Valve: "Are Games Too Expensive?"

Comments and discussion on any and all topics.
User avatar
Vyldan
Meow
Posts:153
Joined:Thu Aug 16, 2007 10:25 pm
Contact:
Valve: "Are Games Too Expensive?"

Postby Vyldan » Thu Feb 19, 2009 1:01 pm



"Games may be too expensive.

That is the message Valve Software President Gabe Newell gave the assembled developers at the annual DICE Summit on Wednesday. While the topic of his keynote was the game industry's transition from retail industry to service industry, he revealed sales data from Steam that suggests games are too expensive.

The reason why few have arrived at this conclusion is because you cannot easily experiment with pricing at retail, says Newell. But you can with Steam, Valve's burgeoning digital distribution platform.

On the PC-only Steam service, a wide range of prices are attached to games, and attractive weekend deals throw more pricing variability into the mix. Although Valve was initially afraid that volatility or variability in pricing would confuse or anger its customers--or even cannibalize retail sales--Newell says that was not all the case.

In fact, it dramatically increased sales. Illustrating his point, Newell showed the results of a Left 4 Dead promotion Valve ran last weekend, which cut the price of the game in half to $25. The discount (and promise of new content for the game) rocketed sales of the game on Steam by 3,000 percent.

"We sold more in revenue this last weekend than we did when we launched the product," says Newell. "We were driving a huge uptick in revenue and attracting new customers." And while people believe that we're "screwing" retail, Newell showed that brick-and-mortar sales were unaffected by the online discount.

This phenomenon is not limited to Valve games. Over the holidays, Steam discounted third-party titles. Sales increased 300 percent and units-sold increased by 600 percent.

Still skeptical? Newell said that a weekend sale of one third-party title drove that game's sales up by 18,000 percent and units-sold increased 36,000 percent. It energized the user base, says Newell. When the sale ended, baseline sales were double what they were prior to the weekend discount.

Discounting games does not only increase unit sales--it increases actual revenues. During the 16-day sale window over the holidays, third-parties were given a choice as to how severely they would discount their games. Those that discounted their games by 10 percent saw a 35% uptick in sales--that's dollars, not units. A 25 percent discount meant a 245 percent increase in sales. Dropping the price by 50 percent meant a sales increase of 320 percent. And a 75 percent decrease in the price point generated a 1,470 percent increase in sales.

The conclusion: The games industry is not pricing its products correctly. It's only through the experimentation that such services as Steam allows will the industry be able to find the golden ratio of price and sales. As Academy of Interactive Arts and Sciences President Joseph Olin concluded Wednesday night, this is going to generate a lot of controversy about pricing."

MaC
Got Fofum
Posts:297
Joined:Thu May 29, 2008 10:25 pm

Postby MaC » Thu Feb 19, 2009 2:32 pm

that picture of the guy was horrible...

but i totally agree with this. I have bought very few games in my life because they are so much so I play the few ones I have a lot. 60 bucks for a 360 game is bs, and 50 is pushy except for the really good one.

Also, I started playing Diablo II again for the hell of it and my brother wanted to make a guy with me on Battle.net. We looked on blizzards site for a digital download to get another CD key and it was 40$ for D2 + LOD. ARE YOU FUCKING KIDDING ME?!? The game was out over ten years ago :shock:

User avatar
Darkfoxx
Site Admin
Posts:9666
Joined:Mon Jul 02, 2007 7:09 pm
Location:Alexandria, VA
Contact:

Postby Darkfoxx » Thu Feb 19, 2009 3:23 pm

I torrent games because they're too expensive, especially if I find out the game sucks after playing it.

What they should do is allow the public to beta test all games so that they can see if the game is for them or not.

If I D/L a multiplayer game and I like it, I usually buy it...like COD4 and COD5.

Lowering the price would help too. Every PC game now is 49.99! Make it $25 like Valve did for L4D and maybe I'll buy more games.
Gaming:

Workstation:

User avatar
Jif
Jimmy Jams
Posts:6896
Joined:Mon Feb 25, 2008 12:49 am

Postby Jif » Thu Feb 19, 2009 6:38 pm

it's the exact same principal that proves lowering taxes actually increases revenue to the government.

almost every product that doesnt have a hard production cost (like a boat or a car or a house have) will gross more sales $ at a lower price per each unit than higher

MaC
Got Fofum
Posts:297
Joined:Thu May 29, 2008 10:25 pm

Postby MaC » Thu Feb 19, 2009 7:42 pm


User avatar
Harness
Da Bumble
Posts:2070
Joined:Mon Dec 10, 2007 6:13 pm

Postby Harness » Thu Feb 19, 2009 7:45 pm

A couple of weeks ago. It lasted only for a weekend.
I type a bunch of shit then people go fuk themselves

User avatar
Tanis Half Elf
Is Kind Of A Big Deal
Posts:944
Joined:Tue Jul 03, 2007 11:00 pm
Location:Greensburg,La

Postby Tanis Half Elf » Thu Feb 19, 2009 10:05 pm

It started at 2/13(last Friday) and was extended until the 16th.


Return to “General Discussion”

Who is online

Users browsing this forum: No registered users and 34 guests