Gabe Newell: “Piracy Is Not A Pricing Issue”

[drop2]Valve’s Gabe Newell thinks that the answer to stopping piracy is to give your customers good service.

Rather than fussing about the price of your product, Newell suggests that it’s all about delivering “a service that’s better than what they’re receiving from the pirates.”

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“For example, Russia,” he said, speaking at a recent WTIA TechNW panel, “you say, oh, we’re going to enter Russia, people say, you’re doomed, they’ll pirate everything in Russia. Russia now outside of Germany is our largest continental European market.”

“The people who are telling you that Russians pirate everything are the people who wait six months to localize their product into Russia. So that as far as we’re concerned is answered. It doesn’t take much in terms of providing a better service to make pirates a non-issue.”

He also talked about changing the price of a product on Steam, and watched how the gross revenue remained absolutely constant.  “What we saw was that pricing was perfectly elastic,” he said. “There’s no way to use price to increase or decrease the size of your business.”

This was via an unannounced price change.  When a product went on a media-advertised sale, the company saw a 40-fold increase in revenue.

Via GeekWire.

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27 Comments

  1. I have to agree with Gabe on this one, I mean the people who use games being an excuse to pirate are just fooling themselves, the majority of those who pirate don’t have the intention of paying whether the game is £40 or £4. And Steam/Valve do offer a good service, they’re constantly offering games at competitive pricing compared to PSN and certainly LIVE, they even give games away for free quite regularly. When you get service like that, why pirate?

  2. With alot of developers, you get consistantly ****ed in the ass if you buy PC games from them *cough*ubisoft*cough*. I’ve still not bought Settlers 7 because they’ve still not gotten rid of that god awful DRM for it. I’ve not pirated it, but it’s obvious to everyone that you’ll get a better service from pirates.

  3. nonsense! i don’t trust business men who don’t blame the consumers!

  4. He’s right again.

  5. He is clever, but I don’t understand how he manages to make money by commenting on things, it’s all I ever hear about him, Gabe says this, Gabe says that. It frustrates me a little when all I really want him to comment on is HL3. I think he is smart though, and I’m always tempted more by steam than PSN, even though MAC is a very minor platform on Steam. If they improved that it would be bloody amazing.

    • When he calls bullshit on the excuses of other publishers and it gets talked about like this he effectively gets free marketing, positioning Valve and Steam away from the competitors (who are in general distrusted by us) and generating goodwill in his core market, which in turn we are more likely to buy from Steam and less likely to buy from his competition. That is how he makes money from this.

  6. Gabe isn’t daft eh. The Steam prices are spot on, it’s really come a long way from its creaky beginnings!

  7. Thank god that we have this one smart person controlling a large publisher.

  8. Imaging what the PSN Store would be like with a man like Gabe in charge, the man’s a genius.

  9. Gabe says something obvious shocker. Wake me up when he goes back to making games.

    • hey wake up, hes making Half Life 3!

  10. Okay, but lower the price of AAA digital copies. 50 euros is a lot when the boxed copy is cheaper on day one.

    • Agreed – the PSN prices of new releases for example, genuinely made my eyes widen in disbelief – £50+ for a digital copy, with no box, disc or even the ability to sell on once I’m done? Get. To. Feck.

      Surely if you’re cutting out a middle man (in the form of product logistics and retail) some benefit of that should have made it to the consumer? Seems not.

      • Agreed, there’s no way selling a digital copy is costing the same, let alone more, than a boxed version.
        Just another way to rip off their customers.

      • Ok, fair enough, digital copies are expensive day 1. But look at Borderlands GOTY for £13. Not to be sniffed at really.

        Also, whilst it’s true that you don’t get a box or a manual or an option to sell it on once it’s finished with, what you don’t get with a physical disk is a game that’s fire proof, thief proof, can’t get eaten by your 360’s disk tray and is genuinely yours for life across multiple machines and locations.

        (they are still too expensive at launch though!)

    • I’m fairly certain that I remember an article saying that games retailers refuse to publish a game if the digital price is lower than RRP at launch. Dunno how true it is though because I can’t even remember where the article was posted.

      • I cannot confirm where I heard it either, but I have heard this before. I imagine it is true. It does make sense, and I’m sure most of us have been confronted with the greed retailers are capable of at one time or another.

      • i’ve heard that as well.
        and it wouldn’t surprise me.

        one solution is what ms and ms have started doing on a small scale, they have cards with codes for the downloadable games that are sold in stores.

        handy for those without debit or credit card who don’t want to have to buy a 25 pound card to buy a 6 quid game.

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