Piracy is not a pricing issue, but a service issue, says Valve's Gabe Newell. The proof? Steam makes more money from the traditionally written-off Russia than most European companies.
From the perspective of Valve, software piracy is caused more by convenience than it is by the cost of games. That's according to co-founder Gabe Newell, who recently spoke at the North to Innovation conference in Seattle, giving a very frank and open outline of the modern economics of video games. According to Newell, Russia -- which is often ignored as a market due to its high level of piracy -- is one of Steam's highest grossing countries. "Russia now outside of Germany is our largest continental European market," said Newell, adding that "the people who are telling you that Russians pirate everything are the people who wait six months to localize their product into Russian." "The easiest way to stop piracy is not by putting antipiracy technology to work. It’s by giving those people a service that’s better than what they’re receiving from the pirates," he said. Valve's Surprising Free-To-Play Numbers Earlier this year, Valve officially went "free-to-play" by offering its popular Team Fortress 2 as a microtransaction-supported game. According to Newell, the move increased the game's online userbase by a factor of five. Surprisingly, where most companies are claiming free-to-play conversion rates -- that is, the percentage of players who end up spending money on in-game transactions -- are between 1 and 3 percent, Newell said Team Fortress 2 players convert far more frequently. "We see about a 20 to 30 percent conversion rate of people who are playing those games who buy something," he revealed. "We don’t understand what’s going on," he admitted. "All we know is we’re going to keep running these experiments to try and understand better what it is that our customers are telling us."
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