Gabe Newell's Keynote at DICE

[Prospero]

G4 posted their liveblog of Newell's keynote. Some of his numbers from the talk are astounding.

Last weekend, Valve decided to do an experiment with Left 4 Dead. Last weekend's sale resulted in a 3000% increase over relatively flat numbers. They sold more last weekend than when they launched the game.

Apparently the team that did the TF2 movies is now working on comics too. 

[Bandit]

Great read.  I bought a bunch of games at the holiday sale...this was interesting:

During the Holiday sales:

    * 10% sale = 35% increase in sales (real dollars, not units shipped)
    * 25% sale = 245% increase in sales
    * 50% sale = 320% increase in sales
    * 75% sale = 1470% increase in sales

Maybe the PC market, or the game market has it's price point all wrong? Hard to tell, as I can honestly say that I only buy games on sale from almost exclusively steam anymore.  It sucks that I can't discuss new games with anyone and I am definitely behind the curve, but I feel pure bliss picking up games like Bioshock for $5 over the holidays.

[Lantyssa]

The numbers don't really surprise me.  50% off is still feels too expensive for most people to not pick and choose their games.  75% off is a fancy dinner or a night at the movies.  Even if you don't like the game, it's a night of entertainment.  If the game lasts longer than that, you've more than made up your money.

[Sky]

I do feel pricing is way fucking off, especially with the fuckall quality control. Maybe not Valve per se, but I was so looking forward to GTA4, then they do a shitty port and charge full price. Same goes for SR2. And the whole 'no returns' garbage means you're making a rather significant irreversible decision. $40-50 may not be much to you folks, but it's huge to me. My entire fund for musical gear used to be $50/mo /before/ I bought a house. Also, as Lanty points out, a lot of folks are ok with games that only last a few hours, I need much more out of my entertainment dollar.

[Samwise]

I don't think that they'd get the same sales if they offered the games at the lower price point to begin with.  Retail stores have known this forever.  Coming in at a high price and lowering it later means that you get to milk the early adopters for lots of cash up front, and then get smaller amounts of money out of a larger number of bargain hunters later on. 

The difference with doing this on Steam is that stocking the same product forever and messing around with its pricing carries no appreciable cost.

[HaemishM]

Great read.  I bought a bunch of games at the holiday sale...this was interesting:

During the Holiday sales:

    * 10% sale = 35% increase in sales (real dollars, not units shipped)
    * 25% sale = 245% increase in sales
    * 50% sale = 320% increase in sales
    * 75% sale = 1470% increase in sales

Maybe the PC market, or the game market has it's price point all wrong?

Yes. Double plus yes. I've felt this for years, and the console market is doubly bad. This is pretty good damn proof.

[Lantyssa]

I don't think that they'd get the same sales if they offered the games at the lower price point to begin with.  Retail stores have known this forever.  Coming in at a high price and lowering it later means that you get to milk the early adopters for lots of cash up front, and then get smaller amounts of money out of a larger number of bargain hunters later on.

The difference with doing this on Steam is that stocking the same product forever and messing around with its pricing carries no appreciable cost.

Oh no, doubt.  It works partly because everyone sees the now cost of a Saturday night's entertainment and thinks, "What a bargain!"

I would be interested in seeing a major studio release a big-name game at these low prices to see the ramifications, but were it my game, I'd be scared to be the test case.  With what we're seeing in the RMT market though, I think it might be a startlingly profitable situation.

[HaemishM]

I'll point back to the X-Box days. Madden was the killer football app, outselling every other football game ever. 2k Sports released their 2k4 NFL game at a $20 price point while Madden was $50. They did this two years in a row. Madden still outsold them, but they sold better than anyone else ever had against Madden. I tend to believe the 2k success was what led EA to push so hard for the exclusive NFL video game license.

[MahrinSkel]

It's digital downloads getting ready to implode the retail model.  $50-60 a shot is simply too high for an impulse purchase, and since I no longer trust reviews, only *incredibly* good word of mouth will get me to buy a game at full price (at that, I still wound up burned by Dead Space, when the first "boss fight" reminded me of the *other* reason I hated console shooters: I can't beat it unless I start the game over at an easier difficulty level, and I'm too far in for that to seem worth it).  So I'll wait for it to drop to $20, or even $10-15, because why the fuck not?  It will be the same game, or even a better one (patched, maybe some extra content, perhaps even an entire expansion pack effectively free) if I play it 6 months late, or even a few years (I didn't play Halflife 2 until I could buy the Orange Box for $20).  I'll enjoy it just as much, and probably more.  If there's been free mods released, there will have been enough time for someone else to sort out which suck and which don't.  If I had waited a year or two for Dead Space, there would have been a tool out there for getting past that boss fight without starting over.

And Valve made more by selling me the Orange Box over Steam, even at the discount, then they would have if I had bought it at the original $60 from a store.  Everybody wins.

Now, some of the increase in sales for the steep discount is because of additional interest generated by the briefness of the sale, and they probably won twice from people buying it at the 50% discount level because they got there too late after hearing about the 75% discount.  So it may be that the winning model is a $25-30 price point that you occasionally cut in half to generate a late feeding frenzy to replace the hit-driven cycle we've been on.  The death of the retail PC game market is probably the salvation of the PC game.

Meanwhile, I still haven't bought a PS3, or purchased a single piece of DLC for the 360's and Wii I already have.

--Dave

[Hawkbit]

Hell, I bought it on sale the other day.  Don't really like it; had a feeling I wouldn't.  But $25 is close to my $20 sweet spot and there was a lot of buzz on it.  So, what the heck.  I'd wager that I've got about $10 of my $25 out of it. 

If a game is $20 or less, I'll buy it even if I'm only remotely interested.  I'm a cheap bastard, I suppose.  Being a librarian doesn't allow for a slew of $50 purchases.  Crysis recently went to $20; bought it the day it did. 

The only exception is MMORPGS, I'll buy those day of because they're my favorite genre (although the past few years have been suck). 

[Lt.Dan]

Great read.  I bought a bunch of games at the holiday sale...this was interesting:

During the Holiday sales:

    * 10% sale = 35% increase in sales (real dollars, not units shipped)
    * 25% sale = 245% increase in sales
    * 50% sale = 320% increase in sales
    * 75% sale = 1470% increase in sales

Maybe the PC market, or the game market has it's price point all wrong?

Yes. Double plus yes. I've felt this for years, and the console market is doubly bad. This is pretty good damn proof.

It certainly says a lot about the demand for games which have been out for a while (half your price, triple your sales = 50% revenue increase) but I wouldn't be rushing off advocating lower PC game prices. 

There's a huge amount of self-selection here - these are games which everyone knows about and are proven as good.  A new game with no definite sales indications and with significant costs of development is going to be priced high and marketed hard to help claw back all those fixed development costs.

[Triforcer]

Meanwhile, I still haven't bought a PS3, or purchased a single piece of DLC for the 360's and Wii I already have.

--Dave

No Virtual Console stuff?  Thats the best part about the Wii.  Although every time I look through the list, I curse the absence of Goldeneye and Banjo- Kazooie one.  Damn were those fun. 

[schild]

Meanwhile, I still haven't bought a PS3, or purchased a single piece of DLC for the 360's and Wii I already have.

--Dave

No Virtual Console stuff?  Thats the best part about the Wii.  Although every time I look through the list, I curse the absence of Goldeneye and Banjo- Kazooie one.  Damn were those fun. 

I too curse the heavens that games now owned by Microsoft aren't on the Virtual Console! Damn you Rare! Damn you!

Pick better things to complain about.

[Sky]

I'll point back to the X-Box days. Madden was the killer football app, outselling every other football game ever. 2k Sports released their 2k4 NFL game at a $20 price point while Madden was $50. They did this two years in a row. Madden still outsold them, but they sold better than anyone else ever had against Madden. I tend to believe the 2k success was what led EA to push so hard for the exclusive NFL video game license.

I agree completely, but just want to add that having a solid product injected into a stagnant market did help their position quite a bit.

Being a librarian doesn't allow for a slew of $50 purchases.  Crysis recently went to $20; bought it the day it did. 

Heh, try not even getting a librarian's salary whilst working at the library :) Where are you seeing Crysis at $20? Been waiting forever for a bin of that title, gamestop is still at $30 and amazon is only slightly less. Amazon has been pretty stingy recently.

And to reinforce what I said earlier, shitty quality control has basically stopped me from buying ANY new game at full retail. For a full title I'm interested in, I'll pay around $20, for an expansion pack I'll pay $10, for a lesser title, I'll pay $10 or less (missed Overlord when it was $5 on amazon). And by the time most games hit that price point, I don't even care anymore and hardly buy anything anymore, because it takes too long for them to get there. 1701 Gold is still $30, dammit.

[Hawkbit]

My local b+m Gamestop had Crysis for $20 for the 'special edition'.  This was about two weeks ago.  Warhead is still $30 and therefore out of my price range.   

[Big Gulp]

The more video gaming gains in popularity the more the price should come down just because your pool of available customers grows.  Look at DVD's.  Everyone at the very least watches movies, so even though a film is usually orders of magnitude more costly to produce than a game you can still get away with selling the DVD for $14.

The problem historically for gaming is that their customer base was so small that in order to really make your investment back you had to squeeze them.  As long as we can keep the gaming industry from becoming a sort of cartel where they can engage in price fixing we should be able to force the price of games down.  Thank Christ that Valve are willing to buck the industry and throw off the grading curve.

[dusematic]

Yeah didn't PC games use to be like 70 bucks in the late 80s?

[Yegolev]

I remember paying $70 for Final Fantasy III on SNES.

[UnSub]

I used to pay $60 - $80 for new Amiga titles. I think I paid $80 for Hero Quest 1 on the PC and $70 for Ghostbusters 2 on the Amiga 500 (and GB 2 was only 3 levels long!).

This is Australian money, but local titles are still $80 up to $110 for the titles that can be most price gorged are most popular.

EDIT: Should also say that the games industry should do some serious price point analysis - a lot of what exists in terms of price are legacy numbers that don't reflect changing times. I mean, if I download a title from a site, should I pay the same amount as someone who picks up a box copy? Or is $20 really a 'budget' title? I've done price point analysis for some other industries and always though some should be done for video games (like $15 for a MMO per month - how many extra players would you pick up if you charged $12.50 a month? Or $10?). So hey, if you are a redname with some spare money for this kind of research, please PM me. 

[NiX]

We need to find a way to get you cheap US games, UnSub. That's insane.

[Megrim]

Oh the Aus market has been like that for a long time now. And not just for pc games either - card games, tabletop, etc...

It's one of the reasons i really, really like Steam, since it actually gives us a somewhat fair pricing for new releases, as opposed to the complete and utter ripoffs that our regular retail chains.

[UnSub]

We need to find a way to get you cheap US games, UnSub. That's insane.

I'm used to it.

I've got friends who import a lot of titles, but that only works when the exchange rate is good. He buys in bulk (i.e. 10 games / DVDs at t time) so postage isn't an issue and he doesn't have kids, hence his ability to buy in bulk and actually watch / play them.

[Azazel]

Yep, these guys are totally correct. Even when the exchange rate is "okay" - as in not good or great it's cheaper to import stuff from overseas. I was buying a ton of my Games Workshop stuff from the UK for awhile. Even with the postage tacked on it worked out a good 25% or more cheaper to buy direct from the UK then from their Australian subsidiary.

Even with the exchange rate in the shitter, it's far cheaper to order a lot of stuff directly from overseas as many local importers of stuff gouge us above and beyond whatever the exchange rate might be.

At the moment the Aussie dollar is really bad: .64  As in US$100 is AU$154

Witness:
http://www.vikingplayground.com/productcart/pc/viewPrd.asp?idcategory=0&idproduct=1508
http://www.vikingplayground.com/productcart/pc/viewPrd.asp?idproduct=2061

Versus an Australian store.
http://www.casefresh.com/alienvspredator/hottoys/12-inchfigures.htm

Even allowing for wholesale shipping (From suppliers in Asia - we're closer to Asia than the US is! And it's via surface, not air.) The price comparison is almost 3x for this stuff when it should be 1.5x

So yes, Steam is a nice option. Roll on the DoW2 50% sale!



It's a small population combined with the tyranny of distance and a lack of other options. It's not like we can just drive over the border to <anywhere> to get <anything> cheaper. They know we're on an island continent and they fuck us accordingly.

[Teleku]

The only answer is to invade all the countries around you so you can finally establish a border with somebody to drive across  .

[Azazel]

We already did that. There's now only water left.

[UnSub]

We already did that. There's now only water left.

Turns out that Christmas Island doesn't have a big video games industry.

[Sky]

Yeah didn't PC games use to be like 70 bucks in the late 80s?

I paid $80 for Ultima 5 when it was released. Luckily I was selling pot at the time.

Before I had crime to fund my teenage gaming years, I was a pirating motherfucker. Doesn't seem to have hurt EA.

[Lantyssa]

We already did that. There's now only water left.

Turns out that Christmas Island doesn't have a big video games industry.

Most of your continent is just useless dirt anyways.  Scoop it out and fill in the ocean until you've got a land border with someplace real.