Wednesday, April 23, 2008

Gamers steamed over Steam? Distilling some learnings

There's an interesting thread over on the Escapist Magazine forums in which someone is raising a bit of a fuss about game prices on Steam. Specifically, their complaint is that many of the games listed, including some of Valve's, can be found cheaper at physical retail locations.

Having higher prices for comparable product isn't normally perceived well, but it's additionally aggravating in this case because (a) so much has been said about the efficiency of digital distribution, and (b) there's a perception that the customer is 'buying direct', and therefore should be given a better deal.

Now, I'm not faulting Valve. I think they have a great service. The issue here, is in the difficulty of keeping up with the aggressive discounting and/or promotion that retailers will do as they manage their inventory and shelfspace.

To some extent, Valve is between a rock and a hard place. Just keeping up with the pricing and promotions that all the retailers have going on would be daunting (I'd argue impossible). Even if they did that, then matching one retailer's price drop would be seen by another retailer as undercutting their channel partners. Damned if you do, damned if you don't.

So what can we learn from this?

1) Be careful about message you send about the value of your service. I'm not sure that Valve has ever said that digital distribution would result in lower prices (I'm fairly certain they didn't). Still if the value was in the dynamic updates, or in the feel-good value of a larger share getting back to developers, or whatever, they should have made that the top talking points in all marketing efforts.

2) If people are comparing apples to oranges, make sure to point out that you are a pineapple. If customers ignore the above, and insist on making comparisions like the above, bring the discussions back to your product/service's value and to why the comparison is moot. In this case, it's not buying a product, it's entering into a service relationship with Valve, and that does more than get you the one game.

3) Prevent the upset from happening to begin with. This might seem a little schizophrenic at first, but I think that Valve should point people away from Steam. By this I mean they should clearly point out that some retailers might offer the game for cheaper, and that if all a customer wants is to buy the game, they are welcome to check prices at places A,B,C. They should then point out what the advantages are of buying through Steam. Customer doesn't feel they were duped, and you've reinforced your messages.

Long story short, I think this is a good lesson in how the customer doesn't always get your marketing pitch. Sometimes they write it for you. You have to plan for that and know how to address it.


Anonymous said...

It's sometimes regarded as a piracy tax in some online circles.

In Europe you get the worst deal I believe. Take2's succesful Bioshock can be had for $30 in the US, but it's $55 in Europe before tax.

The worst example I've seen thus far is Call of Duty 4 which is $70 pre-tax, taking it up to around $85. When at retail the game can be had for a little over half that.

Ubisoft sees so much value in retail at Europe that they haven't bothered putting their high profile games Rainbow Six Vegas or Assassin's Creed on the service.

Valve themselves have given a fairly stoic response stating that they offer worldwide distribution but we are happy to distribute under the terms the publisher sets.

I'm enjoying Lumines right now, my first Steam purchase for just over $13.

There is a lot to be done before I start buying full price releases from Steam.

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