Valve's Pricing Experiments Result in Time Travel and 40x Increases in Sales - Polidicks

[img]http://cdn.geekwire.com/wp-content/uploads/2011/10/newellfries.jpg?7794fe[/img] [i]Valve's Gabe Newell, left, and former Microsoft game chief Ed Fries.[/i] [quote=CS-Nation]Speaking at the WTIA TechNW panel, Valve's Gabe Newell offered up a surprising wealth of information regarding sales, Steam, and penetrating the Russian market. On the subject of the Russian market, Newell quickly silenced some of the skeptics who said that Russia spells doom for any developer for how high the piracy rate is there. Newell, however, said that behind only Germany, Russia is now Valve's second largest "continental European market." A fact surely helped by the recent steps Valve has made to make purchasing games much easier through Steam in that region, even partnering up to allow people to directly add funds to Steam through physical terminals within Russia. As for sales, Valve has been conducting a number of experiments on you, whether or not you knew about it or not. [i]But then we did this different experiment where we did a sale. The sale is a highly promoted event that has ancillary media like comic books and movies associated with it. We do a 75 percent price reduction, our Counter-Strike experience tells us that our gross revenue would remain constant. Instead what we saw was our gross revenue increased by a factor of 40. Not 40 percent, but a factor of 40. Which is completely not predicted by our previous experience with silent price variation.[/i] But what accounts for this massive increase in sales? A sales increase by a factor of 40 is no laughing matter and Valve knows this. They have just one explanation: time travel. Well, almost. It's merely a matter of time-shifting revenue. Taking sales that would have been made over a long period in the future regardless, and condensing them into a much smaller frame of time. [i]Then we decided that all we were really doing was time-shifting revenue. We were moving sales forward from the future. Then when we analyzed that we saw two things that were very surprising. Promotions on the digital channel increased sales at retail at the same time, and increased sales after the sale was finished, which falsified the temporal shifting and channel cannibalization arguments. Essentially, your audience, the people who bought the game, were more effective than traditional promotional tools.So we tried a third-party product to see if we had some artificial home-field advantage. We saw the same pricing phenomenon. Twenty-five percent, 50 percent and 75 percent very reliably generate different increases in gross revenue.[/i] When Valve made Team Fortress 2 a "free to play" title, they found that other sales of TF2 related items increased by a factor of five. He noted that the difference is saying that something is "free to play" and not simply "free" as it "implies about the future value of the experience that they’re going to have." Partners of Valve stated that they have a 2-3% conversion rate of people who purchase a micro-transaction item on a free to play game, compared to the 20-30% conversion rate that Team Fortress 2 has going for it.[/quote] Sources, [url=http://csnation.net/content.php?678-Valve-s-Pricing-Experiments-Result-in-Time-Travel-and-40x-Increases-in-Sales]CS-Nation[/url] [url=http://www.geekwire.com/2011/experiments-video-game-economics-valves-gabe-newell]Geekwire (Interview)[/url]

What a boss.

ITT: they made buttlodes of emone giving shit away for free go gabe

keep being awesome valve

That picture made me think Gabe Newell stepped down as CEO. Iwaslike nooooooooooooooo

It's awesome to see a company realize that they can increase revenue without charging customers out the ass.

I want to know the current sales figures on CS 1.6. It's been out for over a fucking decade and still making mega dollars each year.

While the world is busy taxing and pricing the living hell out of you, Valve alone seems to be the only one willing to risk experimenting with the current market... Only fair - "He who dares, wins."

Oh Valve, shower us with your awesomeness.

my dream job, work at valve. I don't care if I work for $0.01 as a janitor cleaning out Gabe's golden asshole, I want to work at Valve.

They're the closest thing to good guys in this conflicted climate. Sure they have a monopoly, but unlike most wealthy people who grow complacent and indifferent, Valve's been investing their riches wisely in creating quality. Plus, they know that money-off sales make more people able (and more importantly [B]willing[/B]) to buy the game if it's good. And that's an important factor in getting games sold; making them great and memorable.

[img]http://www.facepunch.com/fp/ratings/winner.png[/img]

Sorry to be "that guy" but, still waiting for Half-Life 3 Gabe...

Gabe's a pretty cool guy, I wish more publishers and developers had CEOs like him.

[QUOTE=FPSMango;32944465]Sorry to be "that guy" but, still waiting for Half-Life 3 Gabe...[/QUOTE] He has control over you. It doesn't matter how long it takes. You will buy it anyway :v:

Gabe Newell, 2% body fat, 80% brain.

Ok Gabe, now you can afford hiring some more people to get Ep3/HL3 done faster

Pure. Genius.

20-30% of TF2 players buy hats and weapons? That's kind of depressing.

[QUOTE=ManningQB18;32944628]20-30% of TF2 players buy hats and weapons? That's kind of depressing.[/QUOTE] It's their choice. Valve pretty much created a currency with the tf2 market.

[QUOTE=ManningQB18;32944628]20-30% of TF2 players buy hats and weapons? That's kind of depressing.[/QUOTE] Think of it as supporting Valve, and in return you get some neat items for a game you enjoy playing.

Someday... Someday, I'll go back in time with Gabe Newell in tow and punch my former self in the face screaming "STUDY FOR FUCK'S SAKE!"

[QUOTE=Mr. Scorpio;32944594]Gabe Newell, 2% body fat, 80% brain.[/QUOTE] where's the other 18% then

[QUOTE=noobcake;32944818]where's the other 18% then[/QUOTE] bacon treats

Awesome Valve is really helping push the industry in the right direction and it's good to see that they're getting rewarded for it

Valve master race.

Gabe is large and in charge. :v:

So wait..... Gabe found a way to charge people [I]less[/I] money for games they want, [B]and make a profit[/B]? This is awesome.

[QUOTE=noobcake;32944818]where's the other 18% then[/QUOTE] his knife collection