Interview: OnLive Takes Cues From Steam, Promotions Are 'Experiments'

The buying habits of the cloud-based game consumer are a virtual unknown, mainly because the cloud-based game consumer hasn't really existed until now. Joe Bentley, director of engineering at recently-launched streaming game service OnLive, told Gamasutra in a phone interview that the company is taking cues from digital distribution leader Valve Software and its Steam platform when analyzing the behavior of a new online consumer. The firm last week announced a 50 percent off Labor Day deal across all of its games, including newer titles like Kayne & Lynch 2: Dog Days and Mafia II. "These promotions are experiments," Bentley said. "We are still experimenting with the community to understand what drives its interest." "This data is really feeding back into our analytics so that we can understand it," he added. "This is something that Steam really pioneered. They are always doing these weekend sales and so forth, and it's interesting." "It gives the opportunity for consumers to come in and score a deal. For publishers, it can really drive a significant amount of sales where they might have not been able to do that at standard prices." "We want to understand this new type of user that's using a streaming service. What are they looking for, what are the price points and content they are interested in?" he said. Valve co-founder Gabe Newell explained at the Las Vegas DICE Summit in 2009 how his company used Steam's connected nature to do pricing experiments, and instantly analyze consumer reaction to promotions. In February 2009, a few months after Valve released Left 4 Dead, the company did a weekend promotion that saw the game's price drop 50 percent to $25 -- sales rose 3,000 percent, Newell said, and revenue far eclipsed the game's sales during launch in November 2008. Results like that lead to questions about the effectiveness of current price points and the psychological impact of an aggressive promotion. It also may show that for the right price, new methods of distribution become more attractive. As with games bought from digital platforms like Steam, OnLive customers don't actually own a disc with the game on it. But unlike Steam, OnLive players don't even have a game residing on their local hard drive -- games are fully hosted on remote servers that handle the brunt of the processing work. OnLive users have the option to rent games for a few dollars, or buy an unlimited "Play Pass" for a price comparable to other digital storefronts and retail. Bentley said that people are adapting to the idea of not "owning" a game, but using an online service to acquire and play them. Users of the cloud-based gaming service that sign up by the end of the year get the first year of the service for free, with the option to pay $4.95 per month for the second year, on top of paying for the games. Bentley said that the company will introduce additional pricing plans soon. "I think it's a new technology, and ... I think users are going to get used to digital distribution models," he said.