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Valve Exec: Pirates Are Just Underserved Customers
from the and-then-you-see-the-opportunities dept
We've had a ton of people submitting this, so figured a quick writeup is in order. Jason Holtman, the director of business development and legal affairs for Valve, was speaking a video game conference, when he noted: "Pirates are underserved customers." This is a point that plenty of folks have been making for a while, but having an exec at a company like Valve make it is important. But, even more important was his next sentence:
"When you think about it that way, you think, 'Oh my gosh, I can do some interesting things and make some interesting money off of it.'"This past weekend at the MidemNet conference (on which I'll be writing much more), I heard a few music industry folks say something at least somewhat similar to the first part of the comment: talking about how they had to learn to bring "pirates" back into being legitimate customers. But, then they missed that second part. As one attendee said, the music industry execs kept freaking out about how much money they will lose, while ignoring how much money there is to be made.
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VALVE
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Re: VALVE
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Steam is the worst DRM, ever!
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Re: Steam is the worst DRM, ever!
But once again, this will only last for as long as steam is online. Unless they would do something making all your games work without steam before shutting down.
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Steam
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Re: Steam is the worst DRM, ever!
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Good platform, but...
1. Let people play (and back-up) the games they buy without Steam if they prefer.
2. Don't think users are stupid and charge the same in euro's as in $, like it's the same value.
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Re: Re: Steam is the worst DRM, ever!
Pros:
Install any number of copies of the games.
Integrated friends / server browser / clan system.
Purchased games do not expire.
Cons:
You have to select offline mode while online.
It is DRM.
I am sure there are many more for either side but still I think it is a decent attempt at working with gamers. Much better then EA's recent crap anyways.
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When a Company is as Non-Responsive as Valve
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I thought if I bought a "Steam/Valve" game, Like Portal or Half-Life, I could play it and install it all I wanted without any DRM issues.
Thought DRM issues were only during Online playability, and "re-downloaded" versions.
What am I missing?
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I never really thought of it as DRM in a holistic manner. It seemed Valve saw an opportunity early on that this client could reduce piracy easily. And as for Valve being responsive, they've been pretty communicative to people I know. Maybe it's just the channels they use to get in touch, not sure.
Valve always seems to be on the right track before anyone else is.
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Pirates are underserved customers.
People complained about album prices, and Apple introduced the buck-a-track system. Then people complained that a buck was too high. Nearly everyone you talk to has a different idea as to what constitutes a "fair" price, and every price point you mention is too high for someone else.
People complain about game quality, but just how much better could it be if Valve cut prices in half? Or if they cut it down to $20? Would revenues still support the multi-million dollar price tag needed to create a major game title?
Say Valve listened to it's underserved "customers" and cut the price of a $50 game in half. Would they sell twice as many games, which is still less than the number needed to get back to the same spot? Or would the pirates now say $25 is still too high, that the game companies are still greedy bastards, that there's still DRM, that they still never listen, (insert favorite rationalization here)... and STILL swipe the game?
The idea that pirates are underserved customers is an interesting idea, but assuming that a significant number of pirates will suddenly become paying customers, at any price, or for anything other than a game, is just that, an assumption.
And you know what happens when you assume...
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Not Just Games....
Look at exclusive deals (which make no sense to me). There are certain artists who release their albums at Walmart, Target or Best Buy ONLY. the closest Best Buy and Target to me are over 60 miles away - why would I want to spend an extra $10-$20 in gas to go buy them? I'd torrent it for free instead.
My local video store doesn't carry all new releases, neither does Walmart - I'll torrent it.
Xbox Live does not carry all the new releases to rent/download either - I'll torrent what I want then.
Not every artist. movie, TV show is available on iTunes either. They all want to argue and bicker about pricing - fine, I'll torrent it for free and nobody gets my money.
If they can provide me with the content where I want to get it (downloads preferred) I'll buy it.
If I have to wait - screw them - I won't. It is all about being conveniently available to me - the customer. Don't serve me, then I'll serve myself.
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Yep
http://www.techdirt.com/articles/20090114/0629223401.shtml#comments
Comment 71, Item #2.
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Re: Rick - not just games
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Yes, Valve uses DRM, so don't think for a second they are in the "pirates are OK!" camp. They are trying to quash piracy like everyone else. It's just they've created one of the better means to accomplish it and it gives them a chance to shake their fingers at everyone else who does DRM badly (rootkits, etc).
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You can't play "offline" Valve games without being online. Why? So that their servers can confirm if you're "legit", even if you want to play offline.
Valve saw the light a long time ago and has started moving most of their content to servers that they control. It's a different way of creating "artificial scarcity" as Mike might put it.
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Re: Re: Re: Steam is the worst DRM, ever!
It just reinforces the point that there's no such thing as friendly DRM, and DRM never benefits the user in any way.
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Re: Pirates are underserved customers.
""We take all of our games day-and-date to Russia," Holtman says of Valve. "The reason people pirated things in Russia," he explains, "is because Russians are reading magazines and watching television -- they say 'Man, I want to play that game so bad,' but the publishers respond 'you can play that game in six months...maybe.' "
"We found that our piracy rates dropped off significantly," Holtman says, explaining that Valve makes sure their games are on the shelves in Moscow and St. Petersberg, in Russian, when they release it to North America and Western Europe."
In other words, people were pirating the games because they were forced to wait 6 months, during which time they were refused the real thing. Offer the real thing, and piracy drops. Not rocket science, is it?
There are currently 4 major kinds of "pirates" when dealing with games:
- People who want to "try before they buy"
- People who want the game but can't afford the $60 full retail, so download a copy to use until the price comes down.
- People who want to download a product not currently available in their region, a language not supplied on their region's disc, want a cracked version to not have to jump through DRM hoops, etc.
- People who download with no intention of ever paying for the product even if it was available for $1.
Now, a lot people who are anti-piracy assume that the latter group is the largest. Many others believe that the first 3 groups are the largest.
The problem here is that there's no way of really knowing. However, what we DO know is that the anti-consumer tactics used by the industry such as regionalisation, DRM and repeated activation actually makes less people willing to pay for the final product. Make the "real" version more attractive to paying customers than the pirated one, and they'll pay. The big problem right now is that a non-region-restricted, DRM-free pirate copy of a game is actually *more valuable* than the real thing!
Also, your example of iTunes is a bit of a red herring. Yes, 99c/track is too high, especially for older tunes, and prices for full albums can be nearly as high as a CD. The DRM stopped any competition from taking place for a number of years, meaning that iPod owners could only but from one monopolised outlet. Now that this monopoly has been removed by removing DRM, we are starting to see market forces take place and prices reduced. Everyone can now sell songs that can play on an iPod, and iTunes are being forced to rethink their pricing. If they could just stop the idiotic regional restrictions, then we'll be seeing real progress.
Once the idiocy is removed from PC games, we should see some real progress there as well. Valve is showing that by serving an under-served section of the market, they reduce piracy and increase sales. What's the problem with that?
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Re: Pirates are underserved customers.
I have, however, purchased almost all the games at a later date if I deemed them good enough.
Fully functional demos have also sucked me in (Quake, WoW, etc.)
Regional boundaries are the worst thing a media company can now do. With anything digital, if I can't get it legitimately because of where I live, I will find a way to get it via torrent. (BBC, I'm talking to you!)
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Steam is crapolla.
Eventually, all of my serials were stolen and I never got to play any of the games I bought.
I am not even a multiplayer, just an old disabled dude who likes to play sometimes.
Problem solved!
Since I own the games, I just downloaded non-steam versions of each one I own.
If any game companies want any more of my pc gaming dollars, and they use steam, they better tell Steam to quit making the end user pay to have stolen serials reset.
That is like being penalized for owning the game.
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Re: Good platform, but...
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I'm a fan, and just selling bits means they can experiment
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Re: off line mode
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Re: Pirates are underserved customers.
On the games I've bought physical copies of-> problems with finding my CD-Key after a year of owning it, starforce making my CD-Drive almost burn out, Driver issues with securom...
Steam makes things easy, and I trust that the threat of a massive lawsuit will encourage valve to release no-steam patches for all of my games if they ever give up on steam.
The last game CD I purchased for my PC - The orange box.(Steam Version)
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Re: Pirates are underserved customers.
I think a lot of these arguments get muddled by using morality-laden words like 'fair'. There's nothing right or wrong about any price. But .99 cents for a song -is- too high (economically, not ethically), because the marginal cost of delivering me that song is $0*.
So no one needs justifications/rationalizations you put forward (though people do, of course). The simple fact is downloading a digital product incurs no cost to the producer. Any prize above zero is artificial, and economics tells us it'll have to come down. There's no morality here, it's just the way the market'll go. You can't charge money for something that's actually free, in the long run.
* Actually infinitesimally above zero, factoring in electricity, bandwidth and other frictional elements.
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Re: Not Just Games....
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Re: Re: Re: Re: Steam is the worst DRM, ever!
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Re: Re: Pirates are underserved customers.
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