To be fair, Steam has been in a race to zero for quite some time. I know multiple people to refuse to buy games unless they are hugely (80%+) discounted. Their new expectation of price is "cheap". This seems to be regardless of what the regular retail price is. $60? Wait until it is $10. Oh it is normally $10? Wait until it is $3.
Steam helps this along with its nice email reminders when a game on one's wishlist is on sale.
That said, Valve's earlier policy of "we can put you on sale whenever we want" was interesting. A lot of developers objected, but from what I read (admittedly not much more than a handful of blog entries) Valve's knowledge of how to do pricing meant that their seemingly chaotic sale methodology (generally? always?) resulted increased revenue for games which had been put on sale.
Is it not possible that this is just market segmentation? Like, the people you are referring to would never pay for those games otherwise. With the discount mechanism in place Steam gets to take their money too. People who are more flexible regarding game prices are not going to wait months for a discount and just pay the full price.
It would certainly be interesting to understand if it's a functional long tail.
For me personally, I often end up picking up games on sale or in Humble Sales (which have Steam keys) because my two gaming PCs are ancient by modern standards, so I'm generally buying games which are a few years old to run on them.
The former point may well factor into Valve's thinking; they have very good information on people's hardware, after all.
I love Steam sales but I feel pain for the developers.
The number of AAA titles in my steam library that I've barely played is pretty high. I could go without buying any games for at least a year before I would consider buying another one.
My time for playing games has become so small that I'm well behind the release curve, so games that I do want to play are frequently < $15.
> Is it not possible that this is just market segmentation? Like, the people you are referring to would never pay for those games otherwise.
I can't speak for other people, but as someone who lives in Eastern Europe where the monthly minimum wage is around $200 (two hundred USD), I definitely fall into this segment of the market.
Before Steam became this widespread I didn't buy games at all, even when I started working. $60 is a lot here.
> Their new expectation of price is "cheap". This seems to be regardless of what the regular retail price is. $60? Wait until it is $10. Oh it is normally $10? Wait until it is $3.
That's the expected behavior with Steam's shitty EULA, which is "no refunds, ever".
Bought a game and didn't liked it? Your loss. Bought a game that crashes all the time? Your loss. Bought a game that runs at 10 FPS because it uses some shitty engine? Your loss. Bought a game and there are no servers with an acceptable ping to play on? I'm repeating myself...
It's only logical that people are then averse to sink money on unknown titles unless it's cheap enough to be an non-issue.
I don't think this is correct. The majority of people never have those problems.
Note too that they do give out refunds, but admittedly not as much as I'd like. However, they did refund Splinter Cell: Conviction (which didn't work well on my hardware not due to an incompatibility but do to the performance) and Mirror's Edge (which I tried to play through WINE unsuccessfully.)
>The majority of people never have those problems.
I disagree completely. The majority of people I know who use Steam have a huge library of games that have never been played because they bought most of them as an impulse purchase when they were on sale, and then realized the game wasn't worth playing for one reason or another. It's kind of telling for the market when in a large amount of cases the most reasonable thing to do is to just not use Steam altogether, but their promotions have to it that people forget about that. It's just the same sleazy, destructive sales tactics that we've seen a million times over. It's no surprise that their software prices are trending towards zero in an Apple/Google-esque spiral.
That isn't really a refutation of what I said. I'm saying that most people don't have the problems GP described: buying a game that is unplayable and not being able to get a refund. Not only are most people able to play their entire game library (even if not permitted by time or interest,) I've been able to get refunds even in exceptional circumstances.
Doesn't matter. The minority of people with issues are always the loudest on support and general game discussion forums. Couple this with the fact that the majority of people are risk averse by nature and you get a pretty good explanation for the observed behaviour.
> I know multiple people to refuse to buy games unless they are hugely (80%+) discounted.
I'm probably in that camp. Some might even dismiss it as entitlement, but really I just have a lot of sources of free entertainment (including all the games I bought over the last five years that still work just fine).
I remember paying $60 for a Genesis cartridge, back when graphics and immersion were improving every year. Seems crazy though, I don't feel like I live in that world anymore.
I've got to imagine it's tough to compete in a market where customers can use the product forever and there's no obsolescence.
>> I remember paying $60 for a Genesis cartridge, back when graphics and immersion were improving every year. Seems crazy though, I don't feel like I live in that world anymore.
I wonder if the fact that we're talking digital downloads (vs shelf space at Walmart) has been the driving factor behind "race to the bottom". As a developer, I don't like the "race to the bottom" because it means I have to charge less to remain competitive.
As a consumer, I like it because I get quality games (sometimes) for free or like $5. Thinking about how I used to have to beg for mommy to buy me a $60 game when I was 10 yrs old. This would be a $5 effort now. Could I have gotten away with being a more disobedient kid? Nah, prolly not.
Thing is, now the race to the bottom has just (irreversibly?) skewed price expectations so I still hear consumers complaining "oh it costs $5? I'm not going to play that. SKIP"
And in my head I'm thinking — "wow...you spend how much on your coffee EVERY DAY, COMPULSIVELY, yet you scoff at a complete body of work someone is selling to you for $5?"
> And in my head I'm thinking — "wow...you spend how much on your coffee EVERY DAY, COMPULSIVELY, yet you scoff at a complete body of work someone is selling to you for $5?"
Yeah, but, I don't know many people who will harvest, ship, and roast coffee beans just for fun.
I'm mostly just thrown by everyone casting this as some insane race condition, some producer lunacy that's confusing irrational consumers.
Maybe consumers are the smart ones, and they're sending a deliberate signal to producers. Maybe we're saying, "Hey, we have distraction mostly covered as a human problem. And there are a lot of these other human problems to work on. If you're smart and can pitch in other places where we have greater needs, where it's harder to attract talent because the fields aren't as inherently rewarding, then we'll toss you better returns. (If you can go without good returns, then no big deal, just do what you love.)"
I don't think markets are always (or even usually) rational. But if we're pitting today's game prices against the monopolistic rents charged by consoles a couple decades ago... I don't first assume today's prices are the irrational ones.
> Seems crazy though, I don't feel like I live in that world anymore.
The games take just as much time and effort to develop. The artists put just as much care and love into the each character. The programmers take just as much pride in their intro sequence.
Sure we don't have generational jumps anymore, rather we have developers and designers who now have the tools to bring into being an immense array of visions.
That those visions are now possible does not make them any less valuable!
> The games take just as much time and effort to develop. ... does not make them any less valuable!
I'm not sure the amount of effort is the best way to determine something's value.
If you spent a million hours making me a house out of pizza, I'm probably still not going to move in. If you dig a thousand feet underground to bring me a normal igneous rock, I'm not going to wear it like jewelry. The price for these things, and I'd argue the value of these things, would be very low.
Part of what makes your efforts valuable is whether or not you are filling a pressing need.
If we were in a tribal society surrounded by coconut palm trees, and you start walking to faraway villages to bring back their identical coconuts, you're not bringing back something of value. You're really just wasting everyone's time. If you learn medicine, or go fetch water, that's a little more heroic.
Today we live in an era where we're surrounded by an abundance of entertainment. I could spend the rest of my life and not make a dent in Project Gutenberg. And I don't think we can safely dismiss any of those experiences as valueless. I'm reluctant to believe that every new iPhone game is a far better experience than reading anything by, say, Lewis Carroll.
Maybe falling prices isn't a symptom of an ungrateful audience or a "race to the bottom," but an honest signal from the village of humanity that we've kind of got this human need for distraction covered.
Paid $75 (in 1987 money!) for The Legend of Zelda for the NES at a Toys "R" Us in Colma, CA. Sold all my Series 1 Voltron (with the toxic paint) at a garage sale to finance it. Still the most I've ever spent for a game, and it was worth every penny.
When I think about how expensive games appear to be nowadays, I think back to 8-year-old me and the sacrifices I made.
Eventually everything will just be "on-sale" all the time. Want to sell your little puzzle game for $5 a pop? List it at $20 and put it on sale nearly permanently for 75% off. You immediately get the benefit of this being a "$20 game" in the eye of the consumer as well.
This really is an expected outcome, since people do fall for this effect.
It'll be interesting how Steam will handle that, since that practice is explicitly illegal in many places as misleading advertising - i.e, you can advertise something as x% off only if it really was offered at that higher price for some fixed period; and those laws can interpret Steam as the store responsible for it.
>>Their new expectation of price is "cheap". This seems to be regardless of what the regular retail price is. $60? Wait until it is $10. Oh it is normally $10? Wait until it is $3.
I do this, but it depends on the game.
There are three categories of games for me: those that are first-day buys, those that I become curious about (via review sites and friends) but am not dying to play, and those I am just not interested in. I almost always pay full price for games in the first category. I wait for the games in the second category to go on sale. And the games in the third category I don't play even if they are deeply discounted.
I wonder if the final, low price here will end up empowering consumers more or instead just reduce quality. HN often laments the rise of free-to-play games with IAP, and I wouldn't be surprised if even more of the industry tends towards that with this change.
That said, hopefully I'm wrong, and this change will decrease prices for consumers, increase sales and revenue for developers, and make everyone happy :) (But that doesn't seem likely, IMO.)
> That said, hopefully I'm wrong, and this change will decrease prices for consumers, increase sales and revenue for developers, and make everyone happy :) (But that doesn't seem likely, IMO.)
I very much hope that would be the case instead of turning Steam into something akin to App Store with thousands upon thousands of "free" games and their cheap clones riddled with advertising, boosts and so on.
There's pretty much no way a race to the bottom benefits gamers. This has already been shown by what happened on the iOS and Android marketplaces, and the effects will only be worse on PC and consoles:
The existing industry is pretty much built around higher prices for games, and the things that come with them - large amounts of content, replayability, polish, story components with voiced dialogue, cutscenes, etc.
There are many developers who are able to subsist happily on sales numbering in the tens of thousands, because they can charge a reasonable price for their game while developing it on a low budget, while on the other end you have studios that sink hundreds of millions into AAA video games that they sell for $60 + additional DLC packs down the line. Both of these types of games exist in the same industry, roughly occupying opposite sides of it. In the mobile market, both of those game types get suffocated by the manipulative F2P games that milk as much money as they can out of players before they churn.
> In the mobile market, both of those game types get suffocated by the manipulative F2P games that milk as much money as they can out of players before they churn
No. In the mobile market, high production games have mostly failed because it's the wrong medium for them. Low budget, high quality experiences exist and are successful if you look for them (Device 6, The Room, etc). But that place is NOT the top grossing chart, any more than the best food is found in the largest restaurant chains or the best music is in the MTV top 40.
I don't think 'free' is going to beat 'supercheap' any time soon. If anything 'free' is going to suffer at the hands of 'cheap': people have come to expect IAPs from 'free' games.
No, I don't expect F2P+IAP games to dominate the PC industry. They are a completely separate market segment from so-called "hardcore" or "AAA" gamers. It's like asking if Youtube would kill the market for Hollywood movies and TV shows.
I'm not even sure the premise is accurate. I'm pretty sure developers have been setting pricing on Steam for a while; we have control over the price of the game we're about to release.
But there's no limit on fixed costs for games. Presumably production could cost as much as a Hollywood blockbuster and be priced accordingly. Marginal costs aren't always everything.
Historically pricing a game too high hurts sales because many people have a limit of some sort on how much they can spend on games. If a single game costs a huge percentage of that (say 50 or 60%) they are reluctant to buy it even if it's well-reviewed because it might turn out to be bad, and then they have no more games budget left.
Games prices have actually come down compared to the bad old days of paying upwards of $90 for Super Nintendo carts, for example.
It is the case that production costs have been shown to be scalable; hundreds of millions go into developing a game like Bioshock: Infinite or the latest Call of Duty, and hundreds more go into marketing and sales. In practice, it is possible for a publisher to recoup that investment and earn more on top, even if it's really difficult.
Games are already priced much higher than hollywood blockbusters. To see a blockbuster in the theaters costs about $10 per person, to buy a AAA game on release date costs $60 or more. And it's not as though the market is rejecting these prices, GTA V made around a billion dollars in revenue within its first week of release, games are already some of the biggest entertainment launches in history.
GTA V is also a game that easily costs a dollar an hour for play. That's much less than $10 for 2 hours.
When looking at the price of games, you have to remember you're normally going to be spending much more time playing that game than you are watching a single ticket's worth of a movie.
A similar argument could be made for physical movie media vs movie tickets. You pay $30 for a dvd, sure; but, you and 5 of your friends can all sit down and watch that DVD in the comfort of your home. 3 years later, you can watch it again, and again. The cost per hour of that DVD can easily, if you're an avid, repeat movie watcher, drop down to the same price per hour that you're paying for a game.
On the other hand, if you're buying a modern FPS for the story only and hate multiplayer, then you're getting about 6 hours of play for $60; and that's about the cost of a movie.
Coincidentally, there are many story-based single player games that in practice (and IMHO deliberately) are just that - consumed like movies; where the pacing, player input, difficulty and choice-options are tweaked so that for the things that most players will do, they in fact get a reasonable action movie on their screen for those 6-10 hours.
>There is an issue with Bertrand Competition: it excludes the impact of marketing; it assumes that one pair of shoes is as good as another pair of shoes; it doesn’t factor in the cost of comparison, or the cost of switching, all of which are real.
Well that's an understatement. There's definitely a race to the bottom and it saddens me. At the same time, games aren't commodities. Shoes is a pretty laughable analogy.
I've been excited about some devs recently fighting against the race to the bottom:
People have no sense of history. When Notch announced he was doing an increasing pricing model, Minecraft wasn't Minecraft. He had only been working on the game for a few weeks, it wasn't popular, and it had almost no features (e.g. no crafting). Now when someone suggests the same kind of model, like Rohrer is doing with The Castle Doctrine, gamers are outraged.
It's all Steam's own dumb fault for having no refunds, turning Steam games into lottery tickets. My Steam library is made up of 90% junk I wasted money on and 10% good stuff I got a fair value from. That means I have to pay less for every game just to get a fair value out of Steam as a whole. THAT is why people want to pay $20 for games that truly are worth $60.
Better reviews and player feedback would help; Valve recently started showing user reviews on game pages, which might be useful. Previously all you had was a metacritic score (nearly useless) and the utterly meaningless 'friends who own this game' UI, which has been broken and displaying incorrect data for years.
Steam also has virtually zero discovery features, which makes it hard to find games that actually fit your interests. The new tagging feature might solve this eventually, once it stops being complete noise.
User game reviews are pretty worthless due to the trend of angry users spamming bad reviews to punish the developer whenever they're upset about some small thing.
It shows how many hours the user has played, which is a very effective mechanism for filtering reviews. It was suggested on HN that this could be used for the mobile app stores as well and my own experience is that reading a review and rating from someone who has provably put a lot of time into a game is invaluable.
Yeah. In my opinion, Valve should be using statistics like time played and number of achievements to try and measure player engagement so they can at least get a rough idea of how popular a given game is (along with things like how long an average playthrough is, whether it has replay value...)
That, plus with Steam's DRM, they could steal my collection any time they decide they don't like me for some reason, or something causes them to go under.
I'll never pay full price for a game until I can be assured that 50 years from now my grandkids can piece together a PC emulator and start playing my old game collection.
The problem is with older games. For instance, the first Bioshock doesn't have sound on Windows 7 and up. You have to play it in XP mode to get the sound working.
Some games don't work at all. That's why GOG.com became so popular actually, because they make sure their games work on newer versions of Windows. Steam, however, doesn't care.
I can't use metacritic. My tastes lie way outside the norm. The majority of highly-rated AAA games are extremely boring to me. The ones I do like tend to be sequels to games I already know I like (Elder Scrolls, Total War, Civilization).
The article makes an analogy with shoes but in order for it to hold developers would have to be making identical games.
Many people wait for the next release in a series and many people buy on release day.
If you just want to kill a couple hours then sure, any game might be good enough for you as the consumer. But if you want to play Action Game 9: The Bad Guys Lose then that's your only option.
The authors big mistake is in equating a commodity good like shoes with a creative good like games. If you want to read the latest Game of Thrones, you aren't going to say, "That's 30 bucks! I'll just buy Harry Potter."
> If you want to read the latest Game of Thrones, you aren't going to say, "That's 30 bucks! I'll just buy Harry Potter."
But if you want both of them, you might end up picking the one that goes on sale first.
There are some books I buy no matter what, but I also have a list of "books to read someday" that is so long, and growing, that I'll likely never reach the end of it. And a large number of those books are fairly interchangeable in my mind, and so it comes down to which offers are shoved in my face at the right moments.
I'm not sure, but I think I do recall a rumor (from the recent Gabe Newell AMA on Reddit) that Valve are intending on phasing out the Greenlight system in favor of an all-inclusive model, similar to Desura.
This might just be the beginning.
I think it's a shame, because quite honestly, I've always seen Steam as a badge of honor for game developers. To get on Steam means you have a well polished end product ready for major distribution. Of course, with the advent of Greenlight, crap did start getting past the radar from time to time, but overall there was still an equilibrium maintained.
I'd hate to see Steam head the same direction as Google Play. There's plenty of other distribution platforms to pick from if one wants to instantly submit their games for sale.
I didn't read that as implying everyone would be publish to Steam. In the context of related comments from Valve, I believe they're considering allowing others to more easily use the Steam distribution system to build their own storefronts.
This would allow third parties to create their own Steam-like stores, built on Steam, collating games from whoever submits them - imagine Humble Bundle, or a store that exclusively sells 3d platformers, or a publisher with a storefront with only their own games. Valve could still pick games out of these to put them on the official Steam store front. Plus Valve still gets a x% cut of each sale.
Race to zero? Well, games are an obsolete industry then, they should find something else to make money instead of complaining. Why not play their games live for an audience? Or sell game merchandize, like t-shirts.
Sarcasm off.
Yes, I'm making a sarcastic parallel to what people say about the music industry. My real opinion is that we should structure industries such that people who create value for us can profit from it.
I don't believe in the "invisible hand" and the market adjusting itself always better than with policy intervention (which is cargo cult economics, not to mention a historical impossibility, for there was never any market observed outside of policy intervention).
I also don't believe that just because some technology exists, people should adapt to it. I believe that people, or societies, should shapewhat technology they use and how they use it according to their will, and not the reverse (each new technology presented as inevitable fatalism).
Yeah. Believing that companies ought to disappear because of the invisible hand of the market is like believing that things ought to stay down because of the invisible hand of gravity.
Yes. So no airplanes, helicopters, air-baloons, spacecrafts, lifts or anything similar.
And of course, one is a physical law, the other is a theoritical notion about how economies WOULD work in ideal conditions that don't correspond to any objective histrorical reality and that the feasibility of which has even been disputed in theory.
This does happen. Take Dota 2 for example. Valve makes money from people watching games live, as well as from selling in-game merchandise, such as hats, and armor.
It seems like more people are making music than ever before. Why is that the case, if the conventional wisdom is that it is a terrible industry in which it is impossible for musicians to make a living? Same question for free apps.
>It seems like more people are making music than ever before. Why is that the case, if the conventional wisdom is that it is a terrible industry in which it is impossible for musicians to make a living?
First, "making music" and "making a living from music" is not the same.
Second, the reason is that the friction to recording and publishing is lower than before.
I don't think I conflated making music and making a living from making music...
Your "second" point seems like a good thesis to me: the amount of musical recordings made is correlated with the ease of making musical recordings rather than with the ease of making a living off of them. Thanks.
> I also don't believe that just because some technology exists, people should adapt to it.
It doesn't matter what you believe. History has shown us that technology wins every time. Fighting against it is a losing battle. Better to embrace and find new markets than hang onto dying ones, I say.
>It doesn't matter what you believe. History has shown us that technology wins every time. Fighting against it is a losing battle.
Not really. That's totally fatalist and unworthy of a civilized society. It's a regression to pre-democratic and superstitious eras.
Of course that's an value judgement (an ethical statement). So, the question remains, is what you said true in a pragmatic sense, ie. a historical inevitability?
I say no. We have examples of civilizations that had advanced technology or techniques (that could have been used for lots of stuff), but opted to not deploy it or futher pursue it. The main reason a lot of technology was adopted was because other nations used it and had a war/economic advantage over yours.
We also have examples of technology that was superior but people opted not to adopt, from Betamax to Lisp machines. Smalltalk over Java. (Of course you can argue that it didn't won for economic/business reasons. Well, isn't that a statement in favor of technology not being enough to win in itself?)
(Plus, if we constrain the "technology wins every time" to only consider technology that actually won, then we're just making a tautological statement).
It might be fatalist but it's certainly not regressive, undemocratic, or superstitious. It's merely observational. Technology changes markets.
Beta vs VHS isn't interesting or even relevant. Your other examples are also too microscopic. The VCR itself, though, changed the markets immensely! It created the whole new market of home viewing and without it we wouldn't have time shifting (leading to DVRs) or Blockbuster (leading to Netflix). Then when the technology moved on (streaming and DVDs), those same markets died (Blockbuster, again).
If a market can't adapt to new technology, it deserves to die—we shouldn't be curbing new technology just to prop up outdated markets.
If this includes the gaming market, so be it. Something new/better will rise up in its place (games will never go away at this point). I actually don't see this as fatalistic—I find these changes exciting. Humans are inventive and I love to see what we come up with next.
Obviously, as the author alluded to at the end, this isn't going to happen for every single game.
If you look at either the Google Play or iOS App Store you'll see that there are plenty of well-known games in both free and PSID categories.
I myself was just playing a riveting game of Kingdom Rush (a Tower Defence game) which I paid £1.29 for. Considering how much time I spent playing Tower Defence in WC3 as a teenager I'd say I got a real bargain to be able to play this for only £1.29.
I am not alone in my ability and willingness to pay. Just look at those charts. People still do and always will pay for games as long as this fact continues to be true:
Obviously, this isn't going to happen for every single game.
If you look at either the Google Play or iOS App Store you'll see that there are plenty of well-known games in both free and PSID categories.
I myself was playing a riveting game of Kingdom Rush (a Tower Defence game) which I paid £1.29 for. Considering how much time I spent playing Tower Defence in WC3 as a teenager I'd say I got a real bargain to be able to play this for only £1.29.
I am not alone in my ability and in fact desire to pay. Just look at those charts. People still do and always will pay for games as long as this fact continues to be true:
Obviously, this isn't going to happen for every single game.
If you look at either the Google Play or iOS App Store you'll see that there are plenty of well-known games in both free and PSID categories.
I myself was playing a riveting game of Kingdom Rush (a Tower Defence game) which I paid £1.29 for. Considering how much time I spent playing Tower Defence in WC3 as a teenager I'd say I got a real bargain to be able to play this for only £1.29.
I am not alone in my ability and in fact desire to pay. Just look at those charts. People still do and always will pay for games as long as this fact continues to be true:
One thing I don't think many people have realised yet is that in addition to the cheap games and freemium model, Steam is selling other goods too, under the guise of giving away virtual goods for free.
These goods are given away for free - trading cards, for example. However, in order to actually trade them you have to transfer your money into Steam to buy them from another player. That money cannot be withdrawn, it can only move around the ecosystem and eventually get spent on games. Effectively, they have already made the sale, it's just a matter of waiting for you to redeem the money - or not.
I find it interesting that people are willing to pay other users real money for these goods, when (I assume) they wouldn't be willing to pay the money directly to VALVE - even when this is effectively the end result. It's an extension to the freemium model in my eyes.
Hardly. Most people just have completely no understanding of the concept of consumer surplus and the difference between per unit revenue and total revenue. People will still pay a lot of money for games for the foreseeable future, but they'll also sometimes pay less money for games, and the result will be more total revenue than if there were just one fixed price.
This article is sensationalism dressed up as economic reasoning. In the opening paragraph, the author fails to make the distinction between profits trending toward zero versus prices trending toward zero in a free market. This undermines his argument even without the very real and substantial caveats he waves away later in the piece.
Second, while the marginal cost to sell one copy of a game is effectively zero in electronic marketplaces, the gross cost of making a game is never zero, not even for indie developers, because if nothing else it costs them their time. What we should then expect to see is a situation where, assuming a game is successful, a game sells at some non-zero price the market will bear until it earns its costs back, with steep discounts following. Of course, it is more than possible the game will simply lose money.
We should expect this to be true even in a world where games are sold purely in electronic form and those markets are flooded with free content (which is to say, developers willing to sell their games at a loss). Come to think of it, that's pretty much precisely what we observe in the games industry today. Where's the beef?
Gross cost is basically irrelevant when you are talking about pricing in a perfect competition. The point is that producers cannot set their price because if they set it any higher, somebody else will undercut them.
I think the correct mainstream economic interpretation is that games are highly differentiated, meaning that no game can completely undercut another game because they are never the same. This means that the perfect competition model and argument do not apply and thus MC != MR in the game industry.
Then how about humble indie bundles with steam keys then, where you can get game bundles for $1 and even bigger game bundles for an average of $4.50? The price of the games end up being less than $1.
I buy a lot of shoes and games and it is NOT the same thing. I go crazy when shoes go on sale because as a woman I can never have enough shoes but I have learnt not to spend money on games that I will never end up playing or play for a few hours and get bored - just because they were on sale.
Games have been experimenting with pricing models for a while and subscription based models are tricky, unless you are WOW/EVE. As a developer your cost does not diminish once the game has been published, specially if you are doing this as a longterm business. Pricing integrity and a model that generates revenue through virtual and in-game economies would be a good mix, in my opinion.
I bought a game last week on sale from Steam that used UPlay DRM and the CD key was found to be "already used." Opened a ticket with Ubisoft Support after Steam said they could do nothing for me and it took a week for Ubisoft to say "sorry we can't get you a new key" and yet Steam is still selling it.
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[ 3.1 ms ] story [ 155 ms ] threadSteam helps this along with its nice email reminders when a game on one's wishlist is on sale.
That said, Valve's earlier policy of "we can put you on sale whenever we want" was interesting. A lot of developers objected, but from what I read (admittedly not much more than a handful of blog entries) Valve's knowledge of how to do pricing meant that their seemingly chaotic sale methodology (generally? always?) resulted increased revenue for games which had been put on sale.
For me personally, I often end up picking up games on sale or in Humble Sales (which have Steam keys) because my two gaming PCs are ancient by modern standards, so I'm generally buying games which are a few years old to run on them.
The former point may well factor into Valve's thinking; they have very good information on people's hardware, after all.
And... sometimes I don't get around to playing those games, because something more interesting comes along before I get around to it.
So yes, the developer isn't making as much per user, but I believe the increased volume would often make up for it.
The number of AAA titles in my steam library that I've barely played is pretty high. I could go without buying any games for at least a year before I would consider buying another one.
My time for playing games has become so small that I'm well behind the release curve, so games that I do want to play are frequently < $15.
I can't speak for other people, but as someone who lives in Eastern Europe where the monthly minimum wage is around $200 (two hundred USD), I definitely fall into this segment of the market.
Before Steam became this widespread I didn't buy games at all, even when I started working. $60 is a lot here.
That's the expected behavior with Steam's shitty EULA, which is "no refunds, ever".
Bought a game and didn't liked it? Your loss. Bought a game that crashes all the time? Your loss. Bought a game that runs at 10 FPS because it uses some shitty engine? Your loss. Bought a game and there are no servers with an acceptable ping to play on? I'm repeating myself...
It's only logical that people are then averse to sink money on unknown titles unless it's cheap enough to be an non-issue.
Note too that they do give out refunds, but admittedly not as much as I'd like. However, they did refund Splinter Cell: Conviction (which didn't work well on my hardware not due to an incompatibility but do to the performance) and Mirror's Edge (which I tried to play through WINE unsuccessfully.)
I disagree completely. The majority of people I know who use Steam have a huge library of games that have never been played because they bought most of them as an impulse purchase when they were on sale, and then realized the game wasn't worth playing for one reason or another. It's kind of telling for the market when in a large amount of cases the most reasonable thing to do is to just not use Steam altogether, but their promotions have to it that people forget about that. It's just the same sleazy, destructive sales tactics that we've seen a million times over. It's no surprise that their software prices are trending towards zero in an Apple/Google-esque spiral.
e to below: no I didn't?
Citation needed.
Doesn't matter. The minority of people with issues are always the loudest on support and general game discussion forums. Couple this with the fact that the majority of people are risk averse by nature and you get a pretty good explanation for the observed behaviour.
Besides, Steam games don't come in a box. It's a lease contract anyway, so refunds should required zero attrition.
I'm probably in that camp. Some might even dismiss it as entitlement, but really I just have a lot of sources of free entertainment (including all the games I bought over the last five years that still work just fine).
I remember paying $60 for a Genesis cartridge, back when graphics and immersion were improving every year. Seems crazy though, I don't feel like I live in that world anymore.
I've got to imagine it's tough to compete in a market where customers can use the product forever and there's no obsolescence.
I wonder if the fact that we're talking digital downloads (vs shelf space at Walmart) has been the driving factor behind "race to the bottom". As a developer, I don't like the "race to the bottom" because it means I have to charge less to remain competitive.
As a consumer, I like it because I get quality games (sometimes) for free or like $5. Thinking about how I used to have to beg for mommy to buy me a $60 game when I was 10 yrs old. This would be a $5 effort now. Could I have gotten away with being a more disobedient kid? Nah, prolly not.
Thing is, now the race to the bottom has just (irreversibly?) skewed price expectations so I still hear consumers complaining "oh it costs $5? I'm not going to play that. SKIP"
And in my head I'm thinking — "wow...you spend how much on your coffee EVERY DAY, COMPULSIVELY, yet you scoff at a complete body of work someone is selling to you for $5?"
Yeah, but, I don't know many people who will harvest, ship, and roast coffee beans just for fun.
I'm mostly just thrown by everyone casting this as some insane race condition, some producer lunacy that's confusing irrational consumers.
Maybe consumers are the smart ones, and they're sending a deliberate signal to producers. Maybe we're saying, "Hey, we have distraction mostly covered as a human problem. And there are a lot of these other human problems to work on. If you're smart and can pitch in other places where we have greater needs, where it's harder to attract talent because the fields aren't as inherently rewarding, then we'll toss you better returns. (If you can go without good returns, then no big deal, just do what you love.)"
I don't think markets are always (or even usually) rational. But if we're pitting today's game prices against the monopolistic rents charged by consoles a couple decades ago... I don't first assume today's prices are the irrational ones.
The games take just as much time and effort to develop. The artists put just as much care and love into the each character. The programmers take just as much pride in their intro sequence.
Sure we don't have generational jumps anymore, rather we have developers and designers who now have the tools to bring into being an immense array of visions.
That those visions are now possible does not make them any less valuable!
I'm not sure the amount of effort is the best way to determine something's value.
If you spent a million hours making me a house out of pizza, I'm probably still not going to move in. If you dig a thousand feet underground to bring me a normal igneous rock, I'm not going to wear it like jewelry. The price for these things, and I'd argue the value of these things, would be very low.
Part of what makes your efforts valuable is whether or not you are filling a pressing need.
If we were in a tribal society surrounded by coconut palm trees, and you start walking to faraway villages to bring back their identical coconuts, you're not bringing back something of value. You're really just wasting everyone's time. If you learn medicine, or go fetch water, that's a little more heroic.
Today we live in an era where we're surrounded by an abundance of entertainment. I could spend the rest of my life and not make a dent in Project Gutenberg. And I don't think we can safely dismiss any of those experiences as valueless. I'm reluctant to believe that every new iPhone game is a far better experience than reading anything by, say, Lewis Carroll.
Maybe falling prices isn't a symptom of an ungrateful audience or a "race to the bottom," but an honest signal from the village of humanity that we've kind of got this human need for distraction covered.
When I think about how expensive games appear to be nowadays, I think back to 8-year-old me and the sacrifices I made.
It'll be interesting how Steam will handle that, since that practice is explicitly illegal in many places as misleading advertising - i.e, you can advertise something as x% off only if it really was offered at that higher price for some fixed period; and those laws can interpret Steam as the store responsible for it.
I do this, but it depends on the game.
There are three categories of games for me: those that are first-day buys, those that I become curious about (via review sites and friends) but am not dying to play, and those I am just not interested in. I almost always pay full price for games in the first category. I wait for the games in the second category to go on sale. And the games in the third category I don't play even if they are deeply discounted.
That said, hopefully I'm wrong, and this change will decrease prices for consumers, increase sales and revenue for developers, and make everyone happy :) (But that doesn't seem likely, IMO.)
I very much hope that would be the case instead of turning Steam into something akin to App Store with thousands upon thousands of "free" games and their cheap clones riddled with advertising, boosts and so on.
The existing industry is pretty much built around higher prices for games, and the things that come with them - large amounts of content, replayability, polish, story components with voiced dialogue, cutscenes, etc. There are many developers who are able to subsist happily on sales numbering in the tens of thousands, because they can charge a reasonable price for their game while developing it on a low budget, while on the other end you have studios that sink hundreds of millions into AAA video games that they sell for $60 + additional DLC packs down the line. Both of these types of games exist in the same industry, roughly occupying opposite sides of it. In the mobile market, both of those game types get suffocated by the manipulative F2P games that milk as much money as they can out of players before they churn.
No. In the mobile market, high production games have mostly failed because it's the wrong medium for them. Low budget, high quality experiences exist and are successful if you look for them (Device 6, The Room, etc). But that place is NOT the top grossing chart, any more than the best food is found in the largest restaurant chains or the best music is in the MTV top 40.
That being said, it's thought provoking.
Games prices have actually come down compared to the bad old days of paying upwards of $90 for Super Nintendo carts, for example.
It is the case that production costs have been shown to be scalable; hundreds of millions go into developing a game like Bioshock: Infinite or the latest Call of Duty, and hundreds more go into marketing and sales. In practice, it is possible for a publisher to recoup that investment and earn more on top, even if it's really difficult.
When looking at the price of games, you have to remember you're normally going to be spending much more time playing that game than you are watching a single ticket's worth of a movie.
A similar argument could be made for physical movie media vs movie tickets. You pay $30 for a dvd, sure; but, you and 5 of your friends can all sit down and watch that DVD in the comfort of your home. 3 years later, you can watch it again, and again. The cost per hour of that DVD can easily, if you're an avid, repeat movie watcher, drop down to the same price per hour that you're paying for a game.
On the other hand, if you're buying a modern FPS for the story only and hate multiplayer, then you're getting about 6 hours of play for $60; and that's about the cost of a movie.
Well that's an understatement. There's definitely a race to the bottom and it saddens me. At the same time, games aren't commodities. Shoes is a pretty laughable analogy.
I've been excited about some devs recently fighting against the race to the bottom:
868-HACK - $6 on the App Store. http://indiestatik.com/2013/09/11/868-hack-sales/
The Castle Doctrine - $16. No sales ever. http://thecastledoctrine.net/seedBlogs.php?action=display_po...
Democracy 3 - $25 for an indie game and I think has only had one 50% sale. http://positech.co.uk/cliffsblog/2013/11/19/lessons-from-lau...
Minecraft is a similar example (~$27) but people tend to blow that off as not relevant to the conversation because any other game isn't Minecraft.
so true
GOG.com have that on sale, right now, with a 50% cut. I also seem to recall it being in at least one of their wider sales.
Steam also has virtually zero discovery features, which makes it hard to find games that actually fit your interests. The new tagging feature might solve this eventually, once it stops being complete noise.
So, is this like a requirement for having an app store? Rotten discovery features?
I'll never pay full price for a game until I can be assured that 50 years from now my grandkids can piece together a PC emulator and start playing my old game collection.
Some games don't work at all. That's why GOG.com became so popular actually, because they make sure their games work on newer versions of Windows. Steam, however, doesn't care.
Many people wait for the next release in a series and many people buy on release day.
If you just want to kill a couple hours then sure, any game might be good enough for you as the consumer. But if you want to play Action Game 9: The Bad Guys Lose then that's your only option.
The authors big mistake is in equating a commodity good like shoes with a creative good like games. If you want to read the latest Game of Thrones, you aren't going to say, "That's 30 bucks! I'll just buy Harry Potter."
Shoes aren't identical.
Competing shoes may be closer substitutes for each other than competing games (or, maybe not for popular cookie-cutter genres of games.)
But if you want both of them, you might end up picking the one that goes on sale first.
There are some books I buy no matter what, but I also have a list of "books to read someday" that is so long, and growing, that I'll likely never reach the end of it. And a large number of those books are fairly interchangeable in my mind, and so it comes down to which offers are shoved in my face at the right moments.
This might just be the beginning.
I think it's a shame, because quite honestly, I've always seen Steam as a badge of honor for game developers. To get on Steam means you have a well polished end product ready for major distribution. Of course, with the advent of Greenlight, crap did start getting past the radar from time to time, but overall there was still an equilibrium maintained.
I'd hate to see Steam head the same direction as Google Play. There's plenty of other distribution platforms to pick from if one wants to instantly submit their games for sale.
This would allow third parties to create their own Steam-like stores, built on Steam, collating games from whoever submits them - imagine Humble Bundle, or a store that exclusively sells 3d platformers, or a publisher with a storefront with only their own games. Valve could still pick games out of these to put them on the official Steam store front. Plus Valve still gets a x% cut of each sale.
Sarcasm off.
Yes, I'm making a sarcastic parallel to what people say about the music industry. My real opinion is that we should structure industries such that people who create value for us can profit from it.
I don't believe in the "invisible hand" and the market adjusting itself always better than with policy intervention (which is cargo cult economics, not to mention a historical impossibility, for there was never any market observed outside of policy intervention).
I also don't believe that just because some technology exists, people should adapt to it. I believe that people, or societies, should shapewhat technology they use and how they use it according to their will, and not the reverse (each new technology presented as inevitable fatalism).
And of course, one is a physical law, the other is a theoritical notion about how economies WOULD work in ideal conditions that don't correspond to any objective histrorical reality and that the feasibility of which has even been disputed in theory.
First, "making music" and "making a living from music" is not the same.
Second, the reason is that the friction to recording and publishing is lower than before.
Your "second" point seems like a good thesis to me: the amount of musical recordings made is correlated with the ease of making musical recordings rather than with the ease of making a living off of them. Thanks.
It doesn't matter what you believe. History has shown us that technology wins every time. Fighting against it is a losing battle. Better to embrace and find new markets than hang onto dying ones, I say.
Not really. That's totally fatalist and unworthy of a civilized society. It's a regression to pre-democratic and superstitious eras.
Of course that's an value judgement (an ethical statement). So, the question remains, is what you said true in a pragmatic sense, ie. a historical inevitability?
I say no. We have examples of civilizations that had advanced technology or techniques (that could have been used for lots of stuff), but opted to not deploy it or futher pursue it. The main reason a lot of technology was adopted was because other nations used it and had a war/economic advantage over yours.
We also have examples of technology that was superior but people opted not to adopt, from Betamax to Lisp machines. Smalltalk over Java. (Of course you can argue that it didn't won for economic/business reasons. Well, isn't that a statement in favor of technology not being enough to win in itself?)
(Plus, if we constrain the "technology wins every time" to only consider technology that actually won, then we're just making a tautological statement).
Beta vs VHS isn't interesting or even relevant. Your other examples are also too microscopic. The VCR itself, though, changed the markets immensely! It created the whole new market of home viewing and without it we wouldn't have time shifting (leading to DVRs) or Blockbuster (leading to Netflix). Then when the technology moved on (streaming and DVDs), those same markets died (Blockbuster, again).
If a market can't adapt to new technology, it deserves to die—we shouldn't be curbing new technology just to prop up outdated markets.
If this includes the gaming market, so be it. Something new/better will rise up in its place (games will never go away at this point). I actually don't see this as fatalistic—I find these changes exciting. Humans are inventive and I love to see what we come up with next.
If you look at either the Google Play or iOS App Store you'll see that there are plenty of well-known games in both free and PSID categories.
I myself was just playing a riveting game of Kingdom Rush (a Tower Defence game) which I paid £1.29 for. Considering how much time I spent playing Tower Defence in WC3 as a teenager I'd say I got a real bargain to be able to play this for only £1.29.
I am not alone in my ability and willingness to pay. Just look at those charts. People still do and always will pay for games as long as this fact continues to be true:
All games are not created equal.
If you look at either the Google Play or iOS App Store you'll see that there are plenty of well-known games in both free and PSID categories.
I myself was playing a riveting game of Kingdom Rush (a Tower Defence game) which I paid £1.29 for. Considering how much time I spent playing Tower Defence in WC3 as a teenager I'd say I got a real bargain to be able to play this for only £1.29.
I am not alone in my ability and in fact desire to pay. Just look at those charts. People still do and always will pay for games as long as this fact continues to be true:
All games are not created equal.
If you look at either the Google Play or iOS App Store you'll see that there are plenty of well-known games in both free and PSID categories.
I myself was playing a riveting game of Kingdom Rush (a Tower Defence game) which I paid £1.29 for. Considering how much time I spent playing Tower Defence in WC3 as a teenager I'd say I got a real bargain to be able to play this for only £1.29.
I am not alone in my ability and in fact desire to pay. Just look at those charts. People still do and always will pay for games as long as this fact continues to be true:
All games are not created equal.
These goods are given away for free - trading cards, for example. However, in order to actually trade them you have to transfer your money into Steam to buy them from another player. That money cannot be withdrawn, it can only move around the ecosystem and eventually get spent on games. Effectively, they have already made the sale, it's just a matter of waiting for you to redeem the money - or not.
I find it interesting that people are willing to pay other users real money for these goods, when (I assume) they wouldn't be willing to pay the money directly to VALVE - even when this is effectively the end result. It's an extension to the freemium model in my eyes.
http://stratechery.com/2013/open-source-apps/
http://www.marco.org/2013/09/28/underscore-price-dynamics
http://tapity.com/yep-paid-apps-are-dead/
Second, while the marginal cost to sell one copy of a game is effectively zero in electronic marketplaces, the gross cost of making a game is never zero, not even for indie developers, because if nothing else it costs them their time. What we should then expect to see is a situation where, assuming a game is successful, a game sells at some non-zero price the market will bear until it earns its costs back, with steep discounts following. Of course, it is more than possible the game will simply lose money.
We should expect this to be true even in a world where games are sold purely in electronic form and those markets are flooded with free content (which is to say, developers willing to sell their games at a loss). Come to think of it, that's pretty much precisely what we observe in the games industry today. Where's the beef?
I think the correct mainstream economic interpretation is that games are highly differentiated, meaning that no game can completely undercut another game because they are never the same. This means that the perfect competition model and argument do not apply and thus MC != MR in the game industry.
Games have been experimenting with pricing models for a while and subscription based models are tricky, unless you are WOW/EVE. As a developer your cost does not diminish once the game has been published, specially if you are doing this as a longterm business. Pricing integrity and a model that generates revenue through virtual and in-game economies would be a good mix, in my opinion.