Revenues mushroomed from word-of-mouth buzz, Gabe Newell claims
Counter-Strike gross revenue jumped by 4,000 per cent following a 75 per cent price cut to the game, Valve president Gabe Newell has revealed.
Speaking at a recent conference in Seattle, Newell said he once described discount sales as ‘time-shifting revenue’ – in that they are sales that would ultimately have been made in the future.
But after a recent 75 per cent price cut on Counter-Strike Source, his perception has changed.
“Promotions on the digital channel increased sales at retail at the same time, and increased sales after the sale was finished, which falsified the temporal shifting and channel cannibalization arguments,” he said, as quoted by Geekwire.
“Essentially, your audience, the people who bought the game, were more effective than traditional promotional tools.”
He added Valve then tested the results on a third party product, to examine if it had “artificial home-field advantage”.
“We saw the same pricing phenomenon, 25 per cent, 50 per cent and 75 per cent very reliably generate different increases in gross revenue,” he said.
The figures suggest current full price models could be stifling revenue for new titles, with a plethora of games available to customers, particularly on mobiles, at a fraction of traditional costs.
Further proof may be shown in the power of the sale and low price model as the current top seller in the Steam store is the Grand Theft Auto Complete pack, which has been discounted at 75 per cent off.
Free to pay
Elsewhere at the conference, Newell said he believes that making a game free-to-play is another method to increase audience size and revenue.
He said: “Our user base for our first product that we made free-to-play, Team Fortress 2, increased by a factor of five. That doesn’t make sense if you’re trying to think of it purely as a pricing phenomenon.”
He explained that calling a game free-to-play implies about the future value of the experience they’re going to have, making customers more likely to download.
Team Fortress 2, he added, was now seeing a 20 to 30 per cent conversion rate of people playing the game who buy something.
Steam has seen other studios follow the free-to-play method, taking away up-front costs and subscription-based pay models, with the addition of 12 free-to-play game’s to the digital store’s library such as Spiral Knights, Champions Online and Global Agenda.