Digi distribution destroys old pricing models

Written by Joe Martin

November 18, 2009 // 1:50 p.m.

Tags: #digi-distribution-destroys-old-pricing-models #montreal #offer #price #pricing #sale #steam #value #valve

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."

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