Business

What is the Revenue Model of Humble Bundle?

Gamers are familiar with The Humble Store, a ten-year-old business that sells Steam games at a fraction of the price of the originals. However, how does Humble Bundle generate revenue? Or is it losing money on each sale? To be honest, their prices defy logic!

What is happening? How is HumbleBundle profitable as it sells USD 59.99 games like XCOM 2 for just USD 9.99? Allow me to respond to this query today.

Revenue Model of Humble Bundle!

Revenue Model of Humble Bundle

Humble Bundle generates revenue by reselling previously owned game licenses. They compensate game developers for the use of physical game licenses sold online.

HumbleBundle subsequently sells these licenses at a discount to their normal market value, keeping the rest of the selling price and contributing a portion of the proceeds to charity.

However, there is a puzzle – why would game publishers allow Humble Bundle to sell their titles for such a low price? Let’s take a closer look at Humble Bundle’s business model, as it is very intriguing.

How does Humble Bundle work?

Humble Bundle is a Steam game vendor that offers packages of games at a higher retail value. John Graham and Jeff Rosen formed it in March 2010.

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The most interesting aspect of this business is that you, the consumer, will determine the price of the game package.

For instance, you can buy a package of games that would normally cost $150 for as little as $15.

The Humble Store offers an array of popular types of games at rock-bottom prices. The best thing is that they acquired all of the company’s games lawfully, which means you can play them on Steam under your own name.

The Business Model of Humble Bundle

Now is the time to dive headfirst into the Humble Bundle market and revenue model. Why would businesses have games at such a low price legally?

What do businesses gain? And, regardless of how cheaply businesses give away their games, how does HumbleBundle make money?

1. How does Humble Bundle obtain games?

The Humble Store’s resale of used physical games enables it to resell a practically useless commodity to gaming companies.

Although the games have intrinsic value, that value has already been paid for by a customer. Popular game publishers will permit Humble Bundle to resell these licenses at significantly reduced rates.

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Along with famous games, The Humble Store approaches independent game developers and publishers who already have their titles available on Steam. Although Steam contains over 9,000 games, not all of them are extremely successful.

As a result, Humble Bundle signs deal with lesser-known game developers. This contract has two advantages:

Companies that are not yet well-known gain visibility among niche gaming audiences. Bundle purchasers receive these games for free and are thus more likely to give them a try.

Regardless of the number, game developers begin generating revenue on games that have fallen behind because they are bundled with famous games.

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Apart from that, the HumbleBundle donates to charities in order to raise awareness within the gaming community.

Humble Bundle can sign further deals and expand the number of games available to their customers through all of the above advantages directly impacting the sales of the game production business.

2. How is Humble Bundle funded?

When consumers buy gaming packs, they can choose a price from a list of available choices. Each package has a minimum price, which means that lowering it will result in a loss or a breakeven sale for the company.

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If the customer chooses a price that is less than the bundle’s minimum cost, they forfeit a few of the bundle’s benefits.

As you can see in the screenshot above, I selected a price of US$11 for the package, which means that I will not receive the US$15 material.

3. The charitable component of Humble Bundle’s pricing structure

To maintain the interest of millennial gamers and to have an incentive for them to continue purchasing from The Humble Store, they donate a portion of their profits to charity.

Customers may choose a charity to endorse from a list of HumbleBundle affiliate 501(3)c companies.

4. What is the revenue produced by Humble Bundle?

HumbleBundle’s income is not disclosed publicly. However, research indicates the Humble Bundle’s annual revenue ranges between $10 and $50 million. This is focused on traffic projections and average conversion rates (which are generally higher in the gaming community).

Final Thoughts

The Humble Store has done an excellent job of monetizing a fairly engaged community of shoppers and enthusiasts. Although I started my research with a healthy dose of skepticism, I quickly discovered that the business is not involved in any kind of game piracy.

Simply put, they are able to exploit their massive audience, their novel idea of reselling used license keys, and collaborations to deliver games at eye-popping low prices.

I hope you enjoyed reading this brief overview of how HumbleBundle makes money.

Frequently Asked Questions about Humble Bundle

Is it true that Humble Bundle donates to charities?

Yes, HumbleBundle contributes a portion of the proceeds to charity. The organization to which the funds are donated is determined by the purchaser’s selection of a cause.

Is Humble Bundle a scam or a legitimate business?

HumbleBundle is a legitimate business that acquires all of its games legally by contractual agreements with game developers. Although their prices can raise eyebrows, you can shop with this company completely worry-free.

How is Humble Bundle able to offer such low-priced games?

Through working with gaming companies, they resell the licenses to used physical games. They obtain access to the license at a much cheaper price since it has already been sold.

If you enjoyed reading this article, please checkout the Revenue Model of Craigslist.

About the author

Madhav

Hey Folks, I am Madhav! I lead a team of Marketers at Tech Startup based in Australia. In my free time, I dissect the business models of various businesses. And if there's any free time, I cook some new Dish!