Gabe Newell gives some insight into Steam sales

#1 Edited by doejonathan (172 posts) -

Gabe Newell gave a video conference at a Sports/Entertainment Class. In the video below he talks, among other (sales related) subjects, how the crazy Steam sales aren't that crazy at all.  
 
    

     
I've always wondered how Valve could pull the sales off without losing revenue. I thought it was simply there to get people to install Steam and hope they'll purchase something in the future. The interesting thing is, not only do sales bump up the revenue, but future sales at a normal price will also see an increase. I'm guessing this has to do with making a product popular first, and thereby making future costumers confident in their purchases.  
   
 Gabe Newell on
  • 01:40 - 06:30 the history of Valve and marketing
  • 07:20 - 09:37 the difference between digital and traditional retail sales and finding out the right approach to the "digital" audience 
  • 09:37 - 15:55 the value of the costumer in relation to customizing the value of the product and the experimentation involved due to the lack of direct parallels 
  • 15:00 - 17:15 the power of hindsight
  • 17:20 - 19:48 the amount of stress on Valve employees and independence 
  • 19:55 - 21:45 the correlation between age and the age of technology 
  • 21:50 - 23:10 whether the current state of the economy influences innovation and independent game development 
  • 23:30 - 24:30 his favorite game he has made, his personal favorite game he has played, on Mario Sunshine as well as Mario Galaxy  
  • 24:45 - 26:10 on how dropping out of school makes you a billionaire and male prostitution 
  • 26:20 - 32:30 Valve's job requirement and the importance of adaptation, knowing your audience and staying current with the changes in the industry
  • 33:10 - 35:25 from inception to finished product (includes Tippecanoe Valley High School lunch announcement)
  • 35:45 - 37:20 popularizing Steam, using costumers to create new costumers instead of outside business partners
  • 37:28 - 40:10 gaining experience, the significance of failing and the people you work with
  • 40:25 - 42:55 developing a game and knowing which tools to use on which project, final words, the weather
  
 
I hope this is not considered youtube spam or whether this has already been posted elsewhere. (Anyone knows how to make the embedded player fullscreen?). 
 
Credits go to Destructoid for the heads up and VercittiGangBoy for uploading.
#2 Posted by iDarktread (1206 posts) -

DOTA2

#3 Posted by Geno (6477 posts) -

-75% discount = 4000% increase in sales; basically x10 sales at baseline price, plus additional revenue from publicity after the sale. It's always been estimated as such, but it's nice that it's confirmed now. 

#4 Posted by StillVictor (150 posts) -
@Geno Didn't he say 40x gross revenue?
#5 Posted by Toms115 (2316 posts) -

he hasn't mentioned half life 2 ep 3 within the first six minutes why does gabe hate me

#6 Posted by Chris2KLee (2334 posts) -

Pretty much what they've been saying on the Bombcast. The loss is worth it to get Steam on peoples systems. Then the next time they see a big PC release coming up they have a little icon on their desktop reminding them they can get the same game delivered digitally, and possibly at a better price.

#7 Posted by Toms115 (2316 posts) -
@Chris2KLee said:
" Pretty much what they've been saying on the Bombcast. The loss is worth it to get Steam on peoples systems."
but they don't lose money.
#8 Edited by Chris2KLee (2334 posts) -
@Toms115 said:

" @Chris2KLee said:

" Pretty much what they've been saying on the Bombcast. The loss is worth it to get Steam on peoples systems."
but they don't lose money. "
I figure it depends on the game, some of the sales they have soon after the release has to cost someone money (at least initially), but is probably balanced out quickly through the follow up sales at full price. Whatever the economics, it's a classic Trojan horse tactic, one that has cost my wallet dearly.
#9 Posted by mr_moustache (71 posts) -

You gotta love this Company.

#10 Posted by Fjordson (2448 posts) -

Wow. I wish one of my high school classes would have had a video conference with someone like Gabe Newell.
 
Pretty interesting about the sales, but I think it makes sense. I know I've bought games after friends of mine bought something on sale and had positive things to say about it.

#11 Posted by HitmanAgent47 (8576 posts) -

I'm only half way into the video, gabe newell is brilliant and has the right formulas for marketing sucess. He looks for the results though experimentations rather than use preconcieved notions and rationality which doesn't produce the same results like most store copy pc games.

#12 Posted by CaptainObvious (2997 posts) -

Gabe hates Super Mario Galaxy? Fuck that guy!

#13 Edited by SeriouslyNow (8534 posts) -
@Chris2KLee said:

" Pretty much what they've been saying on the Bombcast. The loss is worth it to get Steam on peoples systems. Then the next time they see a big PC release coming up they have a little icon on their desktop reminding them they can get the same game delivered digitally, and possibly at a better price. "

But that's a bs assumption of loss based on a bs assumption that retail pricing is any indication of cost of development (big hint here: it isn't).  What costs the most is marketing, manufacture, shipping and all the other sundries (such as staff training and non press junkets).  In terms of consumer product, Games are relatively cheap to develop, when compared with something like TV or movies.  So by subtracting a lot of the middleman costs (ie instore marketing, packaging and shipping) VALVe can sell their games during sale periods at something closer to their actual cost value (in terms of the data, licenses and assets which make up a game - something any publisher would know in complete detail) and still retain an extremely healthy profit overall.  VALVe isn't selling any of their sale items at a loss in order to bring customers to Steam.
#14 Posted by Geno (6477 posts) -
@StillVictor said:
" @Geno Didn't he say 40x gross revenue? "
Ah, I interpreted it as unit sales. My bad. 
#15 Posted by kalmis (1558 posts) -

That was very insightful. 

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