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Valve’s Marketing Model
I have to admit that I’m a Valve fanboy – I’ve loved everything they’ve touched since the original Half-Life series. The Valve team is a leader in the video game industry in both multiplayer dynamics and art direction. And as my recent spike in late-night gaming can attest, their award-winning game “Left 4 Dead” is no exception.
However, as I see it, Valve’s greatest impact in video games isn’t the quality of their games, it has been in their marketing. Aside from being a juggernaut in video game buzz generation, the company has changed both the delivery of PC video games through the Steam platform, as well as redefined consumer expectations through the delivery new content months, and even years, after launch.
With my limited experience in video game marketing, the traditional marketing model focuses on a large marketing push at launch with a goal of garnering a majority of sales at launch and/or holiday periods. While I have no doubt that Valve incorporates that model, they don’t stop marketing efforts and move on to the next title, even a year after a game is launched. Take Team Fortress 2, for example, which just released new weapons/abilities for the Scout class over a year after Team Fortress 2 was out. While downloadable content is not a new concept, I have never seen a developer this dedicated to creating new content for a title. Let’s get something straight here – Valve develops new content because it’s a viable marketing strategy, not because of the fanboys like me. When gamers quit playing TF2 months after release, Valve announced new class updates, generated buzz, and got the game back in front of the consumers that may not have purchased yet. Based on a recent Keynote from Gabe Newell of Valve, the TF2 updates led to 106% increase in sales on Steam with retail sales increasing by 28%. The TF2 updates were also credited with a 75% increase in Steam membership. Left 4 Dead has announced new content (albeit ones that should have been included in the initial release), which has it allowed them to get the game back in front of consumers once again.
The Steam platform has also given Valve the unprecedented ability to experiment with price points on games. Unlike retail, Steam can adjust prices, bundle add-ons, or adjust promotions at will to accommodate marketing objectives. This month’s Left 4 Dead Valentine’s Day sale is a great example. A 50% drop in price led to a 3000% increase in sales. In complete opposition of video game marketing expectations, this increase was greater than the weekend the game was launched. It also spiked new Steam membership by 1600%.
I’ve watched triple A titles with multi-million dollar budgets drop off the gaming radar a month after launch. Valve has managed to counteract that trend with a combination of new content and a price-point experiment on Steam. I have to question whether these tactics were more effective than the extensive billboard and TV media buy they did pre-launch. As for me, I’m eagerly scouring blogs for the announcement of any new Team Fortress 2 or Left 4 Dead content.
Data taken from Gabe Newell’s keynote at the 2009 Dice Summit.