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Newell on Piracy, Pricing, TF2 Comics, and More

There's a Live Blog of the DICE 2009 Keynote on the G4tv Website recapping an address by Valve's Gabe Newell on the topic of "entertainment as a service," discussing Steam and serving customers in an era of increased digital distribution and piracy. Along the way he mentions plans for Team Fortress 2 comic books, created by the team behind the TF2 character videos, making a point that audiences tend to be fans of properties, rather than specific products. Gabe makes some sage observations, including how piracy is about service, saying pirates are beating companies on service, citing the example that TV shows are not available in certain parts of the world, but pirates have them up on the web minutes after they are finished airing. He says DRM decreases service value for customers, and makes pirated copies of games look more appealing, saying anecdotal evidence appears to suggest that DRM is increasing and not decreasing piracy. Perhaps most interesting is the talk of how Steam sales have impacted sales figures, which look like they make a strong case for the idea that games are overpriced, as not only did sales increase during these promotions, but so did their profits, and Valve also noted spikes in sales of Team Fortress 2 every time they issued a free update. Here are a couple of direct excerpts from an interesting recap:

Last weekend, Valve decided to do an experiment with Left 4 Dead. Last weekend's sale resulted in a 3000% increase over relatively flat numbers. They sold more last weekend than when they launched the game. WOW. That is unheard of in this industry. They beat their launch sales. Also, they snagged a 1600% increase in new customers to Steam over the baseline.

Worried retailers, fear not. The weekend sale didn't canabalize sales from retail. In fact, they remained constant. Well, constant isn't a 3000% increase, but it's still pretty good, right?

Looking at a third-party game, they saw increases of 36,000% with a weekend sale. Oh. Em. Gee. Okay, Gabe is starting to convince me that PC at retail is going to die very soon.

During the Holiday sales:

        • 10% sale = 35% increase in sales (real dollars, not units shipped)
        • 25% sale = 245% increase in sales
        • 50% sale = 320% increase in sales
        • 75% sale = 1470% increase in sales

At 75% off, they are making 15% more money than they were at full price.

Update: There is also an article about all this on Gamasutra.

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