Steam Sales and Personal Spending Habits

[madman3473]

Just for amusement I'm trying to figure out the results of Steam Sales. We all know that first and foremost everything Valve does is intended to make money. Lowering prices to make more money seems a bit counter-intuitive. But it won't take long to come up with some justification for it. Once everyone who's willing to pay top dollar has done so, you lower the price to pick up business from the tightwads. So why doesn't the price just start high and steadily decline. Why have weekend sales, summer sales, and Christmas sales? To pressure people. If you're tempted to buy and you can wait as long as you wan't, you may never get around to it. If you have 48 hours, not only do you have the temptation, you don't want to regret losing your chance.

There must be a downside though. When you slash so many prices by 50% - 75%; even 90%, people won't feel satisfied with the full price purchase. Do they lose money from this or do they just spread it out over more games? Do people buy four times as many games at a 25% discount? More than that? If they didn't I don't see how Valve would justify their sales.

Are there secondary effects that could be more interesting than customers just spending more money on games? I know I bought an indie game just because it was on sale. I've bought a lot more since that one. If not for that first sale years ago I would probably have never played an indie title.

So, how much more do we spend because of the Steam sales? How does that extra money affect the gaming industry? Do they suck some money away from the best-selling titles supporting and encouraging more diversity from less popular developers? Do the sales encourage more competition and better quality from developers?

[jim konopiarz]

Well, yeah. That's exactly the point. People buy four times as many games when prices are slashed (no matter how much). The reason is: it's cheaper that way:) No more reasons are required.
Mechanism is simple: People who are fully convinced are to buy game for full price. Those who are not totally convinced will buy it when it's 10% discounted, those who are not really into it will buy for 60% and those who will never play the game but want to see graphics will buy it when price's slashed by 80%
So the target is significantly increased. That's a hell of extra money spread over time.

With the weekly discount system on Steam one will find very soon that he has more games than he wished to in the library, and lifetime is not enough to play them all. That's side effect called addiction.

Developers selling online don't have to spend anything towards future income once game is released - apart from generating serial numbers (and patches and DLC); and game "on sale" gets second /third /fourth life. (vide: GOG).
What is worth is that Steam favors indie titles (I think that's after EA and Dragon Age 2 Crisis) so the good news is that niche studios are actually making money, without having to make AAA title. And without spending too much money on promotion and distribution. Sales support that. I'm aware that Valve is having a huge share in that pie, but still some of the great games would never see the light of the day if not for Steam.

The way I see it: this is fresh air to the system and new course for the gaming industry (that has become too stagnant). Big studios are making big money by making boring games. Indie/Greenlight seems a reasonable change, and please note that whenever AAA's are on sale there are always greenlight/indie titles next to it. So people are buing it (come on it's only 2$) and trying it. And that's how it goes.
And big names suddenly realised that big budget, more blood and bigger boobs are not a recipe for success, and they have to compete with small fries with small budget and great, playable titles that make big money. Creativity is the key.

All thanks to weekly/christmas/holiday sale system.

And yeah. This ain't charity; Valve is making money by making money for the others.
Enough money that they don't have be in rush with bloody Half Life 3.

[Kargor]

Originally posted by madman3473:

So, how much more do we spend because of the Steam sales?

I used to buy "budget" titles; nowadays I only buy sales (and cheap bundles, of course).

On the positive side, I'm more inclined to "just try" a game if it's basically given away for nothing. So in the end I might end up buying more titles, even though each individual title will be very cheap. Can't really say whether that affects the total amount of money spent for me, as I don't have a fixed "budget" for games and don't really keep track.

How does that extra money affect the gaming industry?

Well, they aren't getting rich from selling stuff to me, that's for sure.

Do they suck some money away from the best-selling titles supporting and encouraging more diversity from less popular developers?

I doubt anything can "suck money away" from billion dollar marketing campaigns and overhyped generic shooters. Certainly not a few indie titles that are sold for a couple breadcrumbs.

Do the sales encourage more competition and better quality from developers?

Hell no. Some titles are on sale every few days; my guess is that these don't generally sell at all. Sales are about lowering prices, either to get attention or to increase the player count, but they have nothing to do with quality. Quite the contrary -- lower quality means you'll "need" more sales.

Quality requires money, and money isn't usually obtained by lowering prices to -75% or lower, or by humblebundling it, or doing other stuff that basically gives the game away for nothing.

[madman3473]

On taking business from AAA titles: I don't know how much if any they take from AAAs. If I really want to get something I'll buy it. But I have bought $40+ games that weren't to important to me. If Steam were around back then, some of that $40 might have gone to something cheaper (even if I still bought the game later). Even if they suck 1% from the AAA market, it could still make an effect.

On competition and quality: Would games like World of Goo exist without these kind of sales? I have to say that some quality games have sprung forth as a result of ridiculous sales prices. I don't know how AAA dev's have responded or will respond to the low end 'competition'. And maybe some people will enjoy nothing less than the hottest AAA titles. But there is an audience for the sub $5 games. Even if they don't touch the AAAs I think someone's benefiting from them competing with each other. To be honest I was more impressed with World of Goo than some titles like Oblivion.

[madman3473]

Thinking a bit more about it... Portal is an example of a colege project directly contributing to a lead game. Valve has purchased mods and other amateur projects and dumped a ton of money on them to create blockbusters. I'd be surprised if something like this never happened with Indies.

And although I've been sidetracked with the effect of Indies on the market, AAAs go on sale to! I picked Bio-Shock up for $5. I picked Arkham City up for about the same. With deals like that I'm far more hesitant to pay $50 for one game. There's no way I could buy as many games as I do if I paid $40+ for each. Even if I couldn't budget worth a damn I'd go broke. This also encourages me to seek greater variety and quality. And yet... Some developers still can't be bothered to extend their PC ports to take advantage of the extra keys on my keyboard. You'd think purchasing habits like this would have some effect on the market. If something's limiting the effect of the extra competition what could it be? Surly some devs have had to look at their product and say 'We need to put in a little more time and effort to stay on top.' Unfortunately I can't just look into an alternative time-line to see whether the game industries quality would have fallen or risen without Valve's sales. But my reasoning guides me to think even AAAs have had to respond in some way to a more competitive market. One can always hope progress will be made.