Originally Posted by nicedart
That is why I love language. He was right. They are not going out of business, they are just having a sale. He never said that there would not be sales. He stated a specific thing, that does not cover this scenario.
Isn't language awesome.
Q: One of the things that Steam does is this random deep-discounting of software, and it works well for them. Do you see that as something you want to do?
David DeMartini: We won't be doing that. Obviously they think it's the right thing to do after a certain amount of time. I just think it cheapens your intellectual property. I know both sides of it, I understand it. If you want to sell a whole bunch of units, that is certainly a way to do that, to sell a whole bunch of stuff at a low price. The gamemakers work incredibly hard to make this intellectual property, and we're not trying to be Target. We're trying to be Nordstrom. When I say that, I mean good value - we're trying to give you a fair price point, and occasionally there will be things that are on sale you could look for a discount, just don't look for 75 percent off going-out-of-business sales.
Q: Isn't that in some sense an old-school way of looking at it based on cost of goods? When your cost of goods is basically your transaction costs and your server costs. Even when they discount a game by 75 percent, they're still making money on it. It's not the margin that's important, but the total amount of revenue that's coming in. If by discounting it that much on a weekend they then kill the sales going forward, or they kill the sales in retail stores for the packaged versions, that could be a concern. But Gabe has said that as far as they can tell when they've done that it hasn't affected sales in other channels.
David DeMartini: Actually, Gabe will usually say it improves sales in other channels because if the game is good there are some water-cooler moments and it has a spring-up effect. Without revealing too much, what I'll say is one way to deal with aging inventory is you do deep discounts like that. There are other ways, which I can't really talk about, of dealing with product as it ages over a period of time, where you present a value to the customer and you engage them in your service on a going-forward basis. We don't believe in the drop-it-down, spring-it-up, 75 percent off approach, but we've got something else that we do believe in that we'll be rolling out.
But I absolutely understand your point, and I'm not not-hearing what you're saying. We don't have the old-school approach that you're describing; we're all about building as big a universe as we can, and there are multiple ways to build the universe. One way is to discount the price, the other is to form a longer-term relationship with them and draw them in that way.
Q: I do think the downside of what Steam does might be damage to the brand.
David DeMartini: Also what Steam does might be teaching the customer that "I might not want it in the first month, but if I look at it in four or five months, I'll get one of those weekend sales and I'll buy it at that time at 75 percent off." It's an approach, and I'm not going to say it's not working for Valve. It certainly works for Valve; I don't know if it works as well for the publishing partners who take on the majority of that haircut.
Read the bold in quotes, then continue to next quote block.
Today on Origin, Dragon Age: Origins is available for £5. That’s discounted from £40 – an incredible 87.5% off!
Spore is 75% off, as is Darksiders, Need For Speed: Hot Pursuit, and Battlefied: Bad Company 2. 66% savings can be found on Alice: Madness Returns and Darkspore, while Dead Space 2, Shank, Battlefield Bad Company 2 Vietnam, Mirror’s Edge, The Saboteur, Gotham City Imposters, Gatling Gears, and Batman: Arkham Asylum are all half price.
That’s half the price of their current Origin prices, of course. Not half the price of their original prices. In fact, most of those games are now available for 87.5% off their original launch price. That’s an awful lot of intellectual property EA are cheapening today.
What was it you were saying about language?