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In defence of the Steam sale

Concerns that steep discounts are devaluing games are unfounded - discounting older products is how a medium grows its audience for the long term

The Steam sale has rolled around again, emptying wallets up and down the land as gamers find themselves curiously compelled to fill their libraries with games which they ordinarily wouldn't grace with a second glance. This year, the sale's allure has been boosted even further by the arrival of Steam trading cards, a finely honed slice of consumer psychology which encourages players to expand their libraries even further in order to build their card collection.

Much of the industry buys into the Steam sale lock, stock and barrel, as is clear from the broad participation of so many of the industry's top publishers and developers. However, every time the Steam sale (or any other mass-discounting spree) occurs, there are always a fairly significant number of vocal detractors - people who who worry out loud that this kind of sale event is damaging consumer perception of the value of games, making it harder for the industry to sell full-priced product and generally hurting game development and publishing right in the pocket. Steam sales are compared to the kind of aggressive and arguably damaging discounting of games by physical retailers, the implication being that Steam's detractors expected or hoped that the advent of digital selling would end such discounting practices.

It's important, I think, to understand why that's a short-sighted view - especially since digital distribution on consoles has, thus far, been extremely resistant to this kind of discounting activity. One of the things which was commonly pointed out by opponents of Xbox One's now deprecated DRM plans was that console platform holders and their publishing partners have proven themselves to be decidedly inflexible and consumer-unfriendly in their pricing of digital games. Even when console digital stores carry out sales, they rarely manage to discount their games below the level of equivalent physical products on Amazon or in retail stores. One common refrain is to blame physical retail for this problem ("if we discount too heavily, retail will throw their toys out of the pram!" is the regular excuse), but there's a distinct undercurrent of belief that game prices have been driven down too heavily by discounting, and digital sales reflect the "true value" of games.

"Even when console digital stores carry out sales, they rarely manage to discount their games below the level of equivalent physical products on Amazon or in retail stores"

This view is wrong, and not just because it's an attempt to remove videogames from the reality of market-led pricing and, as such, is on very shaky economic ground (and let's not even go into the irony of the avowed capitalists who run most games companies being so uncomfortable with price determination being influenced by market economics). A far bigger problem is that it's a view that's focused extremely narrowly on looking at individual games in isolation, and completely fails to appreciate the extraordinary value of sales and discounted products in the context of the entire ecosystem of videogames.

Step back for a moment and think about the movie business. People in the games business love thinking about the movie business, dreaming about the bright lights of Hollywood and the mountains of cash it commands. One truly enduring topic for videogames' captains of industry is bemoaning the notion that the movie industry gets more "bites of the cherry" than videogames do. Films are released in cinemas first, then launched on Blu-Ray and DVD, eventually turning up on premium TV channels and finally being broadcast on terrestrial or free-to-air channels. At each point, the film has a new price point, a new distribution method and potentially, a new audience - hence the commercial success of movies like The Shawshank Redemption, which was a cinematic flop but a massive hit on DVD. Games, by comparison, seem to receive only one bite of the cherry - you either sell huge numbers in your first week, or you flop utterly (unless you're Nintendo, in which case you've got an enviably elongated sales curve that adds up to huge numbers only after a long time at retail).

That argument is completely reasonable and certainly true, but it's also extremely narrow. It focuses only on the lifespan of one product - one movie or one game - to the exclusion of what's actually a much more important perspective, one which includes the entire ecosystem of which a single movie or game is only a single small part. Viewed in this regard, the "multiple bites of the cherry" which films enjoy are actually far less valuable from a financial perspective than they are from the perspective of audience development and consumer engagement. By the time a movie has been on DVD for a few months or turns up on broadcast TV, the financial side is barely relevant in the overall scheme of things - but what's hugely, vitally important is the long-term value of exposing a vast audience to the movie and its creators, thus (hopefully) growing the potential market of people who'll engage with subsequent movies in the financially valuable early stages of their lifespans.

In simple terms, what this means is that you want as many people as possible to watch your movie on TV, borrow the DVD or pick it up for a couple of quid from a bargain bin, not because you'll make money this time, but because if they like it, they'll be part of your high-paying audience next time. At the most basic level it's easy to see how this applies to franchise movies - if I saw the X-Men movie on TV and loved it, I'll probably buy a cinema ticket to see X-Men First Class - but it also applies more broadly to movies from the same director or starring the same actors, which is why the film business puts so much effort into promoting those names as brands in their own right. They allow franchise effects to span films that aren't part of a franchise; "From the Director of...", "From the Creators of..." or "From the team that brought you...", along with the faces of recognisable stars on posters, are where much of Hollywood's true value is held.

"You buy a book for a dollar in a second-hand sale, or borrow it from a friend. You love it, so you seek out more books in the same series or by the same author"

The same notion applies to other media, of course. You buy a book for a dollar in a second-hand sale, or borrow it from a friend. You love it, so you seek out more books in the same series or by the same author, picking them up cheaply in paperback or on Kindle. Next time a book in that franchise or written by that author appears, there's a decent chance you'll pick it up in hardback on the first day, completing your transition from non-paying customer to high-paying fan. I think every hardback on my shelves is the final step in a journey that began with a book borrowed from a friend or picked up for next to nothing in a second-hand store - this is how the book business has worked for many decades, which explains why the book business is rather more comfortable with lending, borrowing and extensive second-hand selling than the games business is. ("But books degrade! Games are physical so they don't!" - oh, really? Tell you what, I'll read a dog-eared 100 year old book while you play a scratched 1 year old game disc, and we'll see which of us gets on better.)

For games, the opportunity of the Steam sales or other major discounting efforts (PlayStation Plus springs to mind) is similar. It's not about making more revenue from this product, although the little boost in earnings late in the product cycle is no harm. Rather, it's about getting your franchise or your name out in front of people who would otherwise never have engaged with your game - so that next time you release a game in the same series, or (if you've marketed yourself as a creator, which the games business has traditionally been awful at doing) from the same creative people, you'll be able to reap the rewards. I pick up Bioshock for next to nothing from a sale or a bargain bin, and next thing you know I've got a pre-order for a full price copy of Bioshock Infinite - that's the value of the sale and the discount, not the bump in revenue for Bioshock itself.

The new generation of indie creators includes a lot of people who seem to understand this connection very clearly - perhaps because the indie motivation is often more deeply related to connecting with a broad audience than to maximising financial gain anyway. Mike Bithell, creator of the excellent Thomas Was Alone, recently enthused about the game's success on PlayStation Plus, noting that more people played the game for free on Plus than on any other platform. Rather than being concerned about value perceptions, Bithell is excited that this has given him exposure to a huge audience of gamers, making "From the creator of Thomas Was Alone" into a vastly more valuable and powerful statement for his next game. That value, in the long term, is probably worth more than any financial settlement involved in putting the game on PS Plus - and the same logic should apply to any creator putting their work in a Steam sale or otherwise discounting it.

"The new generation of indie creators includes a lot of people who seem to understand this connection very clearly"

This is the logical flaw at the heart of the notion that games should hold their value better than they presently do. If you want to sell games at a premium price point - and I don't have any problem with certain types of game being somewhat expensive, since there's clearly a market for them at those price points - you need to have an entry point somewhere. Nobody walks into a store and spends $50 on something out of nowhere - there's a process involved in becoming a high-spending consumer, and for games, bargain bins, Steam sales and, yes, second-hand sales and lending, are an important part of that process. Do they devalue games? No, not really. Some consumers will say "oh, I'll wait for it to drop in price" - but those aren't your core fans and were never going to spend full-price anyway, at least not this time. If they really love your game, perhaps next time they'll be right there with the full-price pre-order. Understanding and utilising that fact requires a more long-term view and a willingness to avoid trying to wring every drop of revenue out of each individual game in favour of cultivating a bigger audience over the long term. Games haven't always been good at that, but when I look at the Steam sale, that's what I see - long-term value being created, not destroyed.

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Rob Fahey: Rob Fahey is a former editor of who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.
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