Week 2: Price Discrimination - Video Games

Question 1

Two-Part Tariff/Tying Price Discrimination in Video Games

Answer 1

At release a video game may cost $60 (basic), then you can pay extra for downloadable content, DLC (variable)

Question 2

Basic vs Deluxe Price Discrimination in Video Games

Answer 2

can pay $100 up front to get the deluxe version or the $60 standard

Question 3

Temporal Price Discrimination in Video Games

Answer 3

If you wait a few months, the price of the video game will usually drop

Question 4

How is the business model for mobile games different from video games?

Answer 4

-typically free to download but have in-app purchases (e.g. pay to play more than one level a day)
-95% of users don’t make a purchase and those who do will spend $10-$20
-a tiny minority will pay $1000, this how mobile game companies make their money (similar to other vice products such as alcohol)