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[Nightmare Mode] Valve on Economics of Pricing, Piracy - Page 4

post #31 of 55
This is why I love Valve.
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post #32 of 55
If only more companies had a mindset like Valve.
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post #33 of 55
I personally love steam most of my games i got super cheap and i can stay in touch with some of my friends that would otherwise not be contactable. Yes it is technically DRM and yes it has to be running when i want to play a game but i have 8gb of ram so a small 50mb app running in the taskbar is no big deal.
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post #34 of 55
I buy games if they are good. If they are made by Activision, I pirate them and seed like crazy. It's as simple as that .
post #35 of 55
Quote:
Originally Posted by Soggy_Popcorn View Post
I'm a finance/econ student, and this post makes me sad.

Pretty sure he just flipped through his econ textbook and randomly strung together key words.

Gabe on the other hand, makes me very happy! Finally a dev/publisher takes economics (and their customers) seriously!
I'm no economist, but I am a partner at an investment firm and an accountant. If you want to call me a dummy refute what I said.

Marginal utility on the consumer side in what I said is carrying a heavier weight to the intangible of satisfying the "want" because DRM or not the price of the game is less-affected as almost every new release is going to be 59.99-ish because the market has stabilized at this point.

Need to go pick up pizza, brb to finish editing this.

edit- Pizza in hand.

The game theory bit was about how a company needs to acknowledge that the number of times the game is pirated is not equal to lost sales to the extent that intrusive DRM was causing a barrier to consumption to a percentage of these non-participants. If a game is sold for 399.99 USD and requires verification on 17 networks and only allows for one install per license ever you will only sell a handful of games and the 99,999,999 times it's pirated is irrelevant. On the other end you have a game that is free, but the company requests you donate a penny if you like it. This company has FOC of 25,000,000.00 a year and spent 45,000,000.00 developing that IP specifically. 0 piracy and the company is out of business because they can't recoup the costs. Valve has a metric, (look at this thread and count the number of guys that love steam, accept steam and hate all DRM), that accounts for the pirates of convenience and the pirates generally. Specifically targeting the available market and the price that will get the maximum number of buyers within the relevant range to Valve and the game developers.

A factor of 40 increase in sales is irrelevant if the margin that is left requires sales of BEU is 500 million.

tl;dr

The intangible assumption in their modeling, and Valve's unique ability to measure it, that being as unobtrusive in verifying that you are offering proper support to a product and excluding non-participants is a stronger profit driver, than is locking down a game with 12 flavors of Securom or dropping its price to an astronomical BEU is what matters.

Where am I confused?
Edited by dave12 - 10/24/11 at 6:44pm
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post #36 of 55
Quote:
Originally Posted by dave12 View Post
I'm no economist, but I am a partner at an investment firm and an accountant. If you want to call me a dummy refute what I said.

Marginal utility on the consumer side in what I said is carrying a heavier weight to the intangible of satisfying the "want" because DRM or not the price of the game is less-affected as almost every new release is going to be 59.99-ish because the market has stabilized at this point.

Need to go pick up pizza, brb to finish editing this.

edit- Pizza in hand.

The game theory bit was about how a company needs to acknowledge that the number of times the game is pirated is not equal to lost sales to the extent that intrusive DRM was causing a barrier to consumption to a percentage of these non-participants. If a game is sold for 399.99 USD and requires verification on 17 networks and only allows for one install per license ever you will only sell a handful of games and the 99,999,999 times it's pirated is irrelevant. On the other end you have a game that is free, but the company requests you donate a penny if you like it. This company has FOC of 25,000,000.00 a year and spent 45,000,000.00 developing that IP specifically. 0 piracy and the company is out of business because they can't recoup the costs. Valve has a metric, (look at this thread and count the number of guys that love steam, accept steam and hate all DRM), that accounts for the pirates of convenience and the pirates generally. Specifically targeting the available market and the price that will get the maximum number of buyers within the relevant range to Valve and the game developers.

A factor of 40 increase in sales is irrelevant if the margin that is left requires sales of BEU is 500 million.

tl;dr

The intangible assumption in their modeling, and Valve's unique ability to measure it, that being as unobtrusive in verifying that you are offering proper support to a product and excluding non-participants is a stronger profit driver, than is locking down a game with 12 flavors of Securom or dropping its price to an astronomical BEU is what matters.

Where am I confused?
It's probably more of the fact that you said in a full paragraph what could have been said in a single sentence. It's the fact that your purpose is more about sounding smart than articulating your point.

If you had written that for a professor they would probably mark you down a few notches for using the thesaurus too much.

You remind me of this skit:


Edited by FuNkDrSpOt - 10/24/11 at 6:59pm
    
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post #37 of 55
Quote:
Originally Posted by FuNkDrSpOt View Post
It's probably more of the fact that you said in a full paragraph what could have been said in a single sentence. It's the fact that your purpose is more about sounding smart than articulating your point.

If you had written that for a professor they would probably mark you down a few notches for using the thesaurus too much.
Because in my original post I said that what Newell said sounded like common sense, offered a short explanation, and asked Duckie why it would be so important to see Valve's dataset? What Duckie responded makes sense. Why any of this saddens an econ student to the point of denigrating me doesn't.
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post #38 of 55
Valve cuts the crap and gets sales. That's how selling stuff works. 99.9% of my purchases are saved for steam.
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post #39 of 55
Quote:
Originally Posted by FuNkDrSpOt View Post
It's probably more of the fact that you said in a full paragraph what could have been said in a single sentence. It's the fact that your purpose is more about sounding smart than articulating your point.

If you had written that for a professor they would probably mark you down a few notches for using the thesaurus too much.

You remind me of this skit:

http://www.youtube.com/watch?v=TexL-eyZHzo
Right? I need a TL;DR for his TL;DR section.
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post #40 of 55
This thread was making me happy, but then a flame war started. Thanks guys.
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