Pricing Effects On Video Game Portal Sales

Value Corp. are the makers of such hit games as Half Life and Portal. They are giants in digital distribution of PC games where piracy is a huge challenge.   Gabe Newell, the co-founder of Value, gave some off the cuff remarks about experiments they conducted with pricing using the companies Steam distribution system.  The Steam system has more than 35 million users.

The pricing experiments are discussed in detail and are easy to understand.  They tested price reductions and measured multiples of increases in sales rather than percentage increases.  They tested for cannibalization of future sales and the data showed net increase in revenue.

Really interesting read and will give lots to think about.

How Valve experiments with the economics of video games – GeekWire, October 23, 2011 by Todd Bishop.