Yes, this thread is an excellent object lesson--he achieved self-segmentation in his market using nonstandard practices all without a product manager while simultaneously creating great PR.
I don't know what this comment means, except for the "great PR" part. I agree, it's great PR; unfortunately, since people will clearly pay much more than $5.99 for a solid expansion to a game, you're going to have a hard time convincing me that a confusing pricing scheme that practically begs people to pay less than $5.99 is a success.
I think you're a smart guy and being disingenuous here, but I'll play along.
A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function.
If there are users who will pay 2.99 but not 5.99, this strategy can still capture their value today, but simply pricing at a higher price will not. You posit that people will pay much more than 5.99 for an expansion pack for this game and I don't think you're in any position to know that about this game.
I don't know what "self-segmentation" means; I'm not being disingenuous. Do you mean "users segment themselves"? Because no, they don't; he created 2 segments, both wildly underpriced, and provided no rational incentive for customers to choose the more expensive one.
I paid $2 for _The Incident_ on the iPhone. Don't me wrong, _The Incident_ is a work of art, but it does not provide the same kind of value as a title as this game does; I play it in 4 minute increments on the elevator at my office. I am not the only person who paid $2 for _The Incident_.
You're right, I don't play computer games (well, I play Starcraft 2 since I bought it for my son --- actually, I bought it twice, so I could play it multiplayer with him; want to guess how much I spent for that?). Maybe this game just sucks and is only worth $6. That's not the impression I got.
By self-segmenting, I mean that his customers are voluntarily sorting themselves into market segments according to what they are willing to pay, and then paying that amount.
Extracting the most value from your customers is a challenge. Ideally since software has no real unit costs to the developer, you'd like to be able to sell the same software for every value from $500 down to $0 with each person paying the max they are willing. The problem is that you can't divine the amount each person would pay and have no way to manage this. I am saying he has his customers sorting themselves based on what they will pay on his behalf, and in theory he could get closer to the theoretical ideal that way.
It is true, there's no rational incentive (although maybe a desire to ensure the developer keeps working on a game you love almost qualifies) but it doesn't matter if using the guilt lever works on irrationality so long as it works, which if his numbers are real, it did to the extent that he sold two at 5.99 for every one at 2.99.
