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Valve's Newell: One-Price-For-Everyone Business Model 'Broken'
Fysx writes with recent comments from Valve co-founder Gabe Newell about how he thinks the traditional video game business model is flawed:
"The industry has this broken model, which is one price for everyone. That’s actually a bug, and it’s something that we want to solve through our philosophy of how we create entertainment products. What you really want to do is create the optimal pricing service for each customer and see what’s best for them. We need to give customers, all of them, a robust set of options regarding how they pay for their content. An example is – and this is something as an industry we should be doing better – is charging customers based on how much fun they are to play with. Some people, when they join a server, a ton of people will run with them. Other people, when they join a server, will cause others to leave. We should have a way of capturing that. We should have a way of rewarding the people who are good for our community."
One zit-faced 13 year old gets to play for free, and that will "change the face of gaming as we know it?"
Some people, when they join a server, a ton of people will run with them. Other people, when they join a server, will cause others to leave.
In other words, now, instead of having a bunch of friends harass you because they want to build a bigger farm, your friends will actually get monetary recompense for harassing you. Looks like I'll have to unfriend even more 'friends'
"First they came for the slanderers and i said nothing."
Yes, because the object of the game will cease to be capturing the dragons or whatever, and become trying to get the cheapest price/most cash refunded. This will usually involve doing things that aren't particularly useful to others but which it is possible to fool the system into thinking you are a 'fun guy to play with'.
This is basically what happened on /. with karma- for some people the object stopped being an interesting conversation and became karma whoring to increase their score.
They are TRYING to charge you for their time and talent, which is not scarce. As a bonus, you get a game. The way they do this, is by attatching an arbitrary value to what they CAN GIVE YOU - a game - but you are actually paying for the time and talent it took to create that game, not the copy of the game. Same with music, same with books, etc., etc.. If you can come up with a business model that lets people give out something that is infinitely reproduceable - AFTER it is produced, and get paid for the non-scarce talent/time investment... well, I'd like to hear it. I'm not convinced the current model is overly broken, merely that the the value of the public domain is undervalued in the current regulatory regime, and that many people don't look beyond the thing they can acquire to see if something pre-final product was actually scarce.
I initially wrote this off as "oh he's sort of trying to implement perfect price discrimination", which is great in theory, impossible in practice.
But if you ignore his "one price for everyone is a bug" idea, which is fucking stupid. Then supplant it with a, you get micro payments over time, to your account, for playing a lot and being a good player. Then it's just "incentivise people to play nice". That would mean some sort of mechanism of ranking players (based on fun), and giving them targeted discounts based on new games.
This seems fine and dandy... in theory. Once again, how would such a mechanism be implemented? Admin's would suddenly have a lot of power, or other players would, where they could actually do monetary damage to someone. You'd need a dispute resolution system, which is going to cost you overhead. Suddenly you've invented an elaborate system, which might make less profit, and the inventive structure might deter people from getting into these games because "well if I'm not good at it, I might end up paying more for other games I'm more interested in/better at".
At which point, you realize BOTH of these ideas, and likely everything this man has ever said, everything his grandparents ever said, and that his spawn will ever say, is wrong!
This is my footer. There are many like it, but this one is mine.
The problem is that the difference is largely not in the actual words that are being said. Good friends gaming often talk to each other in a way that would greatly piss them off if a stranger did.
Trying to make money from something that isn't scarce is silly. Charge for the scarce goods not the stuff you can easily copy. The very first copy is scarce. Support is scarce. Commissioning people with talent is scarce.
I thought bottled water in places where clean water is plentiful for almost nothing would never take off. I was wrong. People aren't rational.
These posts express my own personal views, not those of my employer
Something you may be aware of is the increase in popularity in gaming over the past several decades.
That translates into more households with more than one gamer, and more households with more than one gaming generation.
I game, my kids game, I have many friends whose partner games.
As an individual steam user, I find your prices generally reasonable, your service adds enough value (ignoring ethics and judging strictly from a convenience perspective) to justify paying you and using it over the hassles of both piracy and retail. Good job to you and your team on getting (me) there.
However, I, like many geeks of my generation, have now evolved into a family of five, and am no longer an individual steam user.
This is where the problems start, and you push me, your customer, away. Why? Because I'm a dad, and my gang all play.
For the sake of making a point, I will ignore 'offline mode' because the games we care about are online.
Here are the options you give me:
Option 1. Have one steam account per person, and either buy many copies of each title
(or, I am told, go through a cumbersome process that costs 10$ processing fee to have your support move the title between accounts, this option is too painful to be practical. ).
Insisting I have a separate per-game license for each kid makes sense and is fair if we will be playing concurrently (and it is A-OK for you to sell us a 'borderlands 4-pack'. I'll buy it.).
This makes no sense if I'm done playing a game, uninstall it, and my kid wants to have a go. Realistically, you're dreaming if you think you'll get me to pay twice. You'll either give me a way to let my kid use it, or I'll take my business elsewhere to GOG or direct2drive or retail, because they will.
Option 2. Have one account for what I'll tell you is /me/, but what in reality will be the whole family. I won't tell, you won't know. Sadly, that means that two computers on my home network can't be "on steam" at the same time, and I can't play online game X while my kid plays online game Y. Plus, it'll get all my steam achievements gunked up with my kid's ones. I don't want that. Force me down this route and, again, I'll go.
Option 3. I'll create a separate steam account for every game I purchase. This will make your product into a very inconvenient one with a flaky user experience, no achievement history etc, and I'll take my business elsewhere. Too much hassle.
Here's the news. An entire gaming generation is now very busy having their children reach gaming age.
You can put some weight behind those brave words you said. The solution is dead obvious.
The recipe is:
1. One family "billing account" (that's a BILLING account, not an application account you sign into steam with) with a single billing method. If a single billing method isn't enough to deter most of the unrelated people from pooling into a "pretend family" account and costing you potential revenue (it probably would be enough, and while you may lose a bit of immediate revenue, you will make huge gains in customer loyalty by trusting them), then put your thinking cap on and figure out how to structure a plan to include real families that count money together and exclude most of the freeloaders. You have smart people working for you.
2. ONE family-wide game/license library.
3. Several "gamer" steam accounts, one per real person managed by the billing contact (the guy with the credit card who vets the games, aka the parent), without needing to involve you. That's what web interfaces (or your application) are for. These steam accounts should all be able to go online concurrently, and can all have their own (SEPARATE) steam achievements, and can be use different games at the same time. If they want multiple people to be playing the same game at the same time (that thing we call co-op play is very popular in families btw) they need to purchase and own multiple licenses. Keep 2-pack, 3-pack and 4-pack deals coming.
Yes, this will mean you may have sev
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