Valve: Are games too expensive? | Hacker News Reader

Valve: Are games too expensive?

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16 pointswilliam4214 comments

That's impressive, BUT there are a couple of hidden variables in these stats:

Those that discounted their games by 10 percent saw a 35% uptick in sales--that's dollars, not units. A 25 percent discount meant a 245 percent increase in sales. Dropping the price by 50 percent meant a sales increase of 320 percent. And a 75 percent decrease in the price point generated a 1,470 percent increase in sales.

Namely,

1) There could be a strong correlation between previous sales and the discount publishers chose. Titles with very low sales might have been given a heavy discount, which means that the impressive percentage wise uptake for titles discounted 75% amount to low absolute sales figures.

2) There is no account of how the products were marketed during the campaign. If the heavily discounted titles went from low sales and almost zero visibility, to being splashed all over the front page, the price point would not be the explanation of the sales figures.

FYI: This article is from early 2009. The industry has moved a lot since then. Game prices on Steam are now much more flexible, although console game prices have remained steady (even in the face of stiff competition: a single 3DS game costs $40, which will buy you 40 great iOS games).

That's not an entirely fair comparison though: digital distribution where the cost per unit is virtually zero vs. costly ROM modules.

It's Nintendo's decision to create a system that requires such modules, and cause games to be priced accordingly.

It isn't like they haven't had five years notice on portable digital distribution.

Providing enough storage on the device itself for the kind of games you expect on a system like the 3DS might not be feasible. Ideally I'd like to purchase a few flash cartridges and write games I've purchased to them as I see fit, from the market app they've got on there now. There is definitely room for improvement.

In Japan in the 90's Nintendo had ROM burning booths installed in Japanese malls. Kids could write games to a cartridge for the equivalent of a few dollars. It was a huge success. Unfortunately I can't remember the name of it.

When looking at the Nintendo eco system you really need to remember that Nintendo primarily make a system to play Mario, Zelda and Pokémon on. They want a robust system. Cartridges, despite their inherent costs, offer child friendly, robust distribution that limits returns, copying and maximises their revenue.

Having said that I can't see them continuing with cartridges for much longer as their cash cow is being decimated by cheaper devices.

70€ for 10 hours of content of mediocre quality? Pass.

I mostly play multi player games nowadays with an occasional big content single player game. I only buy some multi player games upon release and mostly wait for single player games to become heavily discounted. This enables me to leverage the gathered information to buy classics at an acceptable price.

It's not that I cannot afford to pay the price. It just seems obscene and with all the supply of entertainment that is available today, I reckon there is really no need to pay such ludicrous rates.

I expect Steam games to go on sale often and don't buy until they drop below my $25 threshold. Since their sales (revenues) are increasing, that means I'm not as cheap as I thought...

However, the problem with playing with your pricing is the same reason why airlines don't massively discount unfilled seats.

Since the fuel is already paid for, why not discount those seats and make money? It's because people will expect the price to always be discounted near the end, ultimately leading to lower revenue.

If the results are legitimate and the market shifts, something like this could be a big deal. If these results could be applied across the industry... tripling the revenue of an entire industry could stimulate incredible changes.

Yes, games are too expensive. I can't understand why RAGE, just released a few days ago, would cost $60 on Steam. You can sort-of get away with it when you sell at brick-and-mortar stores, but digital distribution should cut the costs dramatically. Instead, you have to pay $60 to get a game on digital distribution when it comes out. That's why I wait for Steam sales. Occasionally great games that came out a year ago are on sale for a reasonable price.

Get out of my head!

I had also planned on buying RAGE but at $60, forget it! I know it will be discounted, maybe around Xmas, so why pay that much?

  The conclusion: The games industry is not pricing its products correctly.

Or it could mean that having a sale increases the number of sales.

Right, did you miss the bit about sales producing a sustained boost to rate of units sold even after the sales end?

He is talking about actual revenues, not units sold. If cutting the price in half gets you three sales where before you would have gotten one, is there any reason not to do it?

Most digitally-distributed games are still priced as though they are delivered on costly ROM modules. There wasn't a correction after the switch to optical media, but at least then there was the excuse of physical distribution costs. Also the fact that, as stated in the article, such experiments are hard to perform in retail. But the facts presented by Valve here paint a pretty clear picture. Some publishers have paid attention (this article is over 2 1/2 years old), most have not. But, it's their money.

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