Sorting customer types by episodes

Video games are a growing segment of the class of products called "information goods." These are products with informational content like books, songs, movies, software, etc. People differ in their willingness-to-pay for the product, but so far, it has been difficult to price discriminate. Now Telltale Games has developed episode based games in which a gamer can sequentially purchase up to five episodes of a 'season' of a game. Their FAQ states:

Aside from their one-shot games like Puzzle Agent and Poker Night, Telltale makes 'episodic games'. If you buy a season, about once a month you'll get a new 2-4 hour game to play, called an 'episode'- kind of like a TV show. And just like on TV, each episode has its own plot, but the season as a whole has an overarching plot spanning all the episodes.

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It is also possible to purchase the entire season at once by buying a season pass- you can download all episodes that have already been released up to that point and will get the rest as they come out. And, of course, you can buy the entire season of any game that is finished and get all the episodes at once. Many of Telltale's older episodes can be purchased individually, but most of their newer titles only come as a season pack.

One advantage of pricing by episode is that gamers with less interest will be more apt to purchase a first episode, try it out, and see if the cliff-hanger is enough to entice them to buy another.

An added benefit of several shorter games with an overarching plot is, again, the same as one would get from watching television. Water-cooler talk is always exciting on the forums, in between episodes there is always engaging discussion on what might happen next.

This version of indirect price discrimination is called "metering" in which willingness-to-pay is related to the intensity of use. Instead of charging everyone the same price, try to devise a way to measure the intensity of use and then price the usage as with a meter.

HT: Brandon Vanderford