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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."
Valve is the corporation's name. Steam is the name of their distribution network.
Steam is the program/service used for a large portion of digital distribution of games on Windows, and now Mac OSX. Valve Software's major claim to fame before creating Steam is the Half - Life series of video games, which broke a lot of new ground in the FPS genre. Gabe Newell is the founder of Valve, and comes from an old school Microsoft background, having been one of the primary coders on early versions of Windows.
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."
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.
What started as the Team Fortress 2 nonsense store which allowed the purchasing of hats in a first person shooter(!), has progressed to a total overhaul of how Valve sell their products. Portal 2 is now fast becoming the flagship example, with, wiat for it, hats available for purchase, along with little flags and such. DLC (I feel a bit sick every time I say or type that) is the devil that you cant' avoid. If Activision put a human shit in a box and sold it as Call of Duty (or Modern Warfare, whichever they own) material DLC, for let's say £5 / $9, it's guaranteed they would make a profit. Call of Duty: Human Chemical Warfare in a Box.
Pretty much every game you buy now has this so called downloadable content, right from the game's release. There's no relevant analogy here, even the most coherent slashdot analogy wouldn't be able to ascribe to the bizarre concept of selling an entertainment product with parts loped off and sold along side it.
A great example is the add-on content to Railworks 2. A £25 game with £800(sic) of DLC. Have a look if you don't believe me. http://store.steampowered.com/app/24010/
Bottom line, there's a huge amount of money to be made on the DLC market and any game company would be stupid not to dip into that pool. And it's a damned shame.
If those fake accounts need to spend real money (buy in at retail price) to count, that's not such a likely scenario.
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.
Yeah, it's a wonderful pipe dream. An MMO where the worst scum of the playerbase get charged extra until they shape up or screw off would be a beautiful idea.
Pity it'll never happen. Any system can be gamed and any person you might want to penalize is the sort of person who will figure out how to game it. Unless you can code the game to recognize and punish bad player behaviour without introducing loopholes, and I don't see that as terribly likely.
Though you could introduce a "swear jar" feature easily enough, whereby using certain words in general chat on most servers would net you a fine, Demolition Man style. At a minimum, making the scumbags pay out the nose for yelling the word "fag" like Fred Phelps with Tourette's syndrome would be a thing of beauty. And perhaps a teabaggers fee for the FPS genre.
Erotic is when you use a feather. Exotic is when you use the whole chicken.
Testing the cafeteria, maybe. What I'm trying to say is: Gabe is fat.
Do you even lift?
These aren't the 'roids you're looking for.
I wonder how this will affect all my single player games. Treat the NPCs well, and I get a discoount?
Valve would do well to remember that while the online games can be cash cows, they are also more risky and carry a much larger operating expense. It's the single player games that provide the slow secure income that allows you to do the social gaming. Reward those users, because they won't require additional expenses on your part after buying their games, and won't fill up your tech support with questions on port forwardings and complaints about latency.
I completely agree that customers who buy a lot of games and who are clearly of the higher income bracket should pay a bit more for games and entertainment
From each according to his "has", to each according to his "wants" huh?
but if we are college students or struggling to find a job we simply cannot afford $50-60 a game.
Then you go without
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
Also, any system can be exploited. If done wrong, you will find a game/MMO where the griefers get free monthly costs, while anyone who isn't in the clique gets penalized as undesirable.
A system of assigning who is friend versus troll really only would work if it was manually done with one of the game employees doing the flagging as good versus troll. Even this can be abused.
If it were up to me, I'd see about notable community members getting a discount (or if they are good enough, such as one person on Everquest 2 Test who is the backbone of the server when it comes to tradeskills), hand them a permanent free sub because of their dedication. I wouldn't put in an automated mechanism just because people will find how it works and abuse it.
Also, any system can be exploited. If done wrong, you will find a game/MMO where the griefers get free monthly costs, while anyone who isn't in the clique gets penalized as undesirable.
More evidence for my belief that all gaming threads degenerate into discussing EVE Online.
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.
Somehow, one price for all, seems more fair.
Than the system you just described? Obviously. It's easy to design a system that's less fair. The challenge is to design one that's more fair. Just because you aren't up to the challenge doesn't mean it's a bad idea...
"Convictions are more dangerous enemies of truth than lies."
Yes
So lemme get this straight, Mister Newell: you wanna charge socially awkward and inept people, like loners and people with Asperger's Syndrome, a premium simply because they don't benefit your Bottom Line above and beyond what they pay for the game? You want to penalize them for being "unpopular"?
Wow, as if they didn't get enough of that mistreatment in high school, now they have to endure it in the marketplace.
Valve does Gods work imho so I would not dismiss this out of turn. He is naturally talking about multiplayer games because in single player games you effectively pay for the content so your entire user experience is crafted by the company using artists etc so in that case you charge what it cost you to make and think up and then some. Now in multiplayer games, the community adds a significant portion of the value to the final product so it could be argued that it makes sense that they be rewarded for adding value to a product (not unlike modders who can sell their maps on the starcraft 2 map store thingie).
In an MMORPG you ARE rewarded for being a better community member when you join groups, raids etc allowing you to unlock better gear and levelup faster. This does not result in monetary gain but most mmo's have some kind of conversion between in game benefits and real world money (not gold farmers, more like purchasable experience scrolls and the like). So in some ways being a better community player already rewards you (at least in theory, by design). Should the base game be cheaper for better community members? I dont think so. Should being a team player/community positive give you in game rewards that are otherwise purchasable with RL cash? Yea that sounds decent.
Its vvvvvvvery interesting he mentions Dota 2 here. First because its good to hear some news about it cos I am waiting on it, and secondly because DotA (the original wc3) has a community that WILL bite your head off the instant you make a mistake in game or say something stupid in people. For some reason DotA brings out the worst in people.
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.
Having a reputation system that gets you in game/store credit, that you can never lose, could work. eg, help some noob through the training level (ala portal 2) gives you $0.50 credit to your next game / DLC purchase... But charging people for trolling/griefing? Not gonna happen. Charging people based on geographical area? Please no, publishers already suck too much at this.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
Don't be rude. Gabe is the nicest person in the industry, I wish there were more executives like him.
How the fuck is this insightful? It's a nonsensical strawman argument.
You find that people in online games quit for all sorts of bad reasons, including "That guy is better than me." I've seen that kind of thing in Bad Company 2, servers that get cleared out because people are good and nobody likes losing all the time.
I play BC2 with a small group of friends, all who are pretty good at it. We are all above average. Get a couple of us together on a server, and we tend to slant things to the side we are on. This often leads to lots of people leaving on the other side. Sometimes it leads to a server dying because people leave, the server switches people from our team, they don't wan to be on the other side so they leave and so on.
Even happens when we are facing another group who is playing together. That is most often the sort of game we get in, since that is where there are a lot of spots on one side. We'll get in and a group of people in the same clan are on the other side. We'll turn the tide of the battle and start winning, and they'll all leave because they want to beat up on people.
So should we get ranked down and charged more because we are good at the game? Now I should add we don't talk shit, we don't harass people, we just play the game to win. People leave because they like to win and aren't having fun losing. Should we get penalized for playing the game, as intended, and being good just because others are not as good and do not care to play against us?
Valve controls the flow of Steam.
One of the alliances in EVE - Red Something-Or-Other - is financed by a wealthy Russian dude. He basically just dropped $100,000 on PLEXes, CCP said "lol, okay", and he instantly crashed the PLEX market. You literally can buy your way into the game, and CCP is not remotely ashamed about it.
You can also play about 30 hours a month (once your skills are up) and make enough Isk to never have to pay for the game again. (Soloing Level 3s/4s, roughly 10 million an hour, and a PLEX is usually around 300,000,000 Isk.) CCP keeps the game relatively fair and balanced, and it's really a lot of fun if you have a good group.
Sadly, the most fun for me is in 0.0 but I'm not entirely fun of mandatory suicidal PvP missions every week. I just wanna mine and build stuff, man. That kinda killed the game for me.
Random Thoughts From A Diseased Mind (Not For Dummies)
Something you may be aware of is the increase in popularity in gaming over the past several decades.
That translates into more households with more than one gamer, and more households with more than one gaming generation.
I game, my kids game, I have many friends whose partner games.
As an individual steam user, I find your prices generally reasonable, your service adds enough value (ignoring ethics and judging strictly from a convenience perspective) to justify paying you and using it over the hassles of both piracy and retail. Good job to you and your team on getting (me) there.
However, I, like many geeks of my generation, have now evolved into a family of five, and am no longer an individual steam user.
This is where the problems start, and you push me, your customer, away. Why? Because I'm a dad, and my gang all play.
For the sake of making a point, I will ignore 'offline mode' because the games we care about are online.
Here are the options you give me:
Option 1. Have one steam account per person, and either buy many copies of each title
(or, I am told, go through a cumbersome process that costs 10$ 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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The phone company had that time-of-day pricing (good that is gone -- Hi Mom, sorry it is 2 AM by you but it is 11 PM for me here in college, and um, I need some money). GM would slap a Buick badge on a Chevy, Ford a Lincoln badge on a Ford and charge money for the status consciousness, that is until Bimmers and Audis came in fashion, although an Audi is a Volkswagen with a different badge on it. Airlines, don't get me started, have this patchwork of fares. Some of this is to fill plane seats and recoup costs at off-peak times, other of this is to offer teasers of bargain fares and then stick it to you when you have to get some place on short notice.
Yes sir, to charge different customers different amounts on willingness to pay for pretty much the same thing has long been the Holy Grail of marketing, but besides the seeming unfairness of it, and to all of you Libertarians, part of success in business is your reputation, and from a utilitarian standpoint, it imposes all manner of inconvenience.
Yes, we have cheap air fares, but on balance I have a low opinion of airlines. Yes, you can negotiate a good deal on a car, but the thought that car dealers "size you up" and someone else is getting a lower price on the car gives me a low opinion of car dealers and the auto industry in general. Yes, you can stay on this side of the law when it comes to swindling customers and I suppose there is a Randian Objectivist rationale to do that, but as a society we are the poorer for it.
So don't buy their games. I stopped buying anything from them when they introduced Steam, and wrote to Gabe explaining why. I got a very polite response, basically saying that they knew that they would piss off a lot of customers, but they'd make a lot more happy, and that he was sorry that I was in the former category. Valve's happy with their customers, and I'm happy not being one of their customers.
I am TheRaven on Soylent News
But despite all Valve's ideas, they still take about 5 times as long to release a game as their competitors, and whilst they're games are good, they're not so good that the increase in release time can be justified.
The thing is that Valve games have polish. Its not just about how much content is in there, but how smoothly everything fits together. Portal 2, at least in single player, is an exceptionally well done game: zero-glitch high-immersion with voice acting and model animations that are top-notch.
The games are not only 'good', but are 'high quality' too. What other game house can say that?
"His name was James Damore."
VAT is nowhere near 40%. Currency exchange margins never exceed 5%. And the american version isn't tax-free either.
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VAT is nowhere near 40%. Currency exchange margins never exceed 5%. And the american version isn't tax-free either.
In the USA advertised prices never include taxes. When I buy a $59.99 game I actually pay $59.99 * 1.08 = $64.78. That final price includes state and local taxes. There is no federal sales tax / VAT in the USA.
When you compare the "before tax" price in the USA to the Euro price minus VAT and then adjust for exchange rates the difference in cost isn't that large.
"Liechtenstein is the world's largest producer of sausage casings, potassium storage units, and false teeth."