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Retail

Digital pricing can go up and down "without penalty" - Valve

Tue 17 Nov 2009 8:56pm GMT / 3:56pm EST / 12:56pm PST
RetailOnline

Sales can continue to climb after discounted games return to full price, says Steam boss – and boxed product won't suffer either

Publishers and developer are free to drop and raise the price of digitally released games without any penalty to future sales or consumer loyalty, according to Valve's head of Steam, Jason Holtman.

Speaking at the Montreal International Game Summit today, Holtman said the digital market flips traditional retail thinking on its head, and that a game discounted for a short time can still go back to full-price and increase sales after the promotion.

"In a connected world with a connected game its very different and it bucks some of the traditional trends on the way people think about pricing," said Holtman. "Fundamentally people thought that with pricing if you ever decreased the price of a product it hurt your future sales and it hurt your product as a whole. Don't ever take a top-end product and go to USD 5-10 because everybody's going to remember and they'll never buy it at the high price again, they'll think it's in the bargain bin.

"But in a connected market prices can be moved up and down without penalty. You can have sales that are dramatically low and bring the price back up and people don't care. They don't care at all. You can do them instantaneously and you can experiment with them," he said.

For Halloween Valve dropped the price of Team Fortress 2 via Steam for six hours from $19.99 to $2.50, without marketing or advertising. "Our revenue from that weekend jumped up dramatically," said Holtman.

"When we took the game up back to its full price after we gave away all that free content and gave away lots of copies – tens of thousands of copies – we actually increased the user base and more people came back the following weekend and bought it at full price than we were selling the week before," detailed Holtman.

The sales promotion was concocted by both business and game design departments, said Holtman. "There was a meta game of people buying and selling it," he said of consumers. "They thought they were exploiting us by buying a bunch of gifts – we love it when people buy a bunch of gifts. They were stockpiling the game."

He also pointed to a Left 4 Dead promotion, where the price of the game was dropped by 50 per cent over a weekend, without it hurting sales at retail.

"We moved more units of Left 4 Dead on that weekend than we did at launch. There was no [retail] store promotion, because that's hard to set up. And retail was unaffected by that," said Holtman. "It didn't hurt our other channel at all. You can actually have lots of marginal sales on top of things and it doesn't mean you are sacrificing one for another. You can do this experimentation and it's not a zero sum game – you don't have to hurt somebody to win."

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