Valve: “Pirates are underserved customers”

By Jim Rossignol on January 19th, 2009 at 11:53 am.


GameDaily has the lowdown on a talk given by Valve’s Jason Holtman at the Game Business Law summit in Dallas last week. Holtman argued that “Pirates are underserved customers.” Looking at it this way, he said, allowed Valve to make some “interesting money” from it. “The reason people pirated things in Russia,” Holtman 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.’ ”

When Valve worked to time distribution in Russia with Western releases: “We found that our piracy rates dropped off significantly.”

Even more interesting, to my mind, was this tidbit of Steam’s development philosophy: “”We’re not just a way of selling game… What we are, actually, is a platform.”

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65 Comments »

  1. Bobsy says:

    Hands up who read that as “undeserved”?

  2. Gap Gen says:

    On a similar note, I wonder how badly the negative vibe for Mirror’s Edge hurt PC sales, especially given that most of its reviews on PC have been quite positive.

  3. Gap Gen says:

    (What I meant was, given the staggered release dates for console and PC, with console impressions being negative, did that hurt PC sales?)

  4. Chris Evans says:

    Bobsy that is the second time I did that! I read it like that when I saw this on Kotaku, and then again here :o

  5. Premium User Badge

    James G says:

    @Gap Gen

    The console reception certainly tempered my interest. I haven’t had much time to look into the PC reception yet, other than to glance at the score in PCG (I’ll be reading the review shortly).

    In response to Valve’s comments though, I think I’d add a ‘some’ to the beginning of the comment. However, in terms of practicality, I think this attitude is probably the best way to tackle piracy. The larger the gap between the legitimate product and the pirate one, the more people who will opt for the pirate copy. While you may never be able to get rid of some of those problems (such as a viable monetizing [ugh] option, be it cost or advertising) you will at least be able to challenge some of them, like availability, ease of access, ability to actually play the game you just purchased after your computer dies in a blaze of glory.

  6. BooleanBob says:

    ”We’re not just a way of selling game… What we are, actually, is a monster.”

    Fixed. Not a helpful contribution, granted, but these sorts of noises do worry me. They’re selling themselves to anyone with a fiscal interest in the PC platform as the platform itself? A nice two-in-one delivery and anti-piracy solution with an eerily enthusiastic fanbase, and all you gotta do to get in on this cozy little protection racket is pay your cut to the don.

  7. alphaxion says:

    well done.. they’ve figured out one of the main reasons why people will pirate anything.

    In the days of TCP/IP distribution channels, there’s no excuse for artificially staggering releases. I can understand if there’s regulartory holdups or contractual limitations (which is why many TV shows are held up from being released). but if there’s no such limitation, staggering your releases will only prompt those to look for other ways of getting their grubby mits onto it.

  8. cliffski says:

    I reckon a lack of a demo is a far greater incentive to piracy than staggered release dates. With all the pre-release hype, I always miss the actual set date when new games are released anyway.

  9. pkt-zer0 says:

    I want the old Valve logo back.

    Also, they managed to take notice of Russia’s existence, maybe Europe will be next? One can hope for that “worldwide market” thing to mean more than just words.

  10. rob says:

    This is a bit rich coming from a company who are charging such ridiculous amounts for non-American customers and refuse to comment on why this is.

  11. Lorc says:

    Treating steam as a platform, analogous to a given console brand, certainly is an interesting stance. It gives me a new angle to look at the number of nascent steam wannabes like Stardock’s impulse and EA’s toe-dipping into digital downloads.

    The immediate difference I see is that from the customer’s point of view, there’s no front-loaded buy-in like there is with physical machines – just the purchase of your first game. Which means there’s not going to be such thing as a Steam gamer vs a PlayNC gamer in the way that there are 360 gamers and ps3 gamers. Which means little or no reason for publishers to go “cross-platform”, instead picking just one horse to bet on.

    I wonder what sort of effect this will have in the long run. Whether we’ll see a few major ones emerge as publishers take advantage of pre-existing infrastructure, or if we’ll be dealing with every major publisher having their own idiosyncratic platform in a desperate attempt to lock consumers in to their brand.

    As a customer PoV I don’t want to juggle a half dozen different clients (with associated login information, user profiles, friend lists, online stores and so on). But I also don’t want Steam to be the valve monopoly on digital distribution platforms.

    In summary: the future is scary and confusing.

  12. Skurmedel says:

    Read it as “undeserved” too :)… “Underserved” is a bit more logical compared to prior Valve statements.

  13. an ape says:

    rob

    To be fair american (and unfortunately by extension Canadian) prices are pretty ridiculous too considering the lack of any physical product. I mean Mirror’s Edge at over 50$, really? I remember being quite pissed when I saw that Bioshock was actually lower on retail. Although I guess compared to Australian prices we are pretty lucky.

    On another note, I am quite pleased to see Valve have a more level headed and less unillateral aproach to the piracy question. They also seem to understand that piracy is less likely if the final product is, well, final (or far closer to it than many games from large publishers.) The view of Steam as a platform, on the other hand, is certainly becoming more acurate while simultaneously blurring the definition of what a platform is.

    As Lorc pointed out though the future of this aproach is quite uncertain. Will we see a proliferation of these “costless platforms” or a severe reduction of them as to be a virtual monopoly. If it is the latter, although convenient, it steps into murky ethical territory.

  14. espy says:

    This is exactly how I feel about US and UK television series in Germany. I’d gladly pay money to watch them on broadcast day or the day after, but no-one will let me buy them. So in that case, I am also an underserved customer, because, I assume, the Studio’s distribution deals with German TV stations and DVD retailers prevent them from selling online copies before the German airdate. Point is, I don’t have a tv, so selling to me online isn’t going to take away a viewer during the German airing, and, just like a regular tv viewer, I still might buy the DVD later on for extras etc. So I’m possibly worth just as much or more than a regular German tv viewer, but nobody will sell me stuff.

    Weird.

  15. rob says:

    an ape:

    It is quite a bizarre situation since you are expected to pay more for a lot less. Unfortunately Valve’s clandestine policies about releasing sales information means that it’s impossible to tell whether the over-priced games on Steam are able to compete in sales with the retail equivalent. Looking on Steam at the moment reveals that Call of Duty IV is a current ‘top seller’. It’s priced at £29.99 on Steam or is easily available for £17.99 online. I don’t know if the price is any better in the US but who is shelling out so much extra for these games? Is the convenience of having it on Steam really so great to justify what is almost double the price?

    Steam should mean cheaper prices since the cost of their product is significantly reduced but the entire thing has been handled so poorly that it just seems like an effort to rip the customer off. I’m a fan of Valve but recently things like the cost of Empire: Total War have meant that other than for novelty games like Arx Fatalis for a couple of quid or the old X-COM games, there is no reason at all to use their platform for third-party games. It would be really nice for Valve to address these issues instead of putting the blame on third-party publishers but until something is done to make the prices more reasonable there is no justification for me to spend so much money on new releases. Empire: Total War is a game I have been really looking forward to but there is no way I am going to pay £40 for it when I can get it delivered on the day of release for £25. The issue with the exchange rates just adds further salt to the wound.

  16. Rich_P says:

    Shamelessly stolen from another forum, but it makes a lot of sense:

    “It’s better to treat pirates as potential customers than customers as potential pirates.”

    The only thing hurting Mirror’s Edge is the pricetag. Word is the game is 6 hours long and has no multiplayer. Valve didn’t charge $50 for Portal for crying out loud.

  17. AceCrikey says:

    I don’t see Valve’s potential dominance and Steam’s realization as a ‘platform’ particularly worrying. The whole console business model is based on proprietary platforms. While the open, chaotin nature of the PC is one of it’s strengths it can often be confusing and off putting. An optional, centrally controled platform for the PC market will only add to its variety.

  18. Canthros says:

    I suspect Valve has only limited control over their pricing. Most likely, prices are set by the publishers or developers.

  19. ImperialCreed says:

    @ Canthros

    That may be true, but it’s still irrelevant if one is using that to actually justify such a high price tag.

    As far as I can see, the reason games sold at traditional retail are priced in the region of €50/60 is that there’s an awful lot of costs (distribution, manufacturing, etc) involved in bringing the game to the shelf. So I can understand why the games are priced as they are.

    But with digital distribution, most of those costs are removed. So one can only assume the publisher’s margin is even larger. The apparent reduction in costs isn’t being passed on to the consumer adopting digital distribution.

    And then consider that nowadays pricing on Steam (for example) is often greatly in excess of that at regular retail and online stores and you can see why a lot of people are suspicious and annoyed at what appears to be rampant profiteering.

  20. Subject 706 says:

    Isn’t the whole ‘Steam games are more expensive than shop games’ situation around because of the actual retailers? I read somewhere that certain retailers refuse to stock games that have a cheaper digital alternative.

  21. Cunningbeef says:

    I love you Valve, but no, you’re not a fucking platform.

  22. Gap Gen says:

    It’s worrying when the console price on Amazon for Mirror’s Edge (£20) is already lower than the PC price (£27).

  23. Arnulf says:

    In the days of TCP/IP distribution channels, there’s no excuse for artificially staggering releases. I can understand if there’s regulartory holdups or contractual limitations (which is why many TV shows are held up from being released). but if there’s no such limitation, staggering your releases will only prompt those to look for other ways of getting their grubby mits onto it.

    Cannot agree more to this. Publisher should abolish with this division via regional codes. Sometimes I got the feeling globalization should be only good for the big players, like Sony, Time/Warner, and their like. We small fry aren’t allowed to take advantage of the global market.

    Heck, they should just release their stuff as soon as one localized version (usually the English one) is ready.

  24. AceCrikey says:

    @Subject 706

    PC sales are hardly setting the retail world on fire at the moment, and if sales of digital titles are as strong as assumed I can’t see why publishers are going along with this outside of protecting their relationship with retailers in light of console sales.

  25. Larington says:

    I’m wondering if any game that has less than 10 hours of play could ever warrant a charge of £35/$50-60, especially if it doesn’t even have any multiplayer to extend life-span (Not that I’m saying multiplayer games should therefor be more expensive of course, though you could say thats the case with subscription based MMOs).

    IE You price a game to sell, instead of pricing it in such a way that you upset your customer base and potentially damage your publishing brand in the process.

  26. Zeh says:

    “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.’ “

    This is part of what I repeat all the damn time (I’m not from Russia, I’m from Brazil). People who live in the US and parts of Europe may not realize it, but it’s extremely annoying trying to keep up with games around the world specially when publishers go out of their way NOT to make a global release date/use digital distribution. It’s no surprise people just resort to piracy with no regret.

    I used to pirate 99% of my games – not because I was cheap, but because it was much easier and faster. Until Steam arrived, and now I have no reason for pirating anything.

  27. Max McG says:

    I used to love Steam until this Euro/Dollar thing. I don’t understand why the gaming press isn’t writing about it more (if at all). Its a really big deal for a lot of European Steam customers yet hardly a word about it other than from affected customers themselves.

  28. NuZZ says:

    @Zeh
    That is no excuse! Fact of the matter is that decent private trackers/usenet/http sources can allow you to pirate games sometimes before you can get them off of valve! Provided one of the game release groups manages to crack the game in time; sometimes cracks are semi-working. RAZOR1911, that be some sloppy work on LORTC and RELOADED, Mirrors Edge. Tisk tisk sir. You are a disgrace to pirates everywhere!

    Humble pirate out~

  29. espy says:

    Oh hey, Zeh reads RPS! :D Neato. Thanks for Tweener and all that!

  30. DBeaver says:

    Pirates everywhere, rejoice! Arrrrr… they claim it’s their own fault that people pirate, them not doing enough for those people!

  31. Rei Onryou says:

    I think Steam is for PC what XBox Live & Marketplace is for the 360. Not in terms of being the only and official method, but its a definite and you know what you’re getting with it. Imagine if Microsoft actually got Games for Windows to work, then they’d be stating that they were the platform for PC.

    TBH, when I read the quote above, I treated it as “Valve aren’t the PC, but something else within it.”

  32. M_the_C says:

    Hands up who read that as “undeserved”?
    *Raises hand*

    This is how publishers should be thinking. (Some already are, but not nearly enough.) Not necessarily the same thing, but trying to understand the market rather than mass labelling.

  33. Y3k-Bug says:

    They’re selling themselves to anyone with a fiscal interest in the PC platform as the platform itself? A nice two-in-one delivery and anti-piracy solution with an eerily enthusiastic fanbase, and all you gotta do to get in on this cozy little protection racket is pay your cut to the don.

    Meaning…. what?

    They put up a substantial amount of money to create and maintain the infrastructure that makes Steam go. In order to make Steam continue they need money.

    That, and Valve is a business.

    Lets assume for a moment that they were positioning themselves as the only place to get PC games digitally. They aren’t even if they wanted to be.

    Gas Powered Games. Direct2Drive. Games for Windows Live. FilePlanet. Or you could just buy it retail.

    You have options.

  34. Geb says:

    People have been saying broadly similar things about film release dates for a year or so now. Nobody seems to care that staggered releases make piracy more attractive. Pirated films are admittedly a different prospect to games, games don’t have any equivalent of a camcorder in a cinema, but I suspect the reaction of most distributors will be just as disappointing here.

  35. Radiant says:

    You know what I want?
    A subscription service.

    Rick Rubin had this idea where, instead of buying music at some artificially derived value, you would pay a monthly subscription and have high quality radio like access to an infinite supply of music.
    So you’d pay your subs same as you’d say…pay for broadband and be able to search the entire catalogue of music of any artists or groups that tickled your fancy [or create playlists of songs]. Playable in your car, your home or wherever.
    What I want is a similar subscription system but for games that I can just download and play on a whim.

    Lovefilm [which I found out from this very website] has a subs system [but you get posted games...very 2002] which enables me to play games that I would otherwise have no interest in buying; either it was the wrong genre [rpgs] or it just was too expensive for what it offered [Deadspace].
    I was hoping steam would be a downloadable version of this but apparently it is just another way to be sold overly expensive games.

    Imagine being able to read about a game like Call of Juarez and be able to just click it and play.

  36. Radiant says:

    Piracy be damned.

  37. Francisco says:

    I do agree with Zeh. We couldnt play any released game, the same problem with the Russians. After steam me and my buddies actually buy lots and lots of games through steam now.

    We even buy some old games that we pirated so the publisher can get some money for all the hours of fun that I had with their game.

  38. Radiant says:

    Shoot I replied to the wrong article.
    Bollocks.

  39. M_the_C says:

    ^^ I suck at html…

  40. Jason Lefkowitz says:

    You know what I want? A subscription service… Rick Rubin had this idea where, instead of buying music at some artificially derived value, you would pay a monthly subscription and have high quality radio like access to an infinite supply of music… What I want is a similar subscription system but for games that I can just download and play on a whim.

    You want GameTap, then.

  41. Kavika says:

    @Bobsy:
    “Under-served” might have worked better. Might be bad English (?), but it is certainly less likely to be mistaken.

    @M_the_C:
    Yeah. After I paid for a year of their service (plenty cheap) I found that out. I also tried it under VMWare w/ XP32 (VMWare supposedly has experimental DX support) and it also locks you out if you don’t have a video card on their list =P Guess I’ll just have to set up dual boot.

  42. Tworak says:

    Probably brought up before but how many “pirate” TV shows due to their country being 1-2 seasons behind or whatever?

    A shit-ton.

  43. Kavika says:

    Oh wait, I thought you were talking about GameTap :)

  44. Trezoristo says:

    I think we see the game industry moving in the right direction. I blogged about all the disadvantages official online distribution channels had in comparison to unofficial ones (piracy), but with regards to games these obstacles seem to slowly fall away. Steam recently added two big publishers to it’s worldwide(r) catologue, getting one step closer to offering any game to any customer. I also consider Steam’s DRM pretty reasonable. DRM isn’t necesarily evil, and in the big world of DRM Steam’s is pretty unintrusive.

    I just wished the movie industry would follow the trend. Currently there is no legal way for me to watch new episodes of my favourite series, Battlestar Galactica, while Americans can even watch it online for free. They honestly can’t believe that fans would wait half a year (or even a week) for a new episode? I’m big enough a fan to want the DVDs anyway when they’re released, but still…

    Anyway, back to Steam, the difference in pricing per region I can sort of get. I’m not an economist, but isn’t it reasonable to tweak the pricing in a specific region to the average income? Maybe that’s what’s going on?

    And regarding Steam being more expensive than retail, one factor I can imagine playing a role here is that a retail shop will buy a number of games in advance, then try to sell them with a margin. If a product doesn’t sell well, the shop will make it cheaper because selling something with a loss is still better than getting nothing at all. In digital distribution, this whole mechanic does not exist.

    Would publishers try to use switch to a new distribution method to get more for their products? Probably, but I don’t think it’s fair to blame Steam for that.

  45. DiGi says:

    Yeah, GameTap and similar services… “…service currently is available only in the United States (and sometimes in Canada)”. Welcome to global world. Is my PayPal account and VISA card worse because I don’t born in US?

  46. subedii says:

    @ Cliffski:

    You would think that’s common sense, but unfortunately publishers are shying away from pre-release demo’s these days as they believe that they have a negative impact on sales, compared to just releasing footage.

    http://multiplayerblog.mtv.com/2008/04/14/study-publishers-shouldnt-release-demos-just-trailers/

    Why let people find out whether they like it or not when you can depend on pre-release hype right?

  47. subedii says:

    I miss the edit button.

    http://games.slashdot.org/article.pl?sid=09%2F01%2F17%2F0339230&from=rss

    Then you’ve got things like CliffyB’s infamous quote about beta’s. Which I’m not going to quote here but it’s easy enough to find if you google it.

  48. Nick says:

    Maybe if they didn’t make shiny but shit games and instead made.. shiny and good games demos wouldn’t put people off.

  49. Gorgeras says:

    Oh now I GET IT. Pirates are *under-served* customers!

    It’s amazing what you can work out when you have a little nap.