Valve has just started the PC games race to zero

By Matthew · 23 replies
Mar 10, 2014
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  1. Valve has just announced that developers will now be in charge of their own pricing on Steam. They can run sales, offer discounts and promote their games without talking to a Valve representative. This is the beginning of PC games...

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  2. GhostRyder

    GhostRyder This guy again... Posts: 2,198   +593

    This is a great idea, its going to bring game prices down and overall help developers do more and have more control over game pricing and everything in between.

    I can't wait to see how things evolve because of this.
  3. Kibaruk

    Kibaruk TechSpot Paladin Posts: 3,286   +902

    I do believe this might drive prices lower to some point, there are really really old games on steam that are on a same price point than blockbusters like L4D2 or whatnot. So I'm not sure how low it will be... but sure, lower.
  4. So poor people have to grind and toil longer to reach the same point, just like real life hah!
  5. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 2,890   +1,223

    I'm not familiar with Steam, but the free-to-play model makes for much different games than the console model. Console games cost millions to make, and that'll be far to big a risk to take on in-game purchaes being the only way to make the money back. If Steam games are to be free, will the developers put out big, comprehensive games like they do today? It sounds like the Steambox will be playing games similar to mobile games, just on better hardware.
    One of the highest revenue generating free mobile games today is Clash of Clans (a real time strategy game). It's fun, sure, but it's nothing like Starcraft 2. Will developers make games like SC2 for a platform that will give it away?
  6. Kibaruk

    Kibaruk TechSpot Paladin Posts: 3,286   +902

    @MilwaukeeMike You didnt get the point of the article, it will tend to 0, not comming in for free. As they start getting older newer games will come to life making them less competitive in the market so in order to stay in the sale point they'll have to start dropping the price. It will take a lot of time it's not a matter of days or months.

    An example is old hardware, when they start making the new procs, mobos and ram the older models start dropping.
  7. theBest11778

    theBest11778 TS Addict Posts: 296   +125

    I don't see AAA games ever dropping to zero, not unless the console versions support in-app transactions too. Games cost upwards of $50 million dollars to make (this will be over $100 million by 2016 if trends keep steady.) Games with in-app transactions can retail at a cheaper price point when launched, and eventually go to F2P once the initial investment has been recovered. However single player/story based games will never become F2P. Games on steam usually drop to $5 or less (on sale,) after a year on the market anyway. I see that sticking around for a long time.
  8. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 2,890   +1,223

    No, hardware is different than digital products. When the article says "In the world of digital, the marginal cost is zero, or as close to zero as makes no odds" what he means is that the cost of each additional game is so close to free that it's hard to measure. 'Marginal cost' means each additional copy of a game, not each new game title. His argument is that because it doesn't cost a developer a single penny to sell an extra copy of a game, the games will eventually be free.

    Your computer example is different. If you make RAM, it costs you money to make each one. If you make a game, it'll cost you a lot to make the first copy, but not a penny more to make a hundred more copies for digital distribution.

    As @theBest11778 says I think this will result in AAA games not being on Steam. The high cost of development for those games will keep the sale cost up, even though the marginal cost is 0. I think this can be seen in cell phone carriers. How much does it really cost for each extra customer to use a network? Very little I'd guess, but the extremely high cost of that network (and support, which games also have) keeps up the monthly bill.
    cmbjive likes this.
  9. fps4ever

    fps4ever TS Addict Posts: 102   +74

    That's the beauty of it. They don't have to drop to zero, but they can if the publisher wants it to.
  10. cmbjive

    cmbjive TS Booster Posts: 777   +138

    "It is my expectation that free, driven by the iron laws of competition, economics and technology, will win out."

    This hasn't happened anywhere else in any market; I don't expect the same to occur with videogames.

    "'Marginal cost' means each additional copy of a game, not each new game title. His argument is that because it doesn't cost a developer a single penny to sell an extra copy of a game, the games will eventually be free."

    Which is why I don't find the author's argument persuasive. It may not cost more to build a game after the initial game has been developed and pressed, but the costs to develop the initial game are so high that prices will need to stay at such a level so as to recoup development costs.
  11. hahahanoobs

    hahahanoobs TS Evangelist Posts: 2,040   +678

    People already have PC's with game libraries that dwarf the Linux library of games, so who in their right mind would buy another computer with Linux as an OS along with an inferior library? For free games? For indie games? More like free and indie games that suck in comparison to the established and dominate Windows library.

    Not sure about the race to zero, but I don't see Steam boxes coming out on top as a result. I just don't. btw, Have you seen the prices of those announced Steam boxes?! The cost of PC hardware is already a detractor for console users, and these announced prices are not helping one bit, except for people already familiar with Linux. Think about it. We already have Windows PC's, in addition to consoles, and now you want people to buy a possible THIRD computer to play games, because it's better than a console, because it has backwards compatibility and better graphics? But what about the games themselves? How do they REALLY compare? They don't. Not yet, and not anytime soon.

    I'm also not a fan of in-app purchases taking over. It's much better for me and my finances to pay a one time cost of ~$60 for a game and get everything (DLC not included), rather than in-app purchases that could bring that $60 up to $120 over time, and for what? Exclusive weapons and customizations? I'll quit gaming before it gets to that point, but that's just me. I used to play Simpsons Tapped out which is a free game with in-app purchases. After estimating that I spent $40 on those in-app purchases, I felt sick to my stomach and stopped putting any more money into the game and just went with what I could get by just playing the game. Two months later I uninstalled it. That's how I feel about in-app purchases in a nutshell. NOT a fan one bit. Especially when you see games like Star Trek Trexels mobile game. The game is already horrible, and the attempt to get even more money out of you is an insult to our intelligence. If that is where we are headed, then we are all f*cked.
  12. EClyde

    EClyde TS Evangelist Posts: 1,302   +429

    Good well researched and thought out article
  13. TheBigFatClown

    TheBigFatClown TS Guru Posts: 683   +253

    Your hardware example is not exactly true. Older hardware seems to hold a baseline price pretty good for a long time. DDR2 memory is still over-priced. I keep thinking I'll double up my DDR2 memory on an old computer. And when I go bargain hunting it cost as much or more as DDR3. It's crazy.

    Even the price difference in Intels SandyBridge, IvyBridge, and now Haswell CPUs remains pretty small between generations. You would think you could get a SandyBridge CPU really cheap now or at least cheaper than the more recent releases from Intel. Huh-uh. They are the same price or even higher.
  14. TheBigFatClown

    TheBigFatClown TS Guru Posts: 683   +253

    Not sure about how your logic works. There are AAA titles all over Steam and they are sold at rock bottom prices all the time. Witcher 2 $5, Call of Duty series $10.00. Many triple AAA titles. No matter how good a game is upon release it will lose value over time. It's that simple. How does it lose value? Newer better games get released making it less attractive as a purchase. New games drive down the cost of old games.

    The developers are in charge of their own pricing. Why does everybody think the world has just been turned upside down? New games will sell for a premium and go down in price over time. Nothing changes.
  15. cmbjive

    cmbjive TS Booster Posts: 777   +138

    The Witcher 2 is a five year old title; the Call of Duty series even older.

    I believe Milwaukee Mike is referring to a nascent triple A title. There's no way that those titles are going to be sold at bargain bin prices.
  16. misor

    misor TS Evangelist Posts: 1,283   +242

    So this is the reasoning why Microsoft is rumored to be offering a 'free windows 8.1 with Bing OS':
    "It is my expectation that free, driven by the iron laws of competition, economics and technology, will win out."
    cmbjive likes this.
  17. TheBigFatClown

    TheBigFatClown TS Guru Posts: 683   +253

    Oh, you guys want new releases at $5 a pop huh? LOL. And I want Britney Spears for my girlfriend. We can all dream I guess. :) I am as happy as I can be and grateful when I see a game that was selling for $50 at one time selling on Steam for $5. Patience is the name of the game.
    misor likes this.
  18. All I know is that I have bought so many top class games for such a cheap price that many remain unplayed in my steam library.

    I could make a huge list of games but just a few examples are getting the latest Tomb Raider title that was released last year for about £7 and Dishonored I picked up for £5.

    You can also pick up some great games in the charity humblebundles that link to you steam account.

    Short of it is, if you can bare to hold on for a while after release then you can buy some great games for stupidly cheap prices. The only exceptions to the rules are multiplayer games that wou would want to play at release.
  19. Kibaruk

    Kibaruk TechSpot Paladin Posts: 3,286   +902

    God... the logic... the comprehension... god...

    Ok as Milwaukee goes, I won't even try making a point. It was an example, not something without marginal cost but something that actually lowered their prices based over TIME (Not days, more than a couple months, usually more than a year) because of new tech arrivals.

    Of course DDR2 is expensive as hell, they don't make it anymore and people are still using dated computers that use them! My point was... hardware tend to lower, not go for free, they go as low as they can when they do sales to liquidate the stocks and after that they stop manufacturing the old parts.

    Sandy, Hasswell, Ivy, Sucky, OF COURSE, THEY ARE NEW! And everything is the same just more power friendly and better integrated graphics and maybe just maybe 100mhz bump in the clocks. Compare now the FX series with the Athlon II's, THAT is the point of comparison with "old" technology. Compare iX Cores with Core2Duo, don't make a comparison of months of techonology apart. Examples, comprehension, understanding, not literally.

    When everyone stops looking for details to tell how wrong everybody always is we will actually get to have good conversations that will build to something, instead of looking at the dots in the picture.
  20. Vrmithrax

    Vrmithrax TechSpot Paladin Posts: 1,352   +293

    The hardware comparison is a tough one, because it's true and then it's not true. As new gen hardware enters the marketplace, or even get rumored that it's coming very soon, prices on existing gen stuff droops. Often this is to try to clear out existing inventory, but it's also because many are contemplating just waiting for the next big thing, so they have to make current hardware attractive enough to get people to buy. This little slope downward in price for older hardware lasts for a while, usually bottoms out, and then slowly starts rising again. This, as Kibaruk pointed out, is because production on the older hardware minimizes or stops altogether.

    It then becomes a classic supply & demand situation - people with older hardware who need a spare part or replacement, but can't or won't update everything to newer tech, need that old legacy equipment. Those people then get to deal with the "rarity premium" prices required to pick up parts that are no longer made and can be very hard to find. The older the hardware, the more expensive it can be.

    That is a big reason why the hardware and software pricing models diverge so much. If hardware isn't made any more, it becomes a case of rarity bumping prices up, not better technology causing prices to drop. In comparison, software can always be copied, even if it's not in "active marketing" any more. And it often ends up on services like Steam, where it is freely accessible to anyone (theoretically forever). In this case, older software shows its age compared to new titles, and there is no rarity effect, so the ease of acquiring and visible age ends up degrading the worth of the title over time.
    Kibaruk likes this.
  21. Gumpngreen

    Gumpngreen TS Rookie

    Even with competition the lowest price seems to be either $1 (mobile) or $5 (PC). But if sales volume on certain titles drop to a certain threshold I can imagine switching those games over to a digital subscription-based service. It could function sort of like cable TV where all the entertainment creators split a set amount so many ways. Otherwise, I can see games becoming standalone $0 freeware if repackaged as a marketing ploy for a sequel (built-in ads and payments systems for the new game).
  22. Kibaruk

    Kibaruk TechSpot Paladin Posts: 3,286   +902

    I've seen great games go for as low as $2 (Like Killing Floor), whereas indie games go for as little in the tens of cents. Also you have to consider the games that have come in bundles, for example one of my favourite was the Warner Humble Bundle, which you could pay a single buck to get both Batman Arkham Asylum and Arkham City, Fear 1 and 2 I think, beating the average (Around $5-6) you got also Fear 3, Lord of the Rings, and whatnot, or the Origin Humble Bundle, which would get you Dead Space 3, Dead Space, Crysis 2 Maximum Edition, Burnout Paradise: The Ultimate Box, Medal of Honor, Mirror’s Edge, Red Alert 3 Uprising and if you beat the average ($5-6 again) you would get Battlefield 3 and The Sims 3.

    Thanks @Vrmithrax for clarifying better than I could the hardware example.
    Vrmithrax likes this.
  23. gingerbill

    gingerbill TS Addict Posts: 233   +59

    Sales are a good thing , it's silly that companies like EA keep a game above £30 for a long time , even when it's clear nobody is interested at that price anymore , consoles are the same , there's loads of games I would have got a year after release if they were a bit cheaper but not when I can buy a new game for the same price.

    I think steam sales have gone to far now though , its great for us consumers in the short term but long term steam could end up like a pound shop. It's going to reach the stage were its not worth investing in a full price game release. Also things like selling a game for 50% off when its an episodic game and only 1 part is out , or big price drops a few weeks after release. Your going to end up with nobody wanting to buy a new full price game which is bad in the long run.

    There needs to be some rules to protect buyers on steam.
  24. Kibaruk

    Kibaruk TechSpot Paladin Posts: 3,286   +902

    That's simply so not true in sooo many levels...

    If "everyone" would wait a year or more until a sale to get a game, what Steam would or wouldn't do doesnt matter because the developers would stop producing games, this is the first logic fail.

    The second logic fail is saying "everyone" when clearly... this is not the case, I have friends with whom I play ocasionally, and yes, we do wait some times for games to be on sale because they were not worth the full price. For example we are big fans of the Resident Evil series and buy them as soon as possible whatever their price is. Warhammer games are also totally worth paying for, and so on. It's more a matter of actually playing a game rather than being a cheap bastard.

    The third logic fail, is the wait per se. Why we buy video games? My friends and I started paying for games when we wanted to play them online, after a year or so (Maybe less, sometimes a lot less) the games popularity diminishes and that means you are stuck with a couple handful of people to play the game online.

    Btw, if "it's clear nobody is interested at that price anymore" trust me, they would lower the price to get sales again and proffit.

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