to estimate what is a fair price, so they use the price distribution of alternatives as a guide to what the price should be.

hm8 12y ago

This was covered in Predictably Irrational by Dan Ariely. It is an awesome book that talks about human behavior in day-to-day life. The best part: it goes on to demonstrate that even the smartest of the folks fall for these tricks in a lot of context.

chippy 12y ago

So what should a rational consumer pick? I'm not seeing that in the article or HN comments. The 30 days option? A different pricing mechanism? Would would that look like?

ConAntonakos 12y ago

A bad deal is a bad deal no matter the cost obviously. But what I find perplexing is why wouldn't people compare against the current market rate to actually purchase said game? If Darksiders 2 is discounted to $10, why would it be rented at $5 for 4 hours? This comparison immediately discredits PlayStation Now's value.

CPLX 12y ago

"I would like a bottle of your second least expensive wine please" - Homer Simpson