Analysis: Three Reasons Why We Buy Those Crazy Steam Bundles

[In this new Gamasutra analysis piece, psychologist and gamer Jamie Madigan explains some psychological reasons why those big bundles from Steam and other digital distribution platforms are so hard to resist.] Steam, the digital game distribution platform owned by Valve, often has these weird bundles for sale where they cram together, for example, every id Software or every Rockstar game or every game featuring squirrels into one package. One message board I frequent has a mega thread dedicated to gaming bargains, and doing a search for "Damn you, Steam" produces results like these: "Damn... maybe I want Colonization. Have CIV IV & BTS on Disc. Should I just get Colonization @ $10.19 or just get them all and have on Steam for a wee bit more. Damn you Steam." "Damn you Steam! More games to buy that I'll probably never get to play." "Damn you Steam. I had just successfully resisted the urge to buy games at both the holiday sale from GoGamer (Heroes of M&M 5 Complete and EU:Rome at $10 each were tempting, and Company of Heores Opposing Front for $5 is a steal) and the last round of Steam Deals (King Arthur especially was calling my name), and now you put Civ IV complete (I own none of the Civ IV stuff) out there for $14. My game backlog can't take much more of this!!" "This is madness. I am buying games for a theoretical PC that I will build someday (maybe) so I can play them. Damn you, Steam." "Got $170 sitting my cart. Staring at it trying to figure out how to cut it down some. Damn you, Steam." People are talking like Steam is forcing them to pounce on such deals when they happen even though they already have a huge backlog and may actually already own physical versions of half the games included. What makes these plainly ridiculous bundles so attractive? I'm glad you asked, because I can think of at least three psychological principles at play here. Scarcity First, In marketing there's a well worn principle called "the scarcity effect." When something is scarce, it automatically becomes more desirable to us than it would be if it were available everywhere we looked. This "available in limited number" trick shows up everywhere from collectible trading cards to special "limited" editions of new game releases (which usually aren't all that limited in all actuality). Ever noticed a store front that had a "going out of business!" sign in the window for months on end? That's the owners trying to capitalize on the scarcity effect. Buy now, sucker, or it'll be gone! Consider a simple 1975 experiment by psychologist Stephen Worchel to provide an illustration of this concept involving baked goods. Posing as a consumer products survey, the experimenters offered subjects a chocolate chip cookie from one of two jars. One of the jars had many cookies in it. The other had only a few. Of course, people reported the cookies from the mostly empty jars as more delicious, more desirable, and more expensive. This despite that the cookies in both jars WERE THE SAME COOKIES. But Steam and similar download services like Direct to Drive sell digital games, right? They're not cookies that are about to disappear, there is literally an UNLIMITED SUPPLY of the 1s and 0s that comprise these digitally distributed games. True, but the scarcity effect still applies, because it's not so much the scarcity of the physical product that we react to, but the opportunity to buy it. Often these bundles are put up a limited time sales and people HATE losing opportunities to do things once they think they're within reach. Obscuring True Value The second psychological principle at play here is the fact that it's hard for shoppers to look at a bundle like that and understand what its true value is. William Poundstone, author of Priceless: The Myth of Fair Value (And How to Take Advantage of It) calls this the "value meal" strategy when describing the psychology of restaurant menu design. How much cheaper is it to get the bundle? What about if I super size it? With curly fries? Oh, forget it. Just give me the #3 with an ice tea. Likewise, we look at a massive bundle of digitally distributed games and think about how much could I get those older games for elsewhere? Could I find them for sale used, and for how much? Could I rent or borrow any of them? For the games I already own, how much is it worth to me to have them available through Steam so that I don't have to dig out my old boxes and CD keys? It's a psychological truism that we have limited cognitive processing power at any one time, and when our brains are tied up considering these questions, we've got fewer cycles to devote to thinking about other stuff, like how much we want to actually PLAY the games. Not that this keeps the folks who run Steam from telling us exactly how much the bundle is worth, though, which brings me to the third psychological factor in play: anchoring. Anchoring In the context of the psychology of prices, anchoring refers to presenting shoppers with a number in order to get them to "anchor" their perceptions of value on either a high or low absolute. The "low ball" offer is the classic example --open a negotiation over price with a really low number and you'll set the stage so that what you're actually willing to pay looks higher in comparison. As a simple but elegant example, consider an experiment done by psychological wizards Amos Tversky and Daniel Kahneman. The researchers asked one group of subjects to estimate the product of these numbers: 8x7x6x5x4x3x2x1 And then they asked another group to estimate this product: 1x2x3x4x5x6x7x8 Those of you with a grade school education may know that because of how multiplication works these products are equal (40,320 if you were wondering). Yet the average estimate for the group that was given the problem starting with "8" was 2,250 while those who saw a "1" at the beginning of the problem had an average estimate of just 512. Why? Because one group anchored on a high number and the other anchored on a low number. Similarly, behavioral economist Dan Ariely and his collegues conducted a study where he used anchoring in an auction simply by having bidders write down the last two digits of their social security number at the top of their bid sheets. Those whose numbers ended in the 80s and above actually were willing to pay up to 346% more for things like wine and chocolates than were those whose social security numbers ended in the 20s or below. CRAZY. How does this relate to those Steam bundles? Well, look closely at one of those promotions and you'll see that the marketing gurus for the service readily list the retail value of the bundle if you paid full price for all games individually. That's your anchor; seeing that number will cause many people to set their perceptions of the bundle's value much higher than if they had seen the sale price alone. In addition, the difference between the "unbundled" and sale prices can trigger the contrast effect, which could be considered a fourth psychological principle at play. So there you have it: you're broke and have way too many games to play because you don't want to lose opportunities to buy something, you're befuddled by pricing, and your perceptions are anchored by arbitrary "normally sells for..." prices. Now, if you'll excuse me, I have to go play Commander Keen, Doom, Final Doom, Doom II, Doom 3, Hexen, Hexen II, Heretic, Quake, Quake II, Quake III Arena, Wolfenstein 3D, Spear of Destiny, Return to Castle Wolfenstein, and more mission packs than I want to think of. [Jamie Madigan, Ph.D. is a psychologist and gamer who explores why players and developers do what they do by studying the overlap between psychology and video games at The Psychology of Games website. He can be reached at [email protected].] References: Ariely, D., Loewenstein, G., & Prelec, D. (2003). Coherent arbitrariness: Stable demand curves without stable preference. Quarterly Journal of Economics, 118, 73-105. Tversky, A. & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185, 1124-1131. Worchel, S., Lee, J., & Adewole, A. (1975). Effects of supply and demand on rating of object value. Journal of Personality and Social Psychology, 32, 906-914.