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The Price Tag of Exclusivity: ATI and Valve

Posted by Zonk on from the win-win dept.

The Inquirer has a piece up breaking down the millions of dollars ATI spent securing a "special relationship" with Valve prior to Half-Life 2 being released. The relationship resulted in a voucher being included with ATI cards for a free copy of Valve's hit game. From the article: "ATI gave Valve $2.4 million in cash for the deal. ATI also invested $1.2 million in marketing this great game. And last, but not least, was a cool $4.4 million that ATI and its partners spent for bundles. That amounts to some $8 million dollars....[ATI] sold an incredible lot of 9800XT and 9600XT cards just because of the nice voucher [for Half-Life 2]. That small piece of paper convinced many people to go out and buy an ATI card." A little salt with this article will help it go down easier.

41 comments

  1. One year later, HL2 came out. by 88NoSoup4U88 · · Score: 3, Insightful
    And then to imagine that once Half-Life 2 finally came out, most of those videocards the game came bundled with were allready quite outdated.

    Still, I know alot of people who, imo, fell for it.

    1. Re:One year later, HL2 came out. by Zebbie · · Score: 1

      I would hardly say they "fell for it." They still had the video card for that time, and it kicked ass. The game was a bonus, as the prices on the video cards were still very competitive, and the video cards which came with the voucher run the game just fine.

    2. Re:One year later, HL2 came out. by mog007 · · Score: 3, Insightful

      I bought my 9600XT just because it came with the voucher. I won't lie. I needed a video card, and I had just received my second batch of bad luck from an Nvidia offering. I figured ATI must be better at it, hell they make cards themselves, not solely whoring out the GPU to other third parties. Sure, they whore out their chips too, but they'll also sell the card themselves. Just tells my subconcious that ATI has more pride in their work than Nvidia, that's all.

      Granted, I had to get my card locally for the voucher, but I was in dire need of a new card, and the 9600XT was in my price range, and it had the horsepower that I could use.

      I still use it today, and it holds up pretty well, so I'd call it a sound investment.

      --
      Learn something new.
    3. Re:One year later, HL2 came out. by Rallion · · Score: 1

      My $120 9600XT is still running wonderfully. Maybe in two or three years, I'll spend another $120.

    4. Re:One year later, HL2 came out. by Mingco · · Score: 1

      I figured ATI must be better at it, hell they make cards themselves, not solely whoring out the GPU to other third parties. Sure, they whore out their chips too, but they'll also sell the card themselves. Just tells my subconcious that ATI has more pride in their work than Nvidia, that's all.

      Actually, nVidia's business model is one that was pioneered by the defunct 3dfx. They are a fabless chip manufacturer, which means that they focus on designing the chips and let other companies worry about the nitty gritty details of warehouses, parts shortages, and fickleness of the market.

      In theory, this leaves them less susceptible to the wildly varying costs of maintaining a manufacturing facility, since it costs quite a bit to maintain it when it's not being utilized.

      In a way, you can think of ATI like Apple: They make the software and the hardware. nVidia is like Microsoft. They just make the software (in this case, the graphics chip), and let other companies figure out how to make everything around it cheaper.

      It is remarkable that of all of the consumer 3D chip companies in the early 90's, we're now down to just two.

    5. Re:One year later, HL2 came out. by Anonymous Coward · · Score: 0

      Actually, nVidia's business model is one that was pioneered by the defunct 3dfx. They are a fabless chip manufacturer...

      And by the defunct 3DO before that, and by the defunct Transmeta of late.

      Hmm. Have any of these so-called fabless manufacturers ever succeeded in the long run?

    6. Re:One year later, HL2 came out. by Anonymous Coward · · Score: 0

      Yeah, and here's some irony. I bought my X800XT Plat Edition card about 6 months ago. When Half Life 2 came out, I practically RAN to the store and plopped down about $90 for the Collector's Edition.

      And it won't run on my machine. I get that stupid memory error when it hits HL2's starting screen.

      I ran every test/check from Valve's tech site, to no avail, and their answer was "it's a hardware problem, we can't help you."

      Yeah, it's a hardware problem that ONLY appears when I play Half Life 2, but I can play any other game on the market without this error, and yet somehow it's not their responsibility.

      I used to be a big fan of Valve, but after this fiasco and their lack of support, I'm obviously not going to be buying their products anymore.

      They proved in their tech support dealings with me that they don't care about the consumer. They proved with their online registration they are more concerned about illegal copies being used than making the process simple for people who actually paid for their products.

      And they proved to me, personally, that they think it's perfectly ok to charge me $90 for a t-shirt and a running copy of the original Half Life.

      I thought about Ebaying my copy of Half Life2, but I think I'll keep it as a reminder of how Valve essentially told me they don't want my money. I'm sorry, but there's way too many decent products on the market to ever feel the need to spend my money on a company that puts out garbage product like this and then claims no responsibility when it doesn't work. I'll allow my wallet to speak for me in the future, and not buy any more Valve products/products running on any of their engines until they fix the bugs. I see they've got an expansion coming out soon, I'll make sure to not buy that one.

  2. ATI troubles by niskel · · Score: 5, Interesting

    I got an ATI card because I was told it had better performance than nvidia, especially in HL2. Now that I have my 9800, I realize what a waste it was, especially in Linux. HL2 was okay but definetely not worth getting this card for, especially for all the trouble it has caused (in an amd64 system). Next time I'm going nvidia.

    1. Re:ATI troubles by Shazow · · Score: 1

      Ditto. I was pretty split up on getting an Nvidia at the time of equal performance and price, but the voucher pushed me towards ATI (even though I had a long history of hating ATI and loving Nvidia).
      Now I regret it, a lot, especially now that I run Linux exclusively.

      Worst part, I never even bothered redeeming the voucher, since ATI insisted that I pay for the shipping both ways, and also had to have a proof of purchase. A purchase that was made over a year before the game came out.
      And to top it off, I got HL2 as a gift from one of my friends, so there was really no point in getting the Valve game activation thing, without the boxed CD. At least with the boxed CD, I could ebay it or something.

      So, as someone said earlier, I do feel like I "fell for it". It sucks. No more ATI for this poster.

      - shazow

    2. Re:ATI troubles by superpulpsicle · · Score: 1

      Yeah I saw all those HL2 and ATI compatibility and I flocked out to get a 9800 Radeon 128MB way before the game came out.

      I am on my 3rd replacement under warranty now since it fried so many times on me in 1 and a half year. Had I known Nvidia would have had equal performance, I would not have rushed out like this. This is probably my last ATI card EVER due to extreme disappointment with the stock fans overheating.

    3. Re:ATI troubles by snuf23 · · Score: 1

      At the time ATI's cards were faster than Nvidia's 5x00 series. I upgraded to a 5600 Ultra from my older 4400 and noticed almost no performance gains. While the 5x00 parts were direct X 9 compliant you couldn't use the DX9 game options because the impact on frame rate was severe.
      Although my experience with the 5x00 Nvidia series was less than spectacular, the card was very stable, just as my 4400 before it was.
      I've avoided ATI due to have bad luck with their drivers in the past. So although I was tempted to get the x800 series when it came out, I waited for Nvidia's 6x00 series.
      I do recommend reading some reviews with regard to the cooling options on the cards. Some vendors have better heatsink/fan setups than others. BFG Tech's cards are usually pretty good.

      --
      Sometimes my arms bend back.
    4. Re:ATI troubles by Eugene · · Score: 1

      I also upgraded from my Nvidia 4x00 series cards in my boxes to ATI 9600 series cards, but it's not because of HL2, rather because nvidai 5x00 series cards were such a big problem (noisy and performance issues). but ATI's driver is such a big problem down the road (especially the ATI Multimedia Center part.. I have 2 AIW cards). and now I'm swearing off ATI for good.. next time I upgrade, it'll be nvidia again. (6x00 or 7x00 series)

      until ATI can pull their shit together on the capacitor issues(maybe) and driver issues (not likely)

    5. Re:ATI troubles by Lehk228 · · Score: 1

      do you have any case fans installed and is your case airflow any good? there is no wayin hell you should be on your third video card within warantee. do you have a PCI slot fan installed to pull hot hir off the video card? do you have at least one dedicated case fan (not PSU fan) and do you have a decent PSU.

      --
      Snowden and Manning are heroes.
    6. Re:ATI troubles by r_jensen11 · · Score: 1
      I'm on my 4th Radeon 8500. The first one lasted two years, then the fan must have wound itself too much with all the dust surrounding it.
      The second card's fan was tilted and very loud.
      The third card had horizontal lines going across the screen under Linux, and Windows XP gave me the BSOD when I tried to play a DVD with it.
      I've had the fourth card for maybe almost a year now, and it's still chugging along, playing The Sims 2. All in all, I had to spend money for shipping on the first two cards to get them replaced, ATI covered the 3rd.

      The next card I'm getting however, will probably be an nVidia 6600GT of some sort, or whatever card is in that price range whenever I have to upgrade.

    7. Re:ATI troubles by aliquis · · Score: 1

      Yeah, if you are going to install Linux, BSD or Solaris simply forget about ATI, it will make life a lot easier.

  3. What d'ya mean, salt? by AkaXakA · · Score: 1, Interesting

    This article simply gives some facts about how much ATi 'spent' on Half-Life 2.

    However, how much the gain was is just speculation, but that there was a gain is sure.

    The real winner here is Valve, of course.

    1. Re:What d'ya mean, salt? by Ford+Prefect · · Score: 5, Informative
      The real winner here is Valve, of course.

      Yup - and there doesn't appear to be any ongoing appreciation of ATi by Valve. After all, the upcoming Lost Coast expansion needs an Nvidia card to run fully, the appropriate ATi hardware not actually being available yet...

      Oh, and I'm still rather fond of the tale of the terribly expensive 'launch party' funded by ATi... ;-)
      If Gabe Newell had his way, he would have spent September 30, 2003, lying low at the Valve office. He was deeply embarrassed by the slipped date and frustrated that the fans were berating Valve on the Internet. In other words, he just wanted September 30, 2003, to quietly pass. Unfortunately, that wasn't a possibility. He had a prior obligation: the Half-Life 2 launch party, which graphics-card manufacturer ATI had scheduled months in advance--fully assuming, of course, that the game would ship on September 30.

      ATI, which is rumored to have paid more than $6 million to Valve as part of a broad endorsement deal, planned a massive fete to celebrate the launch of the game and a new ATI graphics card. ATI rented out the entire island of Alcatraz in San Francisco and planned to host the party inside the prison. Newell wanted to pull out of the event but couldn't. It was an obligation to a business partner--a partner that was "none too pleased we missed our date," he says.
      --
      Tedious Bloggy Stuff - hooray?
    2. Re:What d'ya mean, salt? by Anonymous Coward · · Score: 0

      Gotta respect Gabe Newell for that. The easy way out would have been to ship a half-baked game on time. HL2 wouldn't have sold much less with half the content and half the tech. But he and Valve stuck by their guns and released a (flawed) masterpiece "when it's done." It shipped when the programmers said "Ship it!," not when the accountants said "Ship it!"

    3. Re:What d'ya mean, salt? by KDR_11k · · Score: 1

      Well, the leaked source code suggested that the game was so far from completion at 30 September 2003 releasing it then would have been a desaster on par with Daikatana.

      --
      Justice is the sheep getting arrested while an impartial judge declares the vote void.
  4. No Kidding! by Ieshan · · Score: 5, Informative

    This is marketing. Plain and simple.

    The real "dupe" is in the price per unit of HL2. Although to the regular consumer, HL2 is around 50 bucks, to the company making the game, HL2 is pennies to produce once they've paid back RnD costs. HL2 units are CDs and booklets, nothing more, and valve can mass produce them like crazy.

    Which means ATI can buy lots and lots of them for mucho cheap. And means that your "50 dollar value" game isn't really worth 50 bucks to either company.

    But this sort of thing is done all the time. Macys, Filenes, Sears... almost all of them give away free gifts with purchase that cost little to the company but appear valuable to the consumer. Perfume cases, and samples, pretty silver trinkets, or computer games - really all the same. It just happened to bait lots of geeks this time.

    1. Re:No Kidding! by FriedTurkey · · Score: 3, Informative

      Paid back the R&D costs? Do you have any idea how much it costs to produce a game like Half Life 2? The CD manufacturing costs are nomimal but paying back the programming and overhead costs isn't going to be recouped in selling a couple of boxes. It wouldn't be wrong to assume Half Life 2 has to sell a million copies to break even.

    2. Re:No Kidding! by Ford+Prefect · · Score: 3, Interesting

      HL2 units are CDs and booklets, nothing more, and valve can mass produce them like crazy.

      Hellooo, Mr. Ieshan, 2005 called. Remember that Steam thing?

      My copy of Half-Life 2 is just bits and bytes, and my authorisation details in a database somewhere. No physical packaging whatsoever - and I believe this is how many of the ATI vouchers were redeemed.

      If the cost per unit allows them to hire talented people and take as long as they like on Half-Life 3, just like 2 was funded by the sales of the original game, then I'll be happy. Plus I've had excellent value for money out of the game so far anyway... ;-)

      --
      Tedious Bloggy Stuff - hooray?
    3. Re:No Kidding! by Txiasaeia · · Score: 1

      But for somebody who was actually planning on buying HL2, this translated to $50 off (assuming that the person wanted to buy both) when you purchase both, essentially. I've had a lot of crappy throwaway gifts before, but HL2 definitely seems to have been worth it.

      --
      Condemnant quod non intellegunt.
    4. Re:No Kidding! by Leroy_Brown242 · · Score: 4, Insightful

      If you think the cost of an application is just the CD and leaflets included, you are obviously not a programmer.

      --
      Pretty Pictures!
    5. Re:No Kidding! by generic-man · · Score: 1

      Yeah, and books are just paper with toner sprinkled on it. I can buy 500 blank sheets of paper for $3 and toner is like $60 for a 5,000-sheet cartridge.

      Therefore, a 250-page book ought to cost $4.50. Probably less, since those "printing" companies buy in bulk.

      --
      For more information, click here.
    6. Re:No Kidding! by Anonymous Coward · · Score: 0

      If you think he said that, you are obviously illiterate.

    7. Re:No Kidding! by Sinnix · · Score: 1

      Or a digital artist.

    8. Re:No Kidding! by BaudKarma · · Score: 1

      If they give me something for free that I definitely would have paid $50 for, doesn't that make it a "50 dollar value"? It's the flip side of most pirating issues. Many pirates claim that their downloading an Mp3 or game or whatever doesn't really cost the owner anything, since there was no way they'd actually pay money for the product.

      By the same token, I was definitely going to buy Hl2, and I was going to buy it the day it came out. If I have a coupon that lets me get the game for free, doesn't that make the coupon a $50 value?

      --
      It's the land of the brave, and the home of the free
      Where the less you know, the better off you'll be.
  5. Lack of information by deinol · · Score: 3, Insightful

    Ok, so they spent 8 million getting peoples attention. That's nice. Did they sell 8 million worth of video cards? Or even better, did they even sell enough to make 8 million in profit from video cards? It's been a while since I felt the need to upgrade my video card. Then again, I don't have as much time to play games as I would like. And when I do, a console game is cheaper.

    Certainly I like the fierce competition between Nvidia and ATI. The more they try and get an edge over the other, the better and cheaper the cards that end up in my PC or Console. I wouldn't want either to win however.

    --
    Got Apathy?
    1. Re:Lack of information by harks · · Score: 2, Insightful

      Even if they didn't, they have increased their market share and (hopefully) attracted some satisfied customers who could buy more ATI cards later on.

  6. Valve did some work on their part too by misaochankun · · Score: 5, Informative

    I bought one of these bundles as well, and the instructions said you had to mail it in to get the game software.
    However, when the game came out, I put in the code directly into steam and it worked. No pesky snail mail, no need to wait for hard media. It gave me access to everything software wise. I think Valve did a good job on this, even if steam is a little clunky to deal with.

  7. Bought the card for the game? by faloi · · Score: 3, Insightful

    Nah, this is just like any other incentive. Not much different from bundling games with video cards (as has been going on for a while). The only difference was they bundled a game that didn't exist yet. I don't think anybody bought the card because it "came" with HL2. Having HL2 bundled with it *might* have been the last straw that pushed someone on the Nvidia vs. ATI fence over toward ATI. So ATI wins, they get possibly more people buying their card. Valve wins, they get pre-market sales to count on their accounting sheets before. And the customer wins, they get a decent video card and a good game.

    --
    "It is a miracle that curiosity survives formal education." -Albert Einstein
  8. ok by nomadic · · Score: 1

    Can someone please explain the slashdot story title to me? The price of exclusivity? Where's the exclusivity?

    1. Re:ok by SA+Stevens · · Score: 1

      'exclusivity' is supposed to be a bad word, and reflect badly on ATI, or Valve, or something.

      (Footnote- All I know is the ATI Rage Pro hardware built into the motherboards of all the machines I run these days (Dell Optiplex GX1's that I get at auctions for from 80 cents to five bucks as complete systems) works fine. I hear that we're supposed to hate ATI or something. The ATI hardware *I* have works great, including when I use it with freenixes.)

    2. Re:ok by obeythefist · · Score: 1

      If you look at the benchmarks, the performance of HL2 on the ATI hardware at the time is significantly better than the nVidia hardware at the time.

      I can think of no other game that shares this disparity, generally nVidia's offerings are on par or better than the ATI ones across the board.

      There's only one reason for such a marked difference in the performance of HL2 on ATI gear compared to other software running on ATI - performance optimisation. That's the nicest way to put it. Sabotaging nVidia is another, more tinfoil hat way to look at it.

      So basically what the Inq. is suggesting (and providing evidence for) is that ATI paid Valve to ensure that Half Life 2 made ATI cards look much better than they actually are (compared to how they run with other games).

      To ward off ATI fanboy flames: I own an ATI 9600XT. It wasn't the best card available at the time but it did offer the best price-performance when I bought it. I bought it without a Half Life 2 voucher.

      --
      I am government man, come from the government. The government has sent me. -- G.I.R.
    3. Re:ok by nomadic · · Score: 1

      Eh, don't see the big deal. I was able to play HL2 on what is essentially a geforce2 (geforce4 MX 440 Go) and while it wasn't on especially high detail it was fine.

    4. Re:ok by obeythefist · · Score: 1

      Ahh... yes... you don't see the big deal because you disabled it.

      The ooooh-ahhhh factor is when you're running 1600x1200 8xFSAA 8 tap aniso or better. (Difficult on a laptop, but laptops are not meant for gaming). And yes they put 3D accelerators in laptops, but those are regarded in some circles as a bit of a joke.

      So yes, especially high detail is the whole point, otherwise the money you spent on that laptop would be better spent on a PS/2 or XBox or Gamecube, depending on your preferences.

      --
      I am government man, come from the government. The government has sent me. -- G.I.R.
  9. EQ2 at SOE... by dhakbar · · Score: 1

    EverQuest 2 was used by NVidia in a similar fashion to ATI's use of Half-Life 2. While there weren't any vouchers, NVidia was doing a lot of advertising of EQ2, and, in return, EQ2 got the splash screen saying that NVidia is the "way it's meant to be played" or something along those lines.

    The hardware and software manufacturers no longer even try to pretend that they aren't in cahoots. They know they drive each others' sales.

    1. Re:EQ2 at SOE... by snuf23 · · Score: 1

      The Nvidia "way it's meant to be played" thing has been used for tons of games. I think just about anything Electronic Arts puts out had the slogan at some point.
      The thing that's really irritating is for the most part it's just bs marketing. So while for example, Half Life 2 did actually run a bit better on ATI and Doom 3 ran a bit better on Nvidia - for most games it isn't true. I was pretty annoyed when I bought a Nvidia 5600 Ultra and found that performance was a bit off in Battlefield Vietnam. A game that told me Nvidia was the way to play it everytime I loaded it.

      --
      Sometimes my arms bend back.
    2. Re:EQ2 at SOE... by Lehk228 · · Score: 1

      there is actually a UT2k4 mod that changes it from nvidia to an AIi logo

      --
      Snowden and Manning are heroes.