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This seems to disagree with what I've heard of Valve and Steam sales. That the bigger the discount, the more (total) revenue is made, almost across the board.

$50 game -> 50% off, 100 sales $50 game -> 75% off, 500 sales etc

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Where did you hear that from ? On the contrary. http://www.geekwire.com/2011/experiments-video-game-economic... "What we saw was that pricing was perfectly elastic. In other words, our gross revenue would remain constant."

In that interview, Gabe distinguishes between silent price changes and sales: silently changing the price had no effect on revenue, a promotion discount increased revenue.

Only in certain cases, and he mentions that they do not understand it well enough so they are still experimenting.

Yeah, but those are sales(aka short duration discounts). He noted a spike that eventually fell off. I bet the longer steam discounts see sales fall off in a similar manner.

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