Steam's business model makes companies money

[Poomanchu745]

So the other day i was talking to my friend about steam's specials and how I bought both bioshock and Mass Effect for 5 bucks. I was wondering why companies would do this because the profits brought in must be negligible. And if they did some microeconomics they could probably make more money if they sold the games for even 15 bucks. But now I know that i was wrong in thinking 15 would make them more money.

I bought Mass Effect and only spent 5 bucks effectively making Bioware very little money but also spending very little(prob would not have spent 15). I fell in love with the game and now have Mass Effect 2 on preorder. Now Bioware will make 50 bucks off of me instead of 0. I never really thought about the long term effects of buying/selling a game for so little. Im not really sure if this is an intended consequence of the sales but I gotta say its pretty damn smart.

I could also see this happening with bioshock as the sequel is coming out soon but havent really played it much yet. Anyone else have the same thing happen with any steam specials, whether it be a sequel or something else by the same dev?

 

[dududf]

That's nice and everything, and I apologies as this will come off a little rude but "Discussion?"

 

[azncutthroat]

Actually, I'd chalk it up to economies of scale.

Edit: DAMN YOU DUDUF!! fuckin' ninja

 

[Dusty Donuts]

Yep, looks like you just got what I like to call "Moneyed Over".

 

[JWW]

Those sneaky economists.

The power of product loyalty is great, a company that can be relied on to make quality products is something that people will trust, and even defend.

 

[Poomanchu745]

That's nice and everything, and I apologies as this will come off a little rude but "Discussion?"

Eh didn't really notice that I didnt really go anywhere with that. Added a question that I was asking without actually asking. And that really helps in seeing what people say.

 

[T3h Merc]

They're like a liquidation warehouse with infinite supplies. It's AWL GUD!

 

[Wolvaroo]

Most games that go on sale are either older games where all those $5 are significantly more than the $0 they probably would have gotten. Or pre-order sales which a light 10% off if a fair incentive for on-the-fencers.

Digital Distribution is almost cost-free for developers so the only one not making much profit is valve. But profit is profit no matter hwo small.

 

[dududf]

That's nice and everything, and I apologies as this will come off a little rude but "Discussion?"

Eh didn't really notice that I didnt really go anywhere with that. Added a question that I was asking without actually asking. And that really helps in seeing what people say.

Ahh okay, I can chat up the economics of it if you want. Hell I'll tell you about another little detail that may interest you.

"Sale Rush"

Lets say a say happens, maybe for a multi player game, all of your friends get it and you feel pressured to get it even though the sale is over, that way Valve suckers in a fair amount of full priced sales just because they ran it at a discount for a short while.


Kind of effective actually.

 

[azncutthroat]

That's nice and everything, and I apologies as this will come off a little rude but "Discussion?"

Eh didn't really notice that I didnt really go anywhere with that. Added a question that I was asking without actually asking. And that really helps in seeing what people say.

Ahh okay, I can chat up the economics of it if you want. Hell I'll tell you about another little detail that may interest you.

"Sale Rush"

Lets say a say happens, maybe for a multi player game, all of your friends get it and you feel pressured to get it even though the sale is over, that way Valve suckers in a fair amount of full priced sales just because they ran it at a discount for a short while.


Kind of effective actually.

Wtf is this pseudo-economics? There's no such thing as a sales rush. You're probably talking about a fad induced by marketing.

Edit: And I highly doubt Steam is reliant on peer pressure to raise sales.

 

[DeadlyYellow]

I bought Mass Effect and only spent 5 bucks effectively making Bioware very little money but also spending very little(prob would not have spent 15). I fell in love with the game and now have Mass Effect 2 on preorder. Now Bioware will make 50 bucks off of me instead of 0.

Theoretically yes, but Publishers > Developers. Plus I'm sure there's some additional percentage that goes to Steam for hosting the service.

 

[dududf]

Edit: And I highly doubt Steam is reliant on peer pressure to raise sales.

I thought about it, and yeah that's more marketing then economics (Whoops. XP)

But on the peer pressure thing? I think not.

First off, they built a heavy community around STEAM, if some one is playing a game, you will recive little updates telling you if they got a achievement of sorts. Kind of passing off the idea that they are having fun. You then want to get the game as well (If enough friends have it.)

Secondly, the ability to gift games. Many a time has STEAM had some 4 pack sale that allowed you to buy your friend a game. Or gift them it.

I think peer pressure (Of sorts, you don't feel "Bullied" into it at all, merely you feel that you want it.) plays a factor in Steam for that reason.

 

[pseudo721]

Here's a great blog article about the economics of Steam's epic sales (among other low-priced software).

It's a pretty good read.
http://www.codinghorror.com/blog/archives/001293.html

 

[Master_Fubar23]

ur completly right. i got mass effect n bioshock when they were on sale and love the games n once my nx paycheck comes in im getting mass effect 2 for sure n bioshock 2 later once i play the hell out of mass effect 2 since i think it'll have no reply value then bio 2 but ya. great idea on there end cuz i dont buy games unless there about $5 i love to wait for sales