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Digi distribution destroys old pricing models

Digi distribution destroys old pricing models

According to Valve digital distribution is unaffected by the pricing problems that plagued games sales in the past.

Speaking at the Montreal International Game Summit earlier this week Valve's head of Steam, Jason Holtman, has said that digital distribution systems destroy many of the old problems that affected game pricing.

Specifically, Holtman said that developers and publishers are more free to experiment with the price of digitally released games without any repercussions in terms of customer loyalty, future sales or perceived value. Games can fluctuate price rapidly and massively and still enjoy high revenue.

"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," said Holtman. "'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, according to GI.biz.

As an example Holtman pointed to Team Fortress 2 - a game released in 2007 and which was discounted this Halloween from $19.99 to just $2.50 USD. The discount had no publicity or marketing push and was only active for six hours before the game went back to full price.

"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.

"There was a meta game of people buying and selling it, 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."

Holtman also pointed to a recent 50 percent price cut that went into effect for Left 4 Dead over the period of a single weekend. Holtman said that in that single weekend more copies of the game were sold than when the game was originally launched and that it didn't effect retail performance.

"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."

Let us know your thoughts in the forums.

44 Comments

Discuss in the forums Reply
frojoe 18th November 2009, 14:20 Quote
I love valve, but their weekend deals do seem to spend my money for me.
Psy-UK 18th November 2009, 14:30 Quote
I always look forward to their weekend deals and I rarely purchase games from retail now.
cyrilthefish 18th November 2009, 15:19 Quote
Quote:
Originally Posted by frojoe
I love valve, but their weekend deals do seem to spend my money for me.
Same here, i've actually come to dread the weekends a little.

"it's that cheap? How can i not buy it?" :)
Judaas 18th November 2009, 15:24 Quote
Is it still socially allowed to buy a game unless it's on a Steam weekend deal?
AstralWanderer 18th November 2009, 15:24 Quote
From the article: "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"

That really seems to translate as: "We think our buyers are such idiots that they'll pay whatever price we set. We've seen lab rats with more smarts."

Given that Steam are currently offering Dragon Age for the "bargain" price of US$49.99 (Amazon.com's price is currently US$39.99), Call of Duty: Modern Warfare 2 at US$59.99 (US$41.48 from RJCEntertainment at Amazon Marketplace) and Aion at US$49.99 (US$22.44 again from RJEntertainment) and given that Steam avoid all the costs of physical product (manufacture, storage, shipping) it is perhaps understandable to see where they are coming from.

Weekend deals? Get real - its mostly older games that are offered and these are heavily discounted elsewhere. Steam's last special (50% discount on Mass Effect, priced at €15.99 = US$23.90 when I viewed that page, making a discounted price of US$11.95) isn't so special compared to the all-week price of US$16.49 at Amazon, and I don't doubt that the likes of eBay could better that (US$15.00 was the best "Buy It Now" price when I checked). But then, shopping around is such a burden for some...

(edit: looks like the eBay link is for a returned item, "key status unknown" making it a bit of a crapshoot - the joys of online activation....).
r4tch3t 18th November 2009, 15:46 Quote
Quote:
Originally Posted by AstralWanderer
Call of Duty: Modern Warfare 2 at US$59.99
And just to show Infinity Ward/Activison is further screwing us in New Zealand (And I assume Australia) they are selling MW2 for $89.99US. $149.99 in retail, that works out to be $110US. So I guess in NZ it is cheaper to get it through Steam, but we are getting majorly ripped off.
AshT 18th November 2009, 15:48 Quote
I may as well call my main PC a "Steam Computer" because 99% of my gaming occurs through it.

Weekend deals (and now midweek madness) are happy days.

Shameless plug: www.steampowered.com ... install the client, look for freebies, download game demos and movies, create a friends list, install Vent and get involved in REAL online gaming. BUY Left 4 dead 2. Oh and sell your Xbox 360's.
Darkedge 18th November 2009, 16:24 Quote
Oh yes it's done alot but it certainly hasn't cut the old pricing model, if anything it's reinforced it as digital copies (at launch) cost as much as physical copies and sometimes for ALOT longer it's cheaper to by retail.
To me thats screwed and has to be fixed - anything else from this article is purely marketing to sell Steam to more publishers, nothing more or less.
DON'T BE SUCKED IN.
UrbanMarine 18th November 2009, 16:36 Quote
If you want the game within the first 6-12 months, you're paying full price. His examples were dated games that have been out a while or already passed with a sequal.
Shagbag 18th November 2009, 16:36 Quote
The last time I looked at video game economics it seemed that a high % of the sales price ended up going to the console manufacturer as a license fee. Of course, you don't get any 'console manufacturers' in PC gaming so why are the prices for games similar? (it's a rhetorical question).
Javerh 18th November 2009, 16:52 Quote
What does he mean the halloween weekend wasn't advertised? It was plastered all over the TF2 blog.
Woodspoon 18th November 2009, 17:18 Quote
Jesus some people are never happy

Steam offers you a huge selection of games for immidate play (no waiting for the post) at good prices and some of you still bitch and moan.
Some of their games are a little more expensive, some are a lot cheaper, if you find it elsewhere cheaper then buy it there, but for gods sake dont complain about the good job steam is doing, Imagine a world without it! Games for windows live ruling the roost! eek!
AstralWanderer 18th November 2009, 17:44 Quote
Quote:
Originally Posted by Woodspoon
Steam offers you a huge selection of games for immidate play (no waiting for the post) at good prices and some of you still bitch and moan.
Some of their games are a little more expensive, some are a lot cheaper, if you find it elsewhere cheaper then buy it there, but for gods sake dont complain about the good job steam is doing, Imagine a world without it! Games for windows live ruling the roost! eek!
1). Steam don't offer good prices - given the savings they are making in only providing downloads, new games shouldn't be priced higher than £15-20 and most should be under £10.

2) Valve ties you to an activation system that gives them the ability to wipe your entire Steam software collection. If you have a dispute with a normal shop over a purchase, you usually (for orders over £100 paid for by credit card) have the option of seeking a refund from the credit card issuer. Try that with Valve and see how long your account lasts.

And what is there to stop Valve from making a money grab in the future and imposing annual (or even monthly) fees to keep accounts open?

3). The automatic updates for the Steam client (and purchased software) can result in incompatibilities with previous savegames, mods and even OSes (for example, Steam no longer supports Windows 98 so what has happened to those who purchased games that don't work on later Windows versions, and when will this happen with XP/Vista/Win 7?).

It also means that any breach in Valve's security could allow crackers to push malware to millions of users - Valve of course, cover themselves in section 9C of the Steam Subscriber Agreement which could be paraphrased as "Our system isn't secure, our software isn't secure, your account isn't secure".

With other systems, you apply updates as they suit you, avoiding those that seem unnecessary or may cause problems.

Conversely, Steam is often behind in providing the latest game updates - likely due to the need to embed their activation system.

4). Digitial distribution can be done right - Gog being the best example. DRM-free, generally well-priced with no need of additional software (though they provide a downloader for those that want one).
Star*Dagger 18th November 2009, 17:48 Quote
Valve is my new Church, Gabe Newell the High Priest and Steam the Holy Communion!

In the name of the Gabe, the Steam and the Holy Valve, mmm-mmmm.

Valve has done more to move digital distribution forward than the next 9 companies below them, and they have done so with unremitting excellence and fairness.

Yours in Steaming Plasma,
Star*Dagger
AshT 18th November 2009, 17:53 Quote
Astral, which games don't work on later versions of Windows?
Furymouse 18th November 2009, 17:58 Quote
I would usually prefer to get a physical copy of the game as my bandwidth gets capped way to quick to be downloading full games. But as L4D2 was only $45 and it being $50-$55 retail around here I just couldn't resist :D

I think part of the reason for the success of these deals has to do with peoples mindset that the game isn't worth the price but it is worth the wait. That is how I was with Braid. Awesome game that I wanted to play, so I just waited a little longer, then bought a few for my friends as well ;)
AstralWanderer 18th November 2009, 18:05 Quote
Quote:
Originally Posted by AshT
Astral, which games don't work on later versions of Windows?
Anything relying on WinG, the precursor to DirectX. Anything relying on Win9x drivers which won't work on WinNT/2K/XP. Anything adversely affected by "recent" graphics drivers (e.g. Nvidia made significant changes in their Forceware drivers after 81.95 that left numerous older games such as MDK unplayable in their DirectX incarnations).
crayfish 18th November 2009, 18:15 Quote
Weekend deals all the way, but I'm afraid that I would actually care if the price of something increased after I'd bought it. Don't know where he's coming from with that.
frontline 18th November 2009, 19:09 Quote
I don't think that Steam's average pricing is particularly poor value when compared to high street stores in particular. Yes they are saving money on not providing a phsyical copy of the game, but they have other overheads such as providing the capacity to support multiple downloads, making sure games are patched within a reasonable timescale (so you don't have to go hunting for version 1.97 or wonder if you've installed all 9 stalker patches in the right order...) etc.

Maybe they will disappear into the ether at some point in the future, but i'm pretty sure i'll have stopped worrying about games by then.
PureSilver 18th November 2009, 19:59 Quote
I've got to say Steam plays well on people's need to feel they've gotten a good deal - I'm 99% sure that if the price didn't go back up after the weekend they wouldn't get as many sales. I bought S.T.A.L.K.E.R. a week ago in the full knowledge I won't be able to find the time to play it for weeks, basically because it was so cheap I couldn't say no, and because I knew it wouldn't stay that way.

The main advantage of Steam is that it's EASY - I don't have to worry about problems with additional services or lost discs, and given how often I start my entire computer from scratch that's more important than it might be for other people. The Steam community and the access to servers is also neat and tightly integrated for the most part, and I like it. I'd venture to say that the system is so neat and compact it may actually be worth paying over the odds for. Steam is also widely likeable - anyone who knows it knows that it runs with a staff of less than 20, and that Valve is just Valve - it's not backed by telephone-number budgets, and that gives people the feeling that they are supporting the underdog even though that may not be true.

Certainly as Astral points out at any moment this could all go wrong, but I invite him to consider the user response if it does. Valve rely on Steam as much/more than they rely on their games. If this was a little service, they could be cowboys. As it is, the body politic can to some extent dictate terms - think about the Facebook backtracking over user data in their terms of service. The inertia against them going MW2-style batshit insane is huge - the loss of their customer goodwill, and the collapse of the revenue stream should dissuade them for some time...
Iorek 18th November 2009, 20:58 Quote
Some parts of me like the digital distribution system - not having to remember to take CD's to places with me being one.

However, I do agree that we are being ripped off for games on there, Look at Call of Duty 4 for an example, STILL £30 on steam, yet on Amazon for £18 here. The orange box is £17 vs £11 on Amazon. Other games on Steam are way over priced too, especially older ones. Grid for a prime example here, £15 on steam, and for a fiver on Amazon.

Sometimes i wonder if its an excuse to keep the prices up, "users don't need to go shopping around" and while I know they have offers, that doesn't give them an excuse to keep prices artificially so high!
NuTech 18th November 2009, 22:06 Quote
Quote:
Originally Posted by Iorek
However, I do agree that we are being ripped off for games on there, Look at Call of Duty 4 for an example, STILL £30 on steam, yet on Amazon for £18 here. The orange box is £17 vs £11 on Amazon. Other games on Steam are way over priced too, especially older ones. Grid for a prime example here, £15 on steam, and for a fiver on Amazon
As much as I enjoy using Steam, I totally agree with what you're saying. The biggest problem with Steam is that its only major competitor is rubbish, Valve also prey on geek laziness to not bother shop around.

What I'd like to see Valve do is effectively open up wholesale partnerships (similar to what BT was forced to do in England after it was decided they were a monopoly). For example, say GAME wants to join Steam, they have to buy ~50,000 digital copies of any game they wish to sell on the service at wholesale price. If they have a few thousand remaining in a years time, they might knock the price down to less than what they paid for it just to 'clear inventory', a virtual bargain bin essentially.

So while everything on Steam would look exactly like it does now, the difference will occur when you go to buy a game. Instead of just one 'Steam' price, you'll see a list of prices from various e-tailers. Pick the lowest one and you're good to go.
Iorek 18th November 2009, 22:43 Quote
Quote:
Originally Posted by NuTech
As much as I enjoy using Steam, I totally agree with what you're saying. The biggest problem with Steam is that its only major competitor is rubbish, Valve also prey on geek laziness to not bother shop around.

I'd like to see Valve improve their practices before opening anything up to others... L4D crash course, was patched three times in 3 days after launch? The Steam Client has had 3 updates now for L4D2 stuff, and L4D2 has been updated even tho its not technically out yet (20th).

Valve aren't the only guilty ones - Infinity Ward have patched MW2 4 times on the PS3 since launch.

While I like the simplicity of patches here, I HATE having to wait EVERY time I start it up while it works out what its doing / updates half the games.

Digital Distribution has added another gripe in my opinion - patching. Its now so easy to patch, that games are released and patched and patched - rather than big bundles of fixes we get a constant dribble patches.
smc8788 18th November 2009, 22:56 Quote
Quote:
Originally Posted by AstralWanderer
1). Steam don't offer good prices - given the savings they are making in only providing downloads, new games shouldn't be priced higher than £15-20 and most should be under £10.

Most people are sensible enough to look elsewhere and compare prices. If you're too lazy to do that and end up paying over the odds, well then all I can say is it's your own damn fault. Do you know the amount of their savings as a result of their digital distribution model? I assume you do, seeing as you speak so authoritatively on the subject. I would assume (yes, I don't know) that the cost of producing a disc and distributing it to retailers only amounts to a small fraction of the cost of a game, and don't forget Valve has to pay to maintain the servers through which you download your game.

Oh, and while I'm at it, who are you to say what you should be paying for games? It's up to the company who produces the game to decide how much they want to charge for it, not the consumer. That's like going into Asda and saying "No, I don't want to pay £1 for this loaf of bread, I think it should be 50p". In fact, it's not like that at all, since games are a luxury item rather than an essential commodity. If you don't like the price, then don't buy it. It really is as simple as that.
Quote:
Originally Posted by AstralWanderer
2) Valve ties you to an activation system that gives them the ability to wipe your entire Steam software collection. If you have a dispute with a normal shop over a purchase, you usually (for orders over £100 paid for by credit card) have the option of seeking a refund from the credit card issuer. Try that with Valve and see how long your account lasts.

And what is there to stop Valve from making a money grab in the future and imposing annual (or even monthly) fees to keep accounts open?

You have paid for the games, therefore you presumably have receipts of your purchases. Just because you don't own the physical disc it doesn't mean you don't still own the product, and they don't have the right to deny you access to it (unless you happened to break the conditions of the EULA, I suppose). Though I haven't heard of a single case of this happening, I presume you would be protected under law if it did. The same goes for a subscription-based fees - they can't charge you more for something they have contractually sold to you and which you have already paid for.
Quote:
Originally Posted by AstralWanderer
3). The automatic updates for the Steam client (and purchased software) can result in incompatibilities with previous savegames, mods and even OSes (for example, Steam no longer supports Windows 98 so what has happened to those who purchased games that don't work on later Windows versions, and when will this happen with XP/Vista/Win 7?).

How many people do you know who still use Windows 98? A better question might be: how many gamers do you know who still use Windows 98? It's an obsolete piece of software, so why should Valve go out of their way to support it? It's like trying to play games on a Pentium II and 3DFX video card, which I'm pretty sure most people aren't stupid enough to attempt. Are you?
Quote:
Originally Posted by AstralWanderer
It also means that any breach in Valve's security could allow crackers to push malware to millions of users - Valve of course, cover themselves in section 9C of the Steam Subscriber Agreement which could be paraphrased as "Our system isn't secure, our software isn't secure, your account isn't secure".

Not really, you're twisting their words quite considerably there. It's a legal get-out clause to prevent them getting sued, and I think you'll find nearly all such services would have a similar clause. It would be quite prudent to include one too, because like it or not, no company (or even the Government for that matter) can claim your details will be completely safe and that their software will be impervious to hackers and bugs for all eternity. It would be stupid to do that. What about the hundreds upon hundreds of breaches in security in Micorsoft's OSes? Is that their fault? Some of it may be, but are you going to stop using it because of that? No, you take precautions to make sure it will be a mere inconvenience if it does happen.
Quote:
Originally Posted by AstralWanderer
4). Digitial distribution can be done right - Gog being the best example. DRM-free, generally well-priced with no need of additional software (though they provide a downloader for those that want one).

Yeah, but their collection of games is pitifully small, and the reason they're so cheap is because they're old games, so it's not comparable to the service Steam offers.

Honestly, I think some people must go out their way just to find fault with anything that's remotely successful, even to the point where all logic seems to fly out the window
Quote:
Originally Posted by NuTech
The biggest problem with Steam is that its only major competitor is rubbish

Don't forget Impulse ;)
r4tch3t 19th November 2009, 01:11 Quote
Quote:
Originally Posted by Iorek
I'd like to see Valve improve their practices before opening anything up to others... L4D crash course, was patched three times in 3 days after launch? The Steam Client has had 3 updates now for L4D2 stuff, and L4D2 has been updated even tho its not technically out yet (20th).

Valve aren't the only guilty ones - Infinity Ward have patched MW2 4 times on the PS3 since launch.

While I like the simplicity of patches here, I HATE having to wait EVERY time I start it up while it works out what its doing / updates half the games.

Digital Distribution has added another gripe in my opinion - patching. Its now so easy to patch, that games are released and patched and patched - rather than big bundles of fixes we get a constant dribble patches.
So you are complaining the games are getting patched so soon after a bug has been found?

To paraphrase your words, "Why do they keep the game working so well when they could just leave it in a state that is unplayable for a month and release a giant patch to make it work again"

And for those who complain that games need so many patches and that back in the old days you didn't need patches, while some companies (EA for one) do release games before they are ready and need too many patches, you have to remember, back before the internet and widespread popularity of the CD to allow larger games the code base was quite small and could be bug free without too much difficulty. Now the code is reaching into the millions of lines of code and it has to work on thousands of different configurations.

A few patches here and there are a good thing, especially with the automatic update OPTION you don't even have to worry about having the latest version of the game as Steam will do it for you.
TurtlePerson2 19th November 2009, 04:41 Quote
But Valve's Post-Christmas deals have me holding off buying anything until then.
morris8809 19th November 2009, 04:47 Quote
Why is everyone complaining about the prices on steam? If you dont like the price they have on there THEN DONT BUY IT FROM THEM. No one is forcing you to purchase it through steam so whats the deal, they sell it at a price they want to. IF the market is there at that price then fine but if not then so be it.
garbagetc 19th November 2009, 06:22 Quote
I love Steam, because of them I've bought a ton on indie games I would have never known about before and yeah their sales are great but I think they let other companies screw up their pricing, for instance, who's gonna pay $50 for a bug ridden year old copy of GTA 4 when you can get it at Amazon for $19.67? I'd rather not deal with a CD but I'll do it every time to save that kind of money especially on that title. D2D has the same pricing so I'm betting it's Rockstar keeping the digital distribution price high for some reason. So I wonder if Steam decides when a product goes on sale/drops the price or does the company behind the game keep control indefinitely.
r4tch3t 19th November 2009, 09:00 Quote
The company that publishes the game is the ones who decide the prices. Valve has no control over what prices they set.
hrp8600 19th November 2009, 10:41 Quote
steam has 2 problems for me.
1 , it should be the cheepest place to buy games as it has nothing to sell or post to you and some how I can allways buy cheaper else where and have a physical copy in my hand.
2. Till we get proper internet speeds in the UK its quicker to walk to town , buy game, have dinner , walk home and instal from disk.
1/2 Hr is as long as I am willing to wait to down load any thing. want 10 mins though not Hr's.

I have a question though, how do people loss disks any way lol. It's a £20-£30 disk handle with kid gloves and take care of them.
Aracos 19th November 2009, 11:45 Quote
Quote:
Originally Posted by AstralWanderer
Quote:
Originally Posted by Woodspoon
Steam offers you a huge selection of games for immidate play (no waiting for the post) at good prices and some of you still bitch and moan.
Some of their games are a little more expensive, some are a lot cheaper, if you find it elsewhere cheaper then buy it there, but for gods sake dont complain about the good job steam is doing, Imagine a world without it! Games for windows live ruling the roost! eek!
1). Steam don't offer good prices - given the savings they are making in only providing downloads, new games shouldn't be priced higher than £15-20 and most should be under £10.

I see where you're coming from and I agree with new games but they do ACTUALLY have some good prices, example: I wanted to play KOTOR because I've never played it before, I went on gamestracker to find the cheapest price brand new was £9.99 and yet I went on steam and bought it for £7 brand new, that's a nice saving if I do say so myself :)

I don't get all my games from steam because of some of the prices are a bit off, I just got STALKER Clear sky for £6 on the hut and it's £19 on steam, I'll go with the cheapest provider and sometimes steam are actually just that so yes you can slag them off for certain stuff but every now and then they have some good offers, especially the developer bundles, I bought the valve pack for £52.99 which includes Left 4 Dead 1 which was incredible value considering all the brilliant games I got with it like the counter strike games and the entire half life series which I don't own :)
[USRF]Obiwan 19th November 2009, 12:09 Quote
they really would make me proud if they do a 50% weekend deal for L4D2. lets say next week...
DraigUK 19th November 2009, 13:13 Quote
If you don;t like the prices on Steam buy elsewhere. Simple.

If enough people buy elsewhere they will change their prices.

Me, I find it quick easy and convenient to buy some games from there, I save money more often than not even when they are a bit higher than the shop price.

Because then I don't have to get off my lazy ass, use the petrol in my car and drive 20 miles to town, pay for parking, probably get soaked into the bargain and stuck in traffic behind some moron in a caravan on the way back.

I just click the mouse a few times confirm my payment details and go and watch the TV for a bit.

That is why it is a good service, and why I will continue to use it. If you don't like it - FOR ANY REASON - don't bloody use it!
r4tch3t 19th November 2009, 14:47 Quote
Plus you are forgetting something, when you download the game through Steam, it comes with all the updates. So add the time it takes to download all the patches and install them in the correct order before you can play your retail game.

I am also not the kind of person who buys a game to play it straight away, I get the games when they are cheap and play them later. With the exception of L4D2 that I bought pre-release and pre-loaded it so i only had to decrypt the files on release. Took all of 5-10 minutes on my slow laptop HDD.
Woodspoon 19th November 2009, 14:52 Quote
Quote:
Originally Posted by AstralWanderer
Steam don't offer good prices - given the savings they are making in only providing downloads, new games shouldn't be priced higher than £15-20 and most should be under £10..

Earlyer in the year I brought the Rockstar collection from Steam for £30, Rockstar's entire games catalogue for £30 that was GTA IV all the way back to the original GTA how is that not a good price?
There have also been several other collection's at similar or lower prices that are not available in shops and then there are the indie games which are almost impossible to find in highstreet shops that offer great value and good entertainment.

Steam does an excellent job and the number of very happy users is a testament to that.
Every business has areas it can improve on, but some people will never be happy untill they are being paid to play a game brought to them on a gold tray by a bevvy of naked models.
AstralWanderer 19th November 2009, 21:39 Quote
Quote:
Originally Posted by PureSilver
Certainly as Astral points out at any moment this could all go wrong, but I invite him to consider the user response if it does....As it is, the body politic can to some extent dictate terms - think about the Facebook backtracking over user data in their terms of service.
Ah, the power of Public Vitriol versus the Mighty Buck... :)

It may be worth considering the amount of money at stake here. Steam claim to have 20 million accounts - let's assume 25% are dormant/abandoned and the remainder have an average value (in terms of purchased software) of $100.

What happens if a $5 annual fee is introduced? It's not much, and few people would be keen to risk losing $100 by not paying - but let's assume 20% do refuse. That leaves 12 million users paying (under protest, but paying nonetheless) $5, boosting revenue by $60 million/year.

I clearly can't speak for Valve on this, but I would happily sit in the Bit-Tech stocks for a week and be pelted with pig excrement if I knew I would receive that much money (note to mods: I'll want proof of your bank balances before accepting any related job offer!) so I would suggest that the idea of public feedback being a deterrent is somewhat optimistic.

Now let's imagine a couple of years from now - assume 20 million active accounts, average value $200. A senior beancounter pulls figures from the air and reckons they can get away with a $10/year annual charge (5% of average account value). 20% refuse again, but the revenue gain is now $160 million/year.

At some point, the potential gain will exceed $1 billion/year and how many companies are likely to ignore that?

Now Facebook almost certainly didn't have such financial incentives with regard to its T&C's, and like all social networking sites, has little to tie members in to its services in the face of competition. Banks and credit card companies (who also include examples where annual fees were introduced) face similar problems with customer retention. Steam however does have lock in - accounts aren't transferable to anyone else and the cost of replacing games is surely going to be a bigger deterrent for most than a small fee.

However the last word on this should probably go to Steam's subscriber agreement, section 4B:

B. Charges to Your Credit Card.

ALL STEAM FEES ARE PAYABLE IN ADVANCE AND ARE NOT REFUNDABLE IN WHOLE OR IN PART. Valve reserves the right to change our fees or billing methods at any time and Valve will provide notice of any such change at least thirty (30) days advance...


For a service where payment is made in advance for goods, what other point is there in including a provision like this?
Quote:
Originally Posted by Iorek
Some parts of me like the digital distribution system - not having to remember to take CD's to places with me being one.
You don't need digital distribution for that convenience - a no-CD patch from a site like GameCopyWorld will remove the need to have to carry your discs around. I've used them for over a decade without problems and nowadays check that a game is listed there before considering a purchase. There's no harm in being cautious and putting any downloads through a multiple-scanner service like VirusTotal though.
Quote:
Originally Posted by smc8788
...Do you know the amount of their savings as a result of their digital distribution model? I assume you do, seeing as you speak so authoritatively on the subject. I would assume (yes, I don't know) that the cost of producing a disc and distributing it to retailers only amounts to a small fraction of the cost of a game, and don't forget Valve has to pay to maintain the servers through which you download your game.
Servers and bandwidth can be rented pretty cheaply - a top end dedicated server from 1and1 costs £250/month for 100Mb/s "unlimited" bandwidth. That should be able to handle "up to" 32TB/month. Assuming a typical download size of 10GB (just over what a dual-layer DVD can handle), that means a cost per download of 250/3200 or just under £0.08 pence (about US$0.13).

That's with a British hosting company - bandwidth should be cheaper in the US and bulk discounts should drive the price down further.

Preparing the download package and patches is a task that can be left to the developer. The only updates Valve might need to take care of themselves would be for VAC and the Steam client.

In comparison, the manufacturing cost for a DVD (including colour print and case) from Discus Group would be £0.57 for a run of 5,000. Assume £1.00 for a nice manual.

You have inventory management costs (the need to store and protect stock, monitor levels, arrange new runs, handle damaged returns) and transportation - let's assume these come to another £1.50 per unit.

The biggest cost factors are margins for the retailer and distributor. This thread suggests £15-20 retail markup on a £5 distributor price - which would explain why large online vendors (Amazon, Play, etc) can offer such major discounts, even on new releases (in fairness to retailers, it should be noted that they have significant overheads - High Street rents, local tax/business rates and a higher staff-customer ratio than online stores).

So that would suggest a physical cost of about £3, distributor margin of £2 and a retailer margin of £15-20 which could all be bypassed with digital distribution.
Quote:
Originally Posted by smc8788
Oh, and while I'm at it, who are you to say what you should be paying for games? It's up to the company who produces the game to decide how much they want to charge for it, not the consumer...
Well I'm Joe Consumer, like almost everyone else here. I'll buy things I consider useful, desireable and good value and avoid anything that I see as overpriced.

Yes, a typical retailer is going to charge whatever they think the market will bear (the developers who write games rarely get a say in pricing) so critical consumers who shop around are an important counter-balance.
Quote:
Originally Posted by smc8788
You have paid for the games, therefore you presumably have receipts of your purchases. Just because you don't own the physical disc it doesn't mean you don't still own the product, and they don't have the right to deny you access to it...
Go read the Steam subscriber agreement - look carefully at section 13.C.2.
Quote:
Originally Posted by smc8788
Though I haven't heard of a single case of this happening, I presume you would be protected under law if it did. The same goes for a subscription-based fees - they can't charge you more for something they have contractually sold to you and which you have already paid for.
Steam subscriber agreement section 4.B (as noted above) allows Valve to change their fees at will. To what extent you may be able to appeal legally against any changes (UK users should bear in mind that Valve has no UK presence, they would have to press any case in a US court) is an untested area, but my guess is as long as Valve can put forward a reasonable case for a change (and I don't doubt there are many justifications that could be used), they're not likely to be impeded.

The situation of having a low fee brought in initially and then ramped up in succeeding years would likely be even more difficult to secure a legal judgement on.
Quote:
Originally Posted by smc8788
How many people do you know who still use Windows 98? A better question might be: how many gamers do you know who still use Windows 98?
The question you should ask is how many gamers own software that won't run on Windows versions post 98? I have games dating back to early DOS days (SimCity 2000, Ultima Underworld II) but I can still use them thanks to emulators like DOSBox. I also have the option of setting up a dual-boot PC or even keeping an older system aside just for such games.

None of these would be possible had I purchased such games from Steam (if it had been around back then) since the games would not be usable without the Steam client. In a similar vein, should Valve also terminate support for current Windows versions in future, no-one would be able to run their current purchases via emulation or dual boot.
Quote:
Originally Posted by smc8788
..It's a legal get-out clause to prevent them getting sued, and I think you'll find nearly all such services would have a similar clause...
None of the banks I have an account with have such a clause, no does any ISP I have dealt with. The wording serves to excuse problems at Valve's end more than anything and that is my concern with it.
Quote:
Originally Posted by r4tch3t
The company that publishes the game is the ones who decide the prices. Valve has no control over what prices they set.
Rather at odds with the main article's focus on how Valve changes their prices at whim, isn't it?

As a more general comment, doesn't anyone find it odd that Valve claim their high prices to be a result of retailer pressure, when those same retailers happily discount themselves? Or how this retailer pressure seems to mysteriously disappear with weekend specials?
Quote:
Originally Posted by Woodspoon
Earlyer in the year I brought the Rockstar collection from Steam for £30, Rockstar's entire games catalogue for £30 that was GTA IV all the way back to the original GTA how is that not a good price?
That was a Steam exclusive (Direct2Drive had a less complete version) so no comparison. However it does show that Steam can offer good prices, it's just they rarely choose to.
Quote:
Originally Posted by smc8788
Honestly, I think some people must go out their way just to find fault with anything that's remotely successful, even to the point where all logic seems to fly out the window
The main article is about Steam so it's not unreasonable to discuss it further. However the criticisms (high and arbitrary pricing combined with the online activation lock-in) apply to almost every other digital distribution system as well - Direct2Drive (who also encrypt game .exe files, breaking compatibility with any community-developed patches), GamersGate and even Stardock's Impulse. Only GOG is beyond such criticism, though some of their prices are on the high side given the age of the products.

Now if people want to splash out on Steam and are happy with having the rights of renters, rather than owners, of the games they buy - that's their choice. There is a downside though, and if Steam ever achieves a monopoly (or near-monopoly position) it's possible that its customers will pay far more than they bargained for.
smc8788 20th November 2009, 00:42 Quote
You raise some good points Astral, and I must admit that I haven't looked at the Steam subscriber agreement in much detail (although how far you can read into those individual points is questionable).

I feel part of the problem with pricing is that we are in a transition stage from physical media to digital purchases, and companies (be it the publishers or retailers) are still setting a flat RRP across the board for the different versions of the same game. Once digital distribution of games really starts to take off and has a larger share of the market than physical media, then prices might come down. I'm also unsure of how much say Valve actually has in the price of the games they sell beyond their own productions - it's likely that publishers wouldn't be too happy if they went and heavily discounted their games, and probably have some sort of agreement to that affect.

I agree that it would be dangerous should Steam gain a monopoly of the market, but there will always be competition, and as long as the competition is there, you have choice. Look at iTunes - that arguably has a near monopoly of the music download market, but I haven't bought anything off there for about 5 or 6 years, when it was still in its infancy. But as it is, when their games are priced right, they offer a USP which makes it more beneficial for me to buy from there than anywhere else.

However, I can't think of any good reason why Valve would want to introduce a subscription-based payment system to Steam, not when they're already making so much money from it. It would be a suicidal move on their part if they were to do so, since they already have the backing of a vast proportion of the PC gaming community (i.e. their entire user base), and would go against the whole Valve 'ethos', which is the very thing that drew a lot of people towards them.
r4tch3t 20th November 2009, 01:30 Quote
Quote:
Originally Posted by AstralWanderer
Quote:
Originally Posted by r4tch3t
The company that publishes the game is the ones who decide the prices. Valve has no control over what prices they set.
Rather at odds with the main article's focus on how Valve changes their prices at whim, isn't it?
Yes they do talk about changing the prices of their own games at a whim, therefore they are the developers for those games so they set the prices.
PureSilver 20th November 2009, 02:19 Quote
Quote:
Originally Posted by AstralWanderer
*Snip*

You certainly raise some valid points about the SSA. However, first you have to remember that none of those clauses will ever have been tested properly in law. They are 'CYA,' 'Cover Your Ass' clauses that are intended to protect Valve in case of unpredicted problems and resulting lawsuits. That doesn't make them watertight and they certainly aren't the be-all and end-all of that issue.

I know I'm repeating myself here, but nobody needs Steam; it's an issue of convenience. Because of that users used to having something for free are unlikely in my judgement to take the sudden introduction of annual/monthly fees lying down. There are also many ways for Steam to raise revenue without resorting to something as predictable unpopular as taxes; higher tariffs on games or increased advertising will appear long before such desperate measures. What I'm saying is that it's definitely theoretically possibly legal justifiable for Valve to suddenly begin to charge for Steam, but that doesn't make it even imaginably likely.
Quote:
Originally Posted by smc8788
It would be a suicidal move on their part if they were to do so, since they already have the backing of a vast proportion of the PC gaming community (i.e. their entire user base), and would go against the whole Valve 'ethos', which is the very thing that drew a lot of people towards them.

QFT.
Star*Dagger 20th November 2009, 06:05 Quote
Steam is the most important invention since the Steam engine!
Horizon 20th November 2009, 12:06 Quote
I regret not buying a whole bunch of them for 2.50, could have bought 10 and gifted it to people I knew who would have liked TF2.
SteveU 21st November 2009, 11:44 Quote
This is nothing new, supermarkets have been using loss-leader strategies on products for years. I'm sure a lot of us have bought a tin of beans for 1p before only to pay 50p the next week.

Tell us something we don't know!

Steve
Kiytan 25th November 2009, 14:50 Quote
Steam is convenient, and by god does it have some good deals.

I bought bioshock, civ3 complete, civ 4 + all expansions + colonization, all the x-com games, sid meiers: railroads + pirates, railroad tycoon 3, prey and 2 freedomforce games for £35 (2k games megasale).

It's deals like that, that make steam awesome :P
r4tch3t 25th November 2009, 22:48 Quote
Quote:
Originally Posted by Kiytan
Steam is convenient, and by god does it have some good deals.

I bought bioshock, civ3 complete, civ 4 + all expansions + colonization, all the x-com games, sid meiers: railroads + pirates, railroad tycoon 3, prey and 2 freedomforce games for £35 (2k games megasale).

It's deals like that, that make steam awesome :P
Wish they sold those games in my region I suppose that is the only downside, companies can still choose to stiff some parts of the world.
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