Sporadic
02-19-2009, 02:31 AM
6:01 PM - The keynote is officially 1 minute late. Jeez. Valve can't even ship a keynote on time!
6:04 PM - I just got word that Gabe's beta speech was stolen from the green room and it wasn't very polished. He's hard at work refining his speech and we expect to kick off around "when it's done."
There are some Sony people behind me discussing the Killzone 2 release date. Even at industry events I can't escape "February 27th!!!!"
6:13 PM - Lights are officially dimmed and we're kicking off. Joseph Olin, President of the Academy of Interactive Arts and Sciences, is doing the general introduction to the Summit, which is now officially kicked off.
6:19 PM - Time for Gabe. Here he is! His topic: "Entertainment as a Service" I'm guessing a lot of this will be focused on Steam and Valve's direct relationship to their customers through the service.
Gabe beileves the old way of entertainment: indirect customer relationships, product orientation. Now, the new way of entertainment: direct customer relationships, service orientation. Valve aims to touch their customers in some way every three weeks, not every three years when a new game is shipped.
Through this perspective, Gabe and Valve have observed the following:
30-year old songs with a little service (Rock Band, Guitar Hero) generate huge profits
Pirates are ahead not just on price, but on service
DRM appears to increase, not decrease piracy
Privacy and transparency
Shrinking distance to customer empowers content creators
Gabe doesn't believe that pirates are really seeking to get things for free. They are people that spend thousands on their PC's and internet service. He believes that pirates are beating companies on service. He cites TV shows not available in certain parts of the world. Pirates have TV shows up on the web minutes after they are finished airing.
6:26 PM - DRM decreases service value for customers. It also makes pirated copies of games look more appealing. Anecdotal evidence appears to suggest that DRM is increasing and not decreasing piracy.
As far as privacy goes, Gabe believes that people are willing to give up system and personal information if they feel it's being used to get a better service. Steam's hardware survey is an example of this. Rather than spying on users for nefarious reasons, Gabe believes things like their hardware survey helps them do a better job selling products and service. As long as companies are transparent, he feels that customers will accept this.
As far as the shrinking distance between Valve and their customers, Valve didn't find any service in existence so they made their own: Steam.
6:30 PM - Gabe thinks that the movie industry would benefit from incremental products. Toy Story 1.1! Just make the graphics better!
Steam stats time:
20 million people connected
All major PC publishers on board
350+ of the best PC games
Worldwide in 21 languages
100% Year-over-year growth since 2004
There are competitors, but they are all trying to do the same thing. These include services like Games for Windows Live, Direct2Drive, iPhone App Store, Stardock Impulse. Gabe was very modest and didn't mention that Steam is wildly more successful than any of the other services, but that's why he's giving the keynote. No need to brag.
From a customer's perspective, they want things like: portability of content and files, anti-cheating, auto-updating & version control, new games, old games, indie games, 24/7 availability, and community tools. Yep, Steam has all of those. I still think the groups need an upgrade, but they are definitely functional enough to get the job done.
6:35 PM - From a business perspective, developers and publishers want: piracy protection, keeping customers current with the latest version, direct communication to customers for marketing and promotion, instant sales and promotional performance data, and being able to take advantage of new business models like DLC, subscriptions, and micro-transactions.
6: 40 PM - With Team Fortress 2, Valve shipped the game as a service and not a product. Valve uses "updates" to create more value for their customers. Updates can be bug fixes, new achievements, maps, and unlocks. There have been 63 updates to Team Fortress 2 since its release. Also, why the PC version is so much better than the Xbox 360 version.
Now, Gabe talks about how important web content creators and blog writers are for the future of games. It brings a tear to my eye! They'll be able to help market products with authority and knowledge.
Gabe brings up an excellent point that successful entertainment companies will realize that fans of properties like the property and not the specific product. They are Harry Potter fans, not just fans of the books. The team that's making the TF2 character videos (which are awesome!) are going to be working on comics.
Now he's going showing the Sniper short film. Yay, I get to laugh all over again!
"It works because the people that built that [video] are the same people that built the game."
6:46 PM - Valve has been using their existing customers to gain new customers. "There's no way to go into Circuit City, to pick on the dead" and get a free weekend. Ouch, Gabe. Ouch.
Valve has seen a great turnaround rate on guest passes. Friends invite their friends to play a game they already own. Game invites that also walk a gamer through a purchase process are also effective.
Time to look at the sales of Team Fortress 2 to see the impact of the updates on revenue. Holy s#!%. The sales spike by huge amounts everytime there's a sale or major update. Steam sales went up 106% after a free update. Player minutes went up by 105%. Gifting has thrown a 71% sales increase. Surprisingly, sales from retail stores also went up by 28%. Finally, they saw 75% increase in new users. Knock knock. Who's there? Steam. Steam who? Steam is so successful it hurts.
6:51 PM - Price changes in the retail world don't allow a lot of freedom. Steam and other services offer flexability. In fact, users apparently respond to pricing discounts within five minutes.
Valve was afraid that too many price changes would "confuse and anger" customers. It isn't the case.
Last weekend, Valve decided to do an experiment with Left 4 Dead. Last weekend's sale resulted in a 3000% increase over relatively flat numbers. They sold more last weekend when they launched the game. WOW. That is unheard of in this industry. They beat their launch sales. Also, they snagged a 1600% increase in new customers to Steam over the baseline.
Worried retailers, fear not. The weekend sale didn't canabalize sales from retail. In fact, they remained constant. Well, constant isn't a 3000% increase, but it's still pretty good, right?
6:56 PM - Looking at a third-party game, they saw increases of 36,000% with a weekend sale. Oh. Em. Gee. Okay, Gabe is starting to convince me that PC at retail is going to die very soon.
Oh, more data. I'm such a data nerd. Here's some data!
During the Holiday sales:
10% sale = 35% increase in sales (real dollars, not units shipped)
25% sale = 245% increase in sales
50% sale = 320% increase in sales
75% sale = 1470% increase in sales
At 75% off, they are making 15% more money than they were at full price.
Conclusion time, digital distribution is a game changer the same way that:
VHS to DVD to Netflix
Vinyl to CD to iTunes
Paperback to Tape to Kindle
Entertainment as a service and not just a product certainly has its merits. Unfortunately, this model isn't going to work for console games as the bandwidth required to send a 7.8GB game across the pipes just isn't feasable yet.
Talk is over! GG, Gabe.
Q&A Time:
How does this model apply to consoles?
Consoles will succeed for fail based on their customer relationships. Given the choice between better graphics or seeing instant sales data and customer feedback, Gabe would choose the customer data. Gabe also believes that services like Steam that begin on the PC will eventually end up on consoles.
The weekend sale for Left 4 Dead, was that just a price cut?
It was a price cut and a tease for the new Left 4 Dead content. That's what leads to the non-linear increase in sales. There are other ways to excite customers with things like commentaries and comics that take less effort than new maps.
Does Valve see value in Facebook and MySpace for their content?
Right now, those two social networks are sources of interesting features, but not quite right for a partnership currently.
Are you worried about the constant sales and having customers start waiting for the next sale to buy?
When prices are dropped, Valve sees a lingering increase in sales. Valve has hired an experimental psychologist to come up with new ways to excite users with pricing models and sales. He suggested 1 in 25 users that buy Left 4 Dead get another Valve game for free. That'd be awesome!
http://g4tv.com/thefeed/blog/post/693342/Live-Blog-DICE-2009-Keynote---Gabe-Newell-Valve-Software.html
Very interesting, I'm amazed that almost everything Valve touches turns to gold while almost every other PC publisher is screaming about how piracy is killing PC gaming and nobody is buying.
6:04 PM - I just got word that Gabe's beta speech was stolen from the green room and it wasn't very polished. He's hard at work refining his speech and we expect to kick off around "when it's done."
There are some Sony people behind me discussing the Killzone 2 release date. Even at industry events I can't escape "February 27th!!!!"
6:13 PM - Lights are officially dimmed and we're kicking off. Joseph Olin, President of the Academy of Interactive Arts and Sciences, is doing the general introduction to the Summit, which is now officially kicked off.
6:19 PM - Time for Gabe. Here he is! His topic: "Entertainment as a Service" I'm guessing a lot of this will be focused on Steam and Valve's direct relationship to their customers through the service.
Gabe beileves the old way of entertainment: indirect customer relationships, product orientation. Now, the new way of entertainment: direct customer relationships, service orientation. Valve aims to touch their customers in some way every three weeks, not every three years when a new game is shipped.
Through this perspective, Gabe and Valve have observed the following:
30-year old songs with a little service (Rock Band, Guitar Hero) generate huge profits
Pirates are ahead not just on price, but on service
DRM appears to increase, not decrease piracy
Privacy and transparency
Shrinking distance to customer empowers content creators
Gabe doesn't believe that pirates are really seeking to get things for free. They are people that spend thousands on their PC's and internet service. He believes that pirates are beating companies on service. He cites TV shows not available in certain parts of the world. Pirates have TV shows up on the web minutes after they are finished airing.
6:26 PM - DRM decreases service value for customers. It also makes pirated copies of games look more appealing. Anecdotal evidence appears to suggest that DRM is increasing and not decreasing piracy.
As far as privacy goes, Gabe believes that people are willing to give up system and personal information if they feel it's being used to get a better service. Steam's hardware survey is an example of this. Rather than spying on users for nefarious reasons, Gabe believes things like their hardware survey helps them do a better job selling products and service. As long as companies are transparent, he feels that customers will accept this.
As far as the shrinking distance between Valve and their customers, Valve didn't find any service in existence so they made their own: Steam.
6:30 PM - Gabe thinks that the movie industry would benefit from incremental products. Toy Story 1.1! Just make the graphics better!
Steam stats time:
20 million people connected
All major PC publishers on board
350+ of the best PC games
Worldwide in 21 languages
100% Year-over-year growth since 2004
There are competitors, but they are all trying to do the same thing. These include services like Games for Windows Live, Direct2Drive, iPhone App Store, Stardock Impulse. Gabe was very modest and didn't mention that Steam is wildly more successful than any of the other services, but that's why he's giving the keynote. No need to brag.
From a customer's perspective, they want things like: portability of content and files, anti-cheating, auto-updating & version control, new games, old games, indie games, 24/7 availability, and community tools. Yep, Steam has all of those. I still think the groups need an upgrade, but they are definitely functional enough to get the job done.
6:35 PM - From a business perspective, developers and publishers want: piracy protection, keeping customers current with the latest version, direct communication to customers for marketing and promotion, instant sales and promotional performance data, and being able to take advantage of new business models like DLC, subscriptions, and micro-transactions.
6: 40 PM - With Team Fortress 2, Valve shipped the game as a service and not a product. Valve uses "updates" to create more value for their customers. Updates can be bug fixes, new achievements, maps, and unlocks. There have been 63 updates to Team Fortress 2 since its release. Also, why the PC version is so much better than the Xbox 360 version.
Now, Gabe talks about how important web content creators and blog writers are for the future of games. It brings a tear to my eye! They'll be able to help market products with authority and knowledge.
Gabe brings up an excellent point that successful entertainment companies will realize that fans of properties like the property and not the specific product. They are Harry Potter fans, not just fans of the books. The team that's making the TF2 character videos (which are awesome!) are going to be working on comics.
Now he's going showing the Sniper short film. Yay, I get to laugh all over again!
"It works because the people that built that [video] are the same people that built the game."
6:46 PM - Valve has been using their existing customers to gain new customers. "There's no way to go into Circuit City, to pick on the dead" and get a free weekend. Ouch, Gabe. Ouch.
Valve has seen a great turnaround rate on guest passes. Friends invite their friends to play a game they already own. Game invites that also walk a gamer through a purchase process are also effective.
Time to look at the sales of Team Fortress 2 to see the impact of the updates on revenue. Holy s#!%. The sales spike by huge amounts everytime there's a sale or major update. Steam sales went up 106% after a free update. Player minutes went up by 105%. Gifting has thrown a 71% sales increase. Surprisingly, sales from retail stores also went up by 28%. Finally, they saw 75% increase in new users. Knock knock. Who's there? Steam. Steam who? Steam is so successful it hurts.
6:51 PM - Price changes in the retail world don't allow a lot of freedom. Steam and other services offer flexability. In fact, users apparently respond to pricing discounts within five minutes.
Valve was afraid that too many price changes would "confuse and anger" customers. It isn't the case.
Last weekend, Valve decided to do an experiment with Left 4 Dead. Last weekend's sale resulted in a 3000% increase over relatively flat numbers. They sold more last weekend when they launched the game. WOW. That is unheard of in this industry. They beat their launch sales. Also, they snagged a 1600% increase in new customers to Steam over the baseline.
Worried retailers, fear not. The weekend sale didn't canabalize sales from retail. In fact, they remained constant. Well, constant isn't a 3000% increase, but it's still pretty good, right?
6:56 PM - Looking at a third-party game, they saw increases of 36,000% with a weekend sale. Oh. Em. Gee. Okay, Gabe is starting to convince me that PC at retail is going to die very soon.
Oh, more data. I'm such a data nerd. Here's some data!
During the Holiday sales:
10% sale = 35% increase in sales (real dollars, not units shipped)
25% sale = 245% increase in sales
50% sale = 320% increase in sales
75% sale = 1470% increase in sales
At 75% off, they are making 15% more money than they were at full price.
Conclusion time, digital distribution is a game changer the same way that:
VHS to DVD to Netflix
Vinyl to CD to iTunes
Paperback to Tape to Kindle
Entertainment as a service and not just a product certainly has its merits. Unfortunately, this model isn't going to work for console games as the bandwidth required to send a 7.8GB game across the pipes just isn't feasable yet.
Talk is over! GG, Gabe.
Q&A Time:
How does this model apply to consoles?
Consoles will succeed for fail based on their customer relationships. Given the choice between better graphics or seeing instant sales data and customer feedback, Gabe would choose the customer data. Gabe also believes that services like Steam that begin on the PC will eventually end up on consoles.
The weekend sale for Left 4 Dead, was that just a price cut?
It was a price cut and a tease for the new Left 4 Dead content. That's what leads to the non-linear increase in sales. There are other ways to excite customers with things like commentaries and comics that take less effort than new maps.
Does Valve see value in Facebook and MySpace for their content?
Right now, those two social networks are sources of interesting features, but not quite right for a partnership currently.
Are you worried about the constant sales and having customers start waiting for the next sale to buy?
When prices are dropped, Valve sees a lingering increase in sales. Valve has hired an experimental psychologist to come up with new ways to excite users with pricing models and sales. He suggested 1 in 25 users that buy Left 4 Dead get another Valve game for free. That'd be awesome!
http://g4tv.com/thefeed/blog/post/693342/Live-Blog-DICE-2009-Keynote---Gabe-Newell-Valve-Software.html
Very interesting, I'm amazed that almost everything Valve touches turns to gold while almost every other PC publisher is screaming about how piracy is killing PC gaming and nobody is buying.