Steam’s game pricing psychology

Gabe Newell talks about heavy Steam discounts and the attraction of free-to-play
Darren Allan

October 24, 2011
Steam Store

Gaming is an expensive habit. A freshly released triple A console title will still run you to £40, unless you can be patient and can pick it up later on, or pre-owned.

Even then, an increasing amount of game publishers are introducing schemes to eke another tenner out of those second-hand purchases with online passes for multiplayer.

However, while the top end of the gaming world is singing the same old tune, there are an increasing amount of bargains to be had with the advent and increased usage of digital distribution.

Quality games – some of them indie developed – are now coming out on the likes of Xbox Live for a tenner. Many big name massively multiplayer games have made, or are about to make, the leap to free-to-play, dropping subscription fees in favour of in-game micro-transactions for items and premium benefits.

Funcom’s Age of Conan, Star Trek Online, City of Heroes, DC Universe Online and Lineage II have made the move to, or are about to launch, with this increasingly popular model. So it obviously holds water to some degree.

And indeed Valve’s Gabe Newell has been talking to Rock, Paper, Shotgun about the success the company has had with free-to-play labelling, and discounts on their digital game delivery platform Steam.

Apparently, Valve has been experimenting with the manner in which they introduce Steam discounts, tallying up the sales with different approaches.

While a quietly launched discount caused sales to increase in line, maintaining profits at roughly the same level, a large, heavily promoted discount caused revenue to shoot up massively. Newell mentions profits increasing by a factor of forty, no less.

So now you know why there’s always a constant stream of sales on Steam. Currently you can pick up all the GTA titles, six of them, in a bundle for £6.79 (66% off).

Newell also highlights the distinction between calling something “free” and “free-to-play”, with the latter apparently being a draw for more punters, and hence more profit on micro-transactions and the like.

There’s a perceived value that “free-to-play” offers an ongoing level of support and development – of longevity – perhaps due to its association with MMOG’s subscription models.

The first game which Valve made free-to-play, Team Fortress 2, saw its user base swiftly increase five-fold.

Newell told RPS: “Why is free and free to play so different? Well then you have to start thinking about how value creation actually occurs, and what it is that people are valuing, and what the statement that something is free to play implies about the future value of the experience that they’re going to have.”

All this, of course, is good news for gamers who can look forward to more heavy discounts rolling out on Steam, and more titles going free-to-play.

At the other end of the spectrum, however, you’ll still have the likes of Call of Duty. Not only will that set you back the requisite £40, but Activision is also trying to bring subscription into the model in the form of Call of Duty Elite. Modern Warfare 3 is going to be one well milked cash cow.


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