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Valve: Raise price and digi games still sell News
PC News by Games Industry.biz
Publishers and developer are free to drop and raise the price of digitally released games without any penalty to future sales or consumer loyalty, according to Valve's head of Steam, Jason Holtman, as reported on GamesIndustry.biz.
Speaking at the Montreal International Game Summit this week, Holtman said the digital market flips traditional retail thinking on its head, and that a game discounted for a short time can still go back to full price and increase sales after the promotion.
"In a connected world with a connected game it's very different and it bucks some of the traditional trends on the way people think about pricing," said Holtman.
"Fundamentally people thought that with pricing if you ever decreased the price of a product it hurt your future sales and it hurt your product as a whole. 'Don't ever take a top-end product and go to $5-10 because everybody's going to remember and they'll never buy it at the high price again, they'll think it's in the bargain bin.'
"But in a connected market prices can be moved up and down without penalty. You can have sales that are dramatically low and bring the price back up and people don't care. They don't care at all. You can do them instantaneously and you can experiment with them," he said.
For Halloween Valve dropped the price of Team Fortress 2 via Steam for six hours from $19.99 to $2.50, without marketing or advertising. "Our revenue from that weekend jumped up dramatically," said Holtman.
"When we took the game up back to its full price after we gave away all that free content and gave away lots of copies - tens of thousands of copies - we actually increased the user base and more people came back the following weekend and bought it at full price than we were selling the week before," detailed Holtman.
The sales promotion was concocted by both business and game design departments, said Holtman. "There was a meta game of people buying and selling it," he said of consumers. "They thought they were exploiting us by buying a bunch of gifts - we love it when people buy a bunch of gifts. They were stockpiling the game."
He also pointed to a Left 4 Dead promotion, where the price of the game was dropped by 50 per cent over a weekend, without it hurting sales at retail.
"We moved more units of Left 4 Dead on that weekend than we did at launch. There was no [retail] store promotion, because that's hard to set up. And retail was unaffected by that," said Holtman. "It didn't hurt our other channel at all. You can actually have lots of marginal sales on top of things and it doesn't mean you are sacrificing one for another. You can do this experimentation and it's not a zero-sum game - you don't have to hurt somebody to win."
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Poster
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+2
I love Steam deals and Steam is pretty much the only way they get my cash now so the more deals the better for me!
More serious than deals though more publishers need to address their pricing for me to buy more, The price over physical product is silly and sometimes they stay silly. Take Acti (surprise surprise) for an example, 30 notes for COD:MW - a two year old game. They even had the cheek to put it on a deal before MW2 only for it to go back up.... |
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FortysixterUK
18/11/09 @ 09:27
+8
Steam prices are a joke (overpriced) most of the time, and of course, those that miss out on the few and rare good deals just feel screwed over all the more ( I include myself in this ).
If they had emailed me to say L4D was on special offer , or that TF2 was selling for $2.50 I would have bought them both, however, as most of the time STEAM prices are invariably the same as shop retail, there is no incentive for me to check it daily. STEAM is a reasonably good idea, very poorly implemented. They have all the opportunity in the world to sell you games that are much cheaper than retail ( after all, no box, manual or disc...in fact, no physical media at all), but they don't.***moan moan moan*** |
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kangarootoo
18/11/09 @ 09:35
+2
@Xerx3s
Sounds like your 2 friends are the exception to an observed rule. "STEAM is a reasonably good idea, very poorly implemented" Steam obviously makes money. The only real flaw I am seeing described here is that some people would like to pay less for its products. That isn't poor implemenation - the opposite perhaps. If the products are selling, the price is right, that is how it works. |
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+9
Steam's prices are truly terrible at the top end and often unbeatable at the low end. There are regular unmissable deals,. particularly if you're someone who doesn't always buy big releases on day one.
Check Steam news in an RSS feed if you don't want to check prices every day, particularly at the weekend. PC gaming being what it is, big sites like EG don't always cover the price drops and time-limited deals. edit: @ kangarootoo "If the products are selling, the price is right, that is how it works." I don't really think that's true. I'm pretty sure Valve believe that if lots of publishers changed their prices, they could sell a lot more.
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most recently on 18/11/09 @ 09:44
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+6
Steam is clearly successful, but it is generally overpriced - it's fairly ridiculous that I can buy Valve games cheaper by going to an online retailer than I can by going direct to Valve through Steam.
I can only imagine that if Steam's prices were generally competitive then it would do even better than it is - although at the cost of traditional retail. And presumably Valve are still wary of burning that bridge, although I'm sure they'll get there eventually. |
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+2
"I can only imagine that if Steam's prices were generally competitive then it would do even better than it is - although at the cost of traditional retail."
Agreed if they dropped the pricing and they would clean up! Sod traditional retail on PC games, I can't buy many in my area anyway! Almost no one stocks PC and if they do it's a very small selection. |
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kangarootoo
18/11/09 @ 09:55
+2
@skillian
Well ok, "if products are selling at their peak level the porice is right". What I am really saying is that there are several meanings of "overpriced". Gamers say something is overpriced if it is more expensive than they would like, but how can that ever be a guide? People would like stuff to be free, and work up from there. The only real guide as to whether something is overpriced is whether customers buy it. If a gamer says something is too expensive, but then buys it anyway... it clearly wasn't too expensive. Every business wants to find the perfect balance between profit per unit and units sold. This is why the oh so yawnful "if they halved the price they would clean up" comment that surfaces so often on forums is so frequently nonsensical. Getting the price right is as basic a lesson in retail as you can find, and Valve for one have plenty of experience in doing so. All I am saying is that whatever the price of things on Steam, if they are selling well and creating maximum profits for Valve, the price is right. Gamers may not always think so, but they are rarely a reliable guide for these things (those that complain but purchase anyway even less so). No doubt other publishers should price their own content differently, but the same rules and goals apply. Edit: "Agreed if they dropped the pricing and they would clean up!" Oh christ. What are the odds? :)
Edited 1 times,
most recently on 18/11/09 @ 09:56
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+2
@kangarootoo
When it comes to digital downloads, I don't think anyone knows what that optimum price is yet. Valve are probably the closest to knowing, as they've done quite a bit of experimentation with their pricing, but even they are I suspect still making decisions with bricks and mortar stores in mind. Lots of other publishers (particularly the big ones) don't really have a clue what would be the optimum price for their games, which is partly why we often have Steam coming out and suggesting prices and promotions to those guys. Digital distribution is also very different to traditional retail, and I don't even think there is a single optimum price. Valve have dropped full price games to £5 and brought in more revenue than when the game cost 5 times as much, but I don't think even they would suggest that should be the standard price.
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most recently on 18/11/09 @ 10:09
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+3
@ kangarootoo
I can't agree with you. Sure people pay up at the moment as there is little competition for DD. People pay because if you want a DD copy you have NO CHOICE but to pay the asking price. Saying the price is right because people pay up is silly. Sure it's business, we all understand that business cares more for the £ than the customer, but it doesn't make it right. Gamers rushed out for MW2 after a hike and gave it record sales. They paid up but it sure as hell wasn't right! :) |
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kangarootoo
18/11/09 @ 10:09
0
@skillian
I agree. Maybe no-one will ever know the optimum price. And it almost certainly varies on a daily basis AND varies from title to title. I'm not saying perfection is achievable, I'm just saying Valve are as close as anyone (save perhaps Apple) to knowing as any vendor can be right now. Which makes it rather trite for any of us to dismiss their pricing out of hand, like we really have even the faintest idea. |
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0
To be fair though, Valve's pricing on games is usually pretty good and doesn't attract that much criticism (relatively of course - this is the internet after all).
It's usually the 3rd party games on Steam that get accused of price-gouging, and I think it's reasonably well-accepted now that Valve/Steam don't have much to do with setting prices there. |
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kangarootoo
18/11/09 @ 10:23
0
@bad09
"Saying the price is right because people pay up is silly. Sure it's business, we all understand that business cares more for the £ than the customer, but it doesn't make it right." Well some might suggest that to even consider that "being right" is even part of the picture is rather more silly. To be honest mate, I'm not sure we even disagree because we aren't really talking about the same thing. I am talking about good and bad pricing from the point of view of retail and business (which in my defense is also what the article is about). You are talking about pricing from some moral basis. If we are talking about pricing from a moral basis I might agree with you (unlikely, I admit). As it is, we are at cross purposes. |
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+4
For PC now, I'd actually rather buy from Steam but at €49.99 for a copy of L4D2 or any new release they can fuck right off, it's really priced badly on the euros side. I don't mind waiting and can get my new PC games for close to half that price online or in traditional retail outlets.
Hell I can buy new 360 games for less than that from HMV. They really need to lower their prices for me to start to bite. I might at €40 but at a more reasonable €35 (i.e. in line with UK pricing) or so I wouldn't bother going retail even if it was a bit cheaper. I suspect I'm not alone in my feelings here, they aren't so much close to finding the "sweet spot" on pricing here (in Ireland anyway) as they are miles and miles off, so much so that it's actually insulting.
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most recently on 18/11/09 @ 10:27
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kangarootoo
18/11/09 @ 10:32
0
"I suspect I'm not alone in my feelings here, they aren't so much close to finding the "sweet spot" on pricing here (in Ireland anyway) as they are miles and miles off, so much so that it's actually insulting."
You might not be alone, but you surely aren't in the majority. I find it odd that people feel personal anecdotal experience is more reliable than the stat gathering efforts of the poeple running the system, WHO ALSO have a profit based motive for findign the right balance point. Truly, if the price was badly off Valve would not only KNOW about it far better than any of us, but would have have REASON to change it far more than any of us. P.s. and none of it should be insulting. You really shouldn't take anyone's pricing model personally. |
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+3
@ kangarootoo
Well true from the business side you are right of course "if it's selling the price is right", but then that's the problem there is no connection between gamers and business sense. That's why we all get ripped and the industry sinks deeper into the exploitation we are seeing this gen - but that's another debate!. You are right though, we are sinking deeper into a pricing debate which isn't really the point of the article. I just think, as Valve say, the deals work. That says a lot of people do not like the unit price in the first place, which is part of the bigger issue. Of course people buy at full price after a deal, but as I said in the earlier post that's because there is little choice. |
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bigbadbeasty
18/11/09 @ 10:49
+1
Even though I personally think that the price of L4D2 is too high, I still bought it, and through Steam regardless.
I think there will always be the argument about digital vs physical, and while people feel that they should save money by buying digitally it is best not to forget the cost of bandwidth. For the size of the files and the massive speeds required, the cost would become a factor. Remember that most retail boxes will cost a little over a pound or two to make (varies drastically). I do think that it really comes down to the perception of value. Some feel that having the box feels tangible and valuable; while others can't find room for all there game boxes they own. |
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0
I do think that it really comes down to the perception of value. Some feel that having the box feels tangible and valuable; while others can't find room for all there game boxes they own.
Exactly. I am ready to spend (at least a little) more on DD, because for me, it has added value for being boxless, discless, buy and install anywhere,anytime. The piece of plastic and 4-page b/w-manual you usually get these days is an annoyance, not somethign I feel has any value. |
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+3
I really think people are under-estimating the value of goodwill. Valve would be the first to admit that their success has been in a large part due to the unique relationship they've built with gamers, and that would not exist if their whole business was about maximising prices.
TF2's free updates would obviously have provided more profit if they sold them, but Valve realise that keeping customers happy brings loyalty, along with an army of gamers who sing their praises and give them incredible word of mouth recommendations that would be worth millions in marketing money. |
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+1
The thing is I actually like Digital downloads,they're handy and theres no faffing about with DVD's whenever you want to change games and I understand the purpose of this artcile and what the Valve guys are saying.
I'm not even in the camp that says DD should cost less than retail, I'd be happy with parity, but that isn't the case. I don't think there is anything wrong with my argument and I would suggest that a lot less people in the Euro market (certainly in Ireland) buy games on steam than they do in the UK. Ireland, for it's size, is actually a pretty big market but also one that mostly reflects the prices in the UK. Steam's model is a long way from that. Even if they let me pay in Sterling I'd be happy. |
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kangarootoo
18/11/09 @ 11:05
0
"There was a time when Valve would have decided that even if their Euro pricing was the most profitable, the extra money wasn't worth losing the respect of many thousands of their customers"
I'm not sure if that is really true. That just feels like a bit of rose tinted hero worship to me :) |
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+1
unclelou, thats retarded. DD has added value? by taking stuff away??
*sigh* I buy and play games since the early 1980s. I already own hundreds of boxed games, and I've moved house a lot in the time since. What's retarded for me personally is having yet another tacky piece of plastic wasting valuable space when it can all be so much easier. to install it means downloading a 7GB file or so. hardly instant. and you cant do it anywhere. internet connection and steam required. Yeah, and to install from a disc, you need a PC with a disc drive. Pretty please. a disc you can install anywhere and instantly. No, I can't. For starters, it means I need to carry the disc around. I use two different PCs for gaming a lot of the time, which are hundreds of kilometers apart. Steam is an absolute Godsend. by taking stuff away?? Taking away what exactly? A cheap plastic box?
Edited 3 times,
most recently on 18/11/09 @ 11:13
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+2
I pretty much only buy stuff on Steam when they have a sale as their normal prices are a bit steep for my liking but their sale prices are usually bonkers! The Witcher for £12! Thanks, Valve :)
As for DD over Retail, if the retail packs were like the golden age and had proper manuals and a bit of passion then i'd buy retail each time, now i'll buy the cheapest one of the two at the time i want to buy the game. |
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Sunyavadin
18/11/09 @ 11:13
+1
And his is what I said would happen, and why I have avoided Steam from the start (Not to mention the fact that I can get every game I want for the "discounted" steam price permanently on Amazon)
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actionfitz
18/11/09 @ 11:17
+3
Steam still has some very stupid pricing - usually the non-valve games (surprise surprise activision is one of the worst culprits here).
often you can order a boxed copy from online retailers for significantly less than a digital copy of the same game from steam. Now its likely individual developers/publishers are setting this prices, not valve... but still... its beyond stupid. Boxed copys have to be manufactured, boxes and manuals etc printed, stored in a wharehouse, shipped overseas... and yet you want me to pay sometimes £10 more for a copy I downloaded from your servers, with none of the costs mentioned above? no thanks. I only ever buy from steam on their sale weekends. Picked up the entire Unreal back catalogue for around £20 :) |
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bigbadbeasty
18/11/09 @ 11:25
+1
@ actionfitz
I think very highly of Valve and have used Steam since its launch, but I just want to be clear: Valve are a business, and I do know they take a higher cut than your standard retailer (Game for example), so don't just believe the prices are set 100% by the publisher in question. Valve are not saints, and they have the leading digital distribution service in the world. I am just happy it is not EA/Activision in there position :P |
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actionfitz
18/11/09 @ 11:38
0
@ bigbadbeasty
yeah, I know they aren't saints. Thing is though, the day Valve sell L4D2 or whatever for £25 on steam and £30 in a retail store... thats the day Game etc will refuse to stock PC copys of the game. Im pretty sure that deals are made with retail to keep pricing fixed at a consistent level - bar the odd 'crazy sale weekend' or two. I just wish the highstreet would quit their whingeing and just join them. 'Game' in the UK do this to an extent - they are partnered with 'Metaboli' for games on demand i think? |
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StooMonster
18/11/09 @ 11:44
+1
kangarootoo: "If the products are selling, the price is right, that is how it works."
skillian: "I don't really think that's true. I'm pretty sure Valve believe that if lots of publishers changed their prices, they could sell a lot more." But's it's not about volume is it? It's about margin. What's worth more 100 things at £1 or 10 things at £11? I am sure that Valve and publishers are well versed in theory of price elasticity and price determination; if I were them I'd have a whole bunch of quantitative analysis to back up use of Steam platform to publishers. http://en.wikipedia.org/wiki/Elasticity_... |
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kangarootoo
18/11/09 @ 11:47
0
@skillian
I'm not saying its ok :) Also, losing the respect of customers is unavoidable as many customers give and take their respect on a whim. Just look at the comments we see regularly on these pages. Given that Valve sell millions of copies of their top end products, "thousands of customers" represent a tiny minority... a minority that are perhaps never pleased no matter what Valve do. Remember the L4D2 outrage and boycott nonsense, followed by record pre-order numbers? That a few people get upset is no real guide to anything, and I would question whether Valves euro pricing IS losing the respect of any significant number of people. |
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kangarootoo
18/11/09 @ 11:48
0
@StooMonster
Exactly. Valve probably know what the right price is, we probably don't. And that is why the "is they halved the price they would clean up" comment is ridiculous, as they might well clean up on sales volume but would see reduced profits. |
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+2
Edited my post because I just find this argument depressing.
The view that pissing off large numbers of your biggest fans is irrelevant because you have big pre-order numbers just reaffirms my belief that "big gaming" is just not for me anymore. I think you know I like your posts kangarootoo, but I remember you saying once that there is no such thing as selling out, and I think there's a fundamental difference between us that will never be resoved by debating. Short-term profit over everything else is one of the things that is wrong with the world today IMO. It's just about bearable when we are talking about crisps or petrol prices, but when it infects the arts and entertainment too we get left with the X-Factor and Bobby Kotick being the shining examples of their industries.
Edited 3 times,
most recently on 18/11/09 @ 12:08
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+1
I myself am well aware of the ecomonic theory of price elasticity, I still can't see where the Euro prices come from, and perhaps us being chucked in with the Euro market masks the effect the price has on sales. But certainly i would say they aren't getting nearly as many as they could in Ireland especially with the shift in exchange rates over the past 18 months.
I think they really need to adjust their price in light of that and I firmly believe it would increase both sales and profits for them. And hey I'm not even saying Valve are the only culprits, pretty much all of the Euro DD stores are at it.
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most recently on 18/11/09 @ 12:19
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0
you sit in your house like the rest of us. toss the box away and keep discs in a folder if theyre eating up precious space. rarely do you need to disc again anyway for a pc game. youre just creating drama.
Irony alert. I am not the one whinging about DD. Just explaining why using it isn't "retarded". People can buy their games in boxes till the cows come home for all I care, I am not the one making a fuss about the buying habits of others. And yeah, I'll make a folder, I'll even neatly cut out all the CD keys I need. That's so much more practical...
Edited 1 times,
most recently on 18/11/09 @ 12:51
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+4
I don't know what prices the UK is getting, but here in Sweden a game can be about 20% more expensive on Steam than buying it retail. I've now switched to buying them retail, even if it means a cumbersome box. I just can't support the inflated price.
I do however partake in the many rebates on Steam, I've already bought a handful games through them, but they are an exception. Games that are cheap and not available in retail is fine with me as well, Torchlight for example. So "yay" for rebates, "nay" for the standard pricing.
Edited 2 times,
most recently on 18/11/09 @ 12:51
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Bremenacht
18/11/09 @ 13:01
0
The fun part of this argument is that if Steam cut prices to keep some buyers happy, we'd have at least double the current comments complaining that Steam is killing retail and trying to dominate the DD market. Like UncleLou, I prefer DD for not having to have a disc in the drive to prove ownership, but it's not as fully developed (in terms of choice) as the normal retail market, so I'd rather not see disc retail go anytime soon.
Don't like Steam prices? Buy elsewhere. |
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StooMonster
18/11/09 @ 13:01
0
mikew1985: "perhaps us being chucked in with the Euro market masks the effect the price has on sales. But certainly i would say they aren't getting nearly as many as they could in Ireland"
Yep, Eurozone has to be sold at one price therefore purchase power parity in the Eurozone could be the problem; we don't know if they make squillions in large countries like Germany and that offsets small countries like Ireland. |
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0
@skillian
To be fair though, Valve's pricing on games is usually pretty good and doesn't attract that much criticism (relatively of course - this is the internet after all). It's usually the 3rd party games on Steam that get accused of price-gouging, and I think it's reasonably well-accepted now that Valve/Steam don't have much to do with setting prices there. The amount of times I've heard that, it's practically a meme at this point. It's also complete bollockary - L4D2 Steam £29.99, Amazon £24.99. The only downside I can see to buying from retail is not being able to play from the second it's unlocked. Once you add the key to Steam you effectively have the DD version - you can bin the disc if you really want. I don't understand why Valve don't just go DD only - surely that would be even more money for them? |
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+1
I don't think DD services will ever match retail prices - seeing how there are literally thousands of brick and mortar and online shops, with each and any of them selling different games at different prices. While I agree that Steam should not insist oin the RRP like it does at the moment, we'll hardly see it pricematch the whole retail competition for each and every game.
I also realise that Steam is less competitive in the UK than it is in other countries. Most of the time, I'll save 5 EUR at best if I order a boxed copy somewhere, while there'sa bigger gap between retail prices and Steam prices in the UK, as far as I know. With new PC games often being sold for 18 quid from what I see, Steam can't compete. |
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+2
@zoink: Yeah, when I say good I'm talking about relative to other games on the service - at least Valve games are close at retail unlike many other publishers, but they're still pretty bad.
I bought L4D1 at shop, then just just took the CD and typed it into Steam and threw away the box, disc and manual. It occurred to me what a criminal waste of resources it was, as well as a waste of my time, and illustrates well the hypocracy of DD pricing. Before Left 4 Dead it was always cheaper to get Valve games on Steam, but I think that was mainly due to the dollar pricing.
Edited 1 times,
most recently on 18/11/09 @ 13:16
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+2
A four pack of L4D2 was £80.99 as a pre-order, that made the Steam price too good to turn down for me and my colleagues.
When Valve does pricing like that more often I'll certainly cough up the readies but a lot of the time it really doesn't make too much sense to buy via Steam unless there's a sale on. |
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