The Humble Bundle Business Model – How Does Humble Bundle Make Money?

Executive Summary:

Humble Bundle is an online platform that sells digital products, predominately games, in bundles as well as through its store.  

Humble Bundle makes money via donations, subscription fees, commissions from its Humble Store, as well as fees from its publishing business.

Founded in 2010, Humble Bundle has become a major success in the gaming industry. It has raised over $196 million in charity donations to this date.

How Humble Bundle Works

Humble Bundle is an online platform that will help you find and buy digital products such as games, software, books.

There are thousands of items available for purchase – most of them heavily discounted (for up to 90 percent).

Customers can either purchase single products (such as Red Dead Redemption II) or, as you may have guessed, in bundles.

The bundles include a pre-selected assortment of various digital products. Bundles are oftentimes available for a limited time period.

Every bundle comes with its own set of tiers which can be unlocked by paying a specific price:

  • With Pay What You Want, customers decide what they want to pay for the bundle (minimum purchase price is $1); this unlocks the least amount of content
  • Beat The Average allows customers to purchase the ‘first-tier’ content (i.e. best items within the bundle) by paying more than the average customer does for the bundle
  • When unlocking the third and highest tier, customers will get access to additional, premium content

Customers can then decide how they distribute their payment. During the checkout process, they choose what percentage goes to the developer of the product (for instance EA Sports), charities, or Humble Bundle itself.  

Humble Bundle works together with dozens of charities, including WWF, Make A Wish, GamesAid, Worldreader, and many more.

The top contributors will furthermore be displayed on Humble Bundle’s public leaderboard. Nevertheless, customers have the ability to stay anonymous.

Furthermore, Humble Bundle offers a monthly subscription program that grants customers access to a set number of games, discounts, and many other benefits.

To date, Humble Bundle has reached a total of 12 million customers while being responsible for over $196 million in charity donations.

Humble Bundle Company History

Humble Bundle, headquartered in San Francisco, California, was founded in 2010 by John Graham and Jeffrey Rosen.

Prior to Humble Bundle, both Graham and Rosen had already worked on a venture together. They co-founded Wolfire Games, an independent gaming studio, back in 2008.

Being indie developers themselves, they garnered first-hand experience about how tough it can be to get your games distributed as an unknown studio. Many of their friends, who were developers themselves, had experienced similar issues.

As a result, they decided to launch Humble Bundle, which would act as a quasi-marketing-channel to support independent developers with the special twist of donating to charity.

The initial spark for Humble Bundle was rather random as Rosen recalled in a 2010 interview with Ars Technica:

“We recently teamed up with the Natural Selection 2 guys to do a bundle promotion, which was influenced by Steam’s indie bundles, and that was a huge success. So I was kind of brainstorming about what we could do to top that, and this idea came about. Everyone in the promotion is 100 percent independent, and we are all buddies, so it only took a few emails to organize the whole thing.”

Many other news outlets jumped on the chance to write and talk about Humble Bundle, which created a decent amount of hype prior to the launch.

Finally, in May 2010, the first Humble Bundle was launched, which included five pre-selected indie games called World of Goo, Gish, Lugaru, Aquaria, and Penumbra Overture. That first launch became an instant success, leading to over 100,000 people donating a total of more than $1 million.

The early traction furthermore allowed the founders, who were still working on launching a game at Wolfire Games, to join prestigious startup accelerator Y Combinator. Eventually, Graham and Rosen decided to incorporate Humble Bundle as a separate entity and focus on it full-time.

Months later, in December 2010, the second bundle was released. It, again, became an overwhelming success, allowing the team to raise $3 million within the first two bundles. In support of their mission, SV Angel, Y Combinator, and Sequoia Capital invested a combined $4.5 million in the startup’s seed round (announced in April 2011).

By mid-2011, the founders were able to decrease the time it took to release a bundle from three to four months to once per month. Both donations and revenue increased substantially as a result.

In July 2012, the company began to pivot into other categories in which it could sell bundles. It first launched an indie music bundle (inspired by Radiohead’s 2007 pay-what-you-want release of In Rainbows) and literature (eBooks).

By 2013, Humble Bundle was big enough to not only attract indie developers but major game studios. In August 2013, it launched the Humble Origin Bundle in cooperation with Electronic Arts.

That same year, in November, it expanded its offering by launching its very own storefront. The Humble Store allowed customers to purchase games and other digital products for a fixed price (similar to Steam’s store).

In October 2015, it launched a membership program that provides customers with a handpicked selection of new games (and other products) every month. Over 70,000 people signed up within the first few days of launch.

A year later, Humble Bundle branched out into becoming a publisher. Under the tag name Humble Originals, the platform released games that it developed itself. It later pivoted into working together with other developers and handle anything from funding the project to marketing it.

Just weeks after Humble Bundle crossed the $100 million donations mark (September 2017), it announced that it would be acquired by media giant IGN for an undisclosed amount.

Many in the gaming community grew worried that the sale would mean that the company would lose its humble (no pun intended) origins. Luckily, that did appear not to be the case. Humble Bundle continued to operate as an independent organization that focused on maximizing charity donations as well as promoting unknown game developers.

Nevertheless, the firm’s continued growth was taking place without the day-to-day involvement of Graham and Rosen (who acted as the firm’s CEO and COO, respectively). In March 2019, both announced that they would step down. Alan Patmore, a seasoned gaming executive, became Humble’s new CEO.

Regardless of the firm’s continuous success, it has also faced some backlash. In April 2021, Humble Bundle announced that would cap charity donations at 15 percent. As a result, many of its loyal customers issued angry statements and tweets against the company, which prompted the company to dial back on the initiative.

How Does Humble Bundle Make Money?

Humble Bundle makes money via donations, subscription fees, commissions from its Humble Store, as well as fees from its publishing business.

Let’s take a closer look at each of these in the section below.

Donations

The bulk of the revenue that Humble Bundle generates comes from the donations that customers make during the checkout process.

As previously stated, customers can decide how much they want to pay for any given bundle. Within that purchase, they can furthermore select the split between what goes to charities, the game developers, as well as Humble Bundle itself.

To entice users to spend more, Humble Bundle lists down what the average customer has spent on the bundle.

Furthermore, it publicizes the biggest donors (if they want to) via its Top Contributor list. Some companies have even used it to buy their way into what is essentially a paid promotion by spending enough to appear on the list.

Subscriptions

In October 2015, Humble Bundle launched a subscription offering called Humble Monthly. For a flat monthly fee, customers would get access to a collection of games.

By April 2019, almost four years after its launch, Humble Monthly had amassed over 400,000 subscribers.

Later that year, in December, Humble Bundle rebranded the subscription program to what it is called today: Humble Choice.

With Humble Choice, users still pay a flat fee of $12 every month. The offering grants them access to a variety of benefits, including store discounts (up to 20 percent), access to Trove (Humble’s collection of its own games and other classics), as well as a selection of 12 games.

Nevertheless, Humble Bundle still donates 5 percent of every subscription to a featured charity (which changes on a monthly basis).  

Humble Store

The Humble Store is an online storefront that allows customers to purchase single games and other digital products.

Many of the available games are heavily discounted (sometimes up to 80 percent). However, there are also newly released titles available for purchase.

75 percent of the revenue generated through the store goes to the developer itself. The rest is distributed to Humble Bundle (15 percent) as well as the charity (10 percent).

Humble Games

Developers can work together with Humble Bundle (via its Humble Games unit) to have their games published and promoted through the platform.

Humble Bundle provides developers with upfront financing, a dedicated producer and marketing team, as well as access to more than 12 million customers.

Furthermore, developers are able to retain 100 percent of their ownership and intellectual property while having full creative control.  

Each of these partnerships are done on a contractual basis, so deal structures are not publicly disclosed. It can be assumed that Humble Bundle receives a percentage fraction of all incoming sales.

Additionally, if Humble Bundle is able to acquire a stake in that business or game, it can be assumed that future royalty payments (and other forms of income) are also distributed to the company.  

Humble Bundle Funding, Revenue & Valuation

According to Crunchbase, Humble Bundle has raised a total of $4.5 million in just one round of venture capital funding.

Investors who participated in that funding round, which was raised back in April 2011, include SV Angel, Y Combinator, as well as Sequoia Capital.

Both prior to and after the acquisition, neither the firm’s valuation nor revenue have been disclosed to the public.

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