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Valve: Games are too expensive

This is a discussion on Valve: Games are too expensive within the General PS3 Discussion forum, part of the Everything PlayStation; Valve: Are Games Too Expensive? - Edge Magazine Games may be too expensive. That is the message Valve Software President ...

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    Valve: Games are too expensive

    Valve: Are Games Too Expensive? - Edge Magazine

    Games may be too expensive.

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

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

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

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

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

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

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

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

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

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    If this is true, it's great. Maybe we'll finally see a decrease in game pricing across all fronts.

    I for one tend to limit myself to the big blockbusters and titles that really attract me to them. But if games were to only cost $20-$30 on release I would probably buy a lot more titles.

    Case in point, had amazon.com not sold Portal 2 for $35 on release I probably still would not have purchased it and not fallen in love with the game as having not played the first Portal, I questioned if I would actually enjoy the game or not and wasn't willing to throw away $50-$60 on a question mark.

    I think ultimately I'd still spend the same amount of money on video games, I'd just end up buying a lot more then I do now if the price dropped to something more reasonable.

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    Valve is one of the most respectable developers around. It looks like they've got the right idea

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    No shit Sherlock. Does it seriously take data-mining on Steam to tell the gaming industry they've crawled up their own arse by offering shorter games at higher prices?

    I won't buy a single game at $60, but i'll buy 5 every week at $20. This scenario is exacerbated in Australia where the average retail price is $100-110 with no sign of dropping any time soon. Hence, Aussie retailers are struggling to compete with online stores offering the same games at 40-50% of the price.

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    Talk about stating the obvious.

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    wow, i sometimes think that the heads of companies are from another planet.....did they come up with that idea all by themselves ' lowering prices increase sales ' REALLY ?!?!??! WHY HAS NO ONE THOUGHT OF THIS BEFORE!!! ITS BRILLIANT!!!

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    No game is worth 40-45 I'd much rather give it a few months and buy it for 25.
    Theres plenty of other cheaper games out there that have taking my attention.

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    Quote Originally Posted by ant1th3s1s View Post
    No shit Sherlock. Does it seriously take data-mining on Steam to tell the gaming industry they've crawled up their own arse by offering shorter games at higher prices?

    I won't buy a single game at $60, but i'll buy 5 every week at $20. This scenario is exacerbated in Australia where the average retail price is $100-110 with no sign of dropping any time soon. Hence, Aussie retailers are struggling to compete with online stores offering the same games at 40-50% of the price.
    Quote Originally Posted by bobbyblitzed View Post
    Talk about stating the obvious.
    Quote Originally Posted by Ac3dUd3- View Post
    wow, i sometimes think that the heads of companies are from another planet.....did they come up with that idea all by themselves ' lowering prices increase sales ' REALLY ?!?!??! WHY HAS NO ONE THOUGHT OF THIS BEFORE!!! ITS BRILLIANT!!!

    -.- fucking morons
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    But if you had a game like Red Dead Redemption which cost 100mill ( or $ im not sure) you would want to make a profit wouldn't you?
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    No game is reliable for that. I want to know about that more.

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    Quote Originally Posted by sammingo View Post
    But if you had a game like Red Dead Redemption which cost 100mill ( or $ im not sure) you would want to make a profit wouldn't you?
    Based on Steam's figures (given we have no other statistical tool at our disposal) cutting the price in half would sell more than triple the units = m0ar profit.

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    Video games require a bloody hell lot more effort, work, and cold hard cash to produce and publish. It's no wonder it's expensive.

    Obviously it's also stating the obvious that games are becoming way too expensive, with Australian prices reaching retail price of $110.

    It doesn't take a genius to figure it out that games are becoming shorter and more expensive. This is why online overseas stores are open. :stare:




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    new games in AUS used to be $100 + now we are started to see them in the 70s or 80s.. so things are changing already thank god
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    Quote Originally Posted by Brenden View Post
    new games in AUS used to be $100 + now we are started to see them in the 70s or 80s.. so things are changing already thank god
    It depends. I can walk into my local EB Games and pick up new retail games at $110. There's even pre-owned games at that price as well.




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    Whats funny is people love this idea, but will hate it when implemented.

    I understand completely where Gabe is coming from, but reducing prices will result in alot shorter games with more DLC.

    I do think once digital distribution takes off this will start hitting hard.

    One good thing that may come from this: Maybe games will start being SP and MP only.

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    Quote Originally Posted by Brenden View Post
    new games in AUS used to be $100 + now we are started to see them in the 70s or 80s.. so things are changing already thank god
    Have a look in the PS Store. EA Sports has a couple of titles at $110 a pop and they aren't new releases.

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    Quote Originally Posted by Gauss View Post
    Whats funny is people love this idea, but will hate it when implemented.

    I understand completely where Gabe is coming from, but reducing prices will result in alot shorter games with more DLC.

    I do think once digital distribution takes off this will start hitting hard.

    One good thing that may come from this: Maybe games will start being SP and MP only.
    I've actually found the opposite. As more established publishers have jumped onto Steam, prices for new releases have shot through the roof. The initial value of Steam was buying games at a good $20-30 cheaper than retail, but that's changed over the last couple of years to match retail.

    New releases at $50 is a good deal and is roughly what you'll pay for most games at the bigger UK online retailers. If you're prepared to wait a few months, that quickly drops to $30, then $20 a few months after that.

    $80-110 is doing the industry more harm than good, particularly Down Under and is tantamount to price gouging. We can buy the same games at release for half the price if we're willing to wait a week or two for them to ship to Oz from online stores.

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    Quote Originally Posted by ant1th3s1s View Post
    I've actually found the opposite. As more established publishers have jumped onto Steam, prices for new releases have shot through the roof. The initial value of Steam was buying games at a good $20-30 cheaper than retail, but that's changed over the last couple of years to match retail.
    I don't know how it is in the AU, but up here DD games tend to be atleast a little bit cheaper (5-10 USD).

    Half-and-half doesn't count though, anymore most publishers treat Steam/PSN/XBL as a way to recoup the financial loss that comes with used-gaming and piracy. They make way more money off DD.

    When DD really takes off, that will change as competition will start dictating it.

    Quote Originally Posted by ant1th3s1s View Post
    $80-110 is doing the industry more harm than good, particularly Down Under and is tantamount to price gouging. We can buy the same games at release for half the price if we're willing to wait a week or two for them to ship to Oz from online stores.
    Don't take a macro-problem and turn it into a specific issue though.

    AU is fighting its own economic battle caused by your countries intelligent handling of its own economy relative to the rest of the world's general incompetence... with a sprinkling of your countries naturally difficult import laws.

    This problem is universal to every market your country is dealing with...
    Last edited by Gauss; 10-05-2011 at 02:10 PM.

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    Quote Originally Posted by Gauss View Post
    I don't know how it is in the AU, but up here DD games tend to be atleast a little bit cheaper (5-10 USD).

    Half-and-half doesn't count though, anymore most publishers treat Steam/PSN/XBL as a way to recoup the financial loss that comes with used-gaming and piracy. They make way more money off DD.

    When DD really takes off, that will change as competition will start dictating it.
    The DD on PSN is full price or worse lol. But ya, DD SHOULD be less by quite a significant amount since that is pure profit for a company and no hard copy of a game needs to be made and shipped. I wouldn't mind doing the whole DD too much, but it's fking expensive when I can get all retail for dirt cheap. And PSN related, the only reason I don't mind it too much, is I can share it with my 5 ps3's.... So that's like 5 games for the price of 1 which is good. My problem will be when DD takes over completely, and were paying the same price or more. But theirs nothing we can do about it but bitch and complain, or don't pay the price. But how long would you wait before a discount came?

    I'd atleast want to buy a retail game and get a code for a DD version. I love having a hard copy in my hand.

    As for the OP... This is common sense.

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    The argument that raising prices means more profit is stupid. Let's do some simple math shall we?

    Lets say a person buys one new game at $60 a month and about 3 used games at $30 a month. That equals $150.

    Now lets say that new games cost only $50. That same person could buy 4 new games for $150.

    Lets say games cost $30 new. That person would buy 5 new games a month for the same $150.

    If new games were cheaper, more people would buy them new. It's that simple. Sure you'd make less money per unit, but wouldn't it make sense to make $30 per unit on 5 million units than $60 per unit on 1 million?

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