Why do we buy Season Passes?
The longer you’ve followed me on Twitter,
the more likely you are to have run into one of several of my very impassioned rants against
Season Passes, and especially preorders. Also you’ve probably been subjected to a dose
of catgirl pictures that exceeds the Surgeon General’s recommended maximum dose.
But, you know... Whatever.
Season Passes and Pre-orders make no sense to me, especially in an age of digital distribution.
Pre-orders used to serve an actual purpose--used to be, if you wanted your new Nintendos or
Segas, you had to go down to a store and pick up a physical copy of it. And if you wanted
a game the day it released, you could be screwed, because the physical store that physically
carried them could physically run out of them. Physically. Anyway, this actually happened
sometimes, honestly. People were boned on release days because demand was too high.
This was bad for gamers because they didn’t get what they wanted, bad for the stores because
they were losing potential sales, and bad for the publishers because they weren’t
moving as many copies as possible. It was lose-lose-lose. Enter: pre-ordering. A way
to ensure you’d get your hands on a game you wanted when it came out.
Of course, that’s not really the day we live in anymore. Most games, even those on
consoles, are distributed digitally. They’ll come with a disk sometimes, sure, but at this
point it’s mostly ceremonial. It would take 6 DVDs to hold all the install data for Fallout
4, and over 10 for Grand Theft Auto 5. You can save a bit on physical space if you use
BlueRays, but blue ray is more expensive, and even still all of Fallout 4 wouldn’t
fit on it, let alone GTA 5.
We no longer have to worry about not getting our hands on games when they release on modern
systems. And yet pre-orders still exist. Why is that? Well, for one thing, while the benefit
to you and me isn’t there anymore, there’s still a benefit to the publishers.Getting
a commitment to a full priced game early from as many people as possible? Heck yes.
If you write it out on paper, it makes no sense. In a capitalist economy, your money
is...basically everything. Money is what economists call “fungible,” which is a sorta-pretentious
way of saying “it can be turned into anything.” Like if you have $60, you effectively have
the potential to own anything worth $60. You can see a movie. You can buy lunch. In the
right parts of town, it might even be able to buy you love.
And in classical economics, it makes no rational sense to part with a fungible asset “early.”
Money is much more powerful when it can be anything. Giving up money before you have
the thing it’s supposed to transform into? Huge no-no, especially if you take into account
the fact that our currency is almost constantly inflating and losing value, albeit slowly.
So $60 spent today is a more valuable $60 than you might spend six months from now.
Plus, classically speaking, a business is supposed to be motivated to get my money from
me by presenting a product that entices me enough to give up my money. Preorders, for
both Season Passes and whole games, completely remove this incentive. The money’s gone.
It’s a sunk cost. Hurray!
But you’ve heard this all before. Totalbiscuit, Jim Sterling, and dozens of game industry
pundits have covered over and over and over again why pre-orders make no sense, don’t
help us as gamers, and ultimately harm the industry. But if they objectively make no
sense, why do we still buy them?
I wrestle with this a lot. If you ask people why they buy season passes or pre-orders,
you get a variety of answers from folk. Some say it’s an investment. Some say it’s
a deal, particularly in the case of Season Passes--that it’s a bundle. Some will say
that they have the money now, and they may not have it later, so they buy it when they
can. All of these reasons are fallacious when you look at them rationally. Season Passes
aren’t an investment because they don’t provide you any monetary return--in fact,
by locking that money up earlier, you’re actually making losing more money due to inflation
than if you waited . And if you have the money now for something you think you’re going
to want later, you can set that money aside. Just don’t spend it. In fact, you could
even put it in a savings account and earn interest on it. These lines of thinking when
it comes to a purchasing goods and services are completely irrational, and yet totally
common.
And you know what, I’m totally not immune. I’m not sitting here saying you are irrational,
I’m saying we, you, me, everyone are irrational. I hate Season Passes, a view not held by everyone
here at Shoddycast, but even I bought The Witcher 3’s DLC pass. I’ve spent a lot
of time justifying it, but the truth of the matter is that it doesn’t matter that CDProjekt
Red crafts excellent stories and have really high-integrity practices--all the same logic
about sinking your money into something before you actually want or need it still holds.
So why do I, someone who tries his damnedest to frame Season Passes and Pre-Order culture
in a rational economic perspective still fall victim to the lure and temptation of Season
Passes? Simple: transaction utility.
Those of you who watched my last Rethinking video may remember during the ad spot for
Audible that I mentioned I was listening to the book Misbehaving by Richard Thaler, who
is a pioneer of a new school of economics called Behavioral Economics, which was created
to explain how we humans behave irrationally, as opposed to traditional economic models
which suggest we wouldn’t. But in a world full of rational consumers who think about
their purchases from a logical perspective, season passes would never exist. And yet they
do. Why is that?
Thaler presents two concepts that work in concert with one another to explain this:
acquisition utility and transaction utility. Acquisition utility is what is gained when
something you buy has an objectively greater value to you than what you pay for it. For
instance, if you’re very thirsty, paying a dollar for a bottle of water has a good
acquisition utility, because the bottle of water is worth more to you than your dollar.
Or, in terms we understand, I was bored, and the $60 I spent on Fallout 4 was worthless
to me than the tens of hours of entertainment it provided for me.
Notice how this sort of thinking would lead you to only buying games when you’re actually
going to play them. But that’s not what we do, point of fact. At least not most of
the time. Which brings us to Transaction Utility. Transaction Utility is the difference between
the price you pay for something and the price you would normally expect to pay. For example,
if you missed the boat on the Fallout 4 Season Pass by a day and had to pay fifty--erm, “forty-nine
ninety nine” for it instead of twenty-nine ninety nine it was the day before, that would
produce what Thaler calls a “negative transaction utility.” Aka a “rip off.”
Don’t get it? It’s fine, it’s confusing. But you experience transaction utility all
the time--probably every time you shop. Ever go into a department store and everything’s
on sale? Oh look, a shirt you like. It’s twenty bucks, but it’s on SALE, and the
suggested retail price is $60! It’s like you’re getting the shirt at a third of its
original price. Of course, the suggested retail price is often complete bullshit, and the
actual profit-turning price is the $20 you spend on it. But on top of getting a new shirt
to wear when you buy it, you’re also getting the positive feeling of getting it for $40s
cheaper, even if that entire feeling is as synthetic as the fibers woven to make the
shirt.
Season Passes are entirely dependent on creating a feeling of positive transaction utility
in gamers. For instance, Bethesda announced its first group of DLC in February--Automatron:
$10, Wasteland Workshop: $5, Far Harbor $25, bringing it to a total of $40. Ten dollars
more than folk spent on the season pass! Wow! And then they announced that they were raising
the price to $50, but don’t worry, they’re planning on releasing $60 of DLC content,
so even those who missed the boat on the Season Pass at $30 will still feel like they’re
getting a bargain.
Of course, the real price is $30. Or $50, depending upon when you bought it. The $60
they’re claiming the DLC will be worth is, effectively, the suggested retail price.
The funny thing is that, well, this seems like bullshit at first glance, we tend to
like things to be this way. We love feeling like we’re getting a deal, even if we’re
not. And we hate when the illusion is shattered. JC Penny and Macy’s both tried to abandon
this whole “suggested retail price” trick in favor of a more, um, logical sales method.
How’d they do? The faceplanted. The CEO of JC Penny said they’d be doing away with
what he called “fake pricing” and also dropped the whole .99 schtick. No more 9.99,
everything’s $10. Sales and stockprices both plummeted for Macy’s and JC Penny,
JC Penny’s CEO resigned, and their sales still haven’t recovered. Yikes.
Corporations love Season Passes because advanced purchasing of a product separates the purchasing
decision from the the decision to play the game itself. Once you’ve sunk that money
in, it’s gone. You could never play the DLC, and they still have the money. It seems
worth it because, you know, if and when you decide to, you can.
So at the end of the day, Season Passes probably aren’t going anywhere. They bug me. They
may bug you. But honestly, the truth of the matter is that we like the feeling of getting
a good deal on something, and we’ll always be able to justify the purchases to ourselves,
even if they make no financial sense at all. Even I, a huge crybaby about it, can fall
victim to this line of thinking. S o. Whatever. Do what you want. Just know why you’re doing
it. Thanks for watching.
This episode of Rethinking was sponsored by Opinion Outpost. Opinion Outpost is a website
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