It’s been a little while since I stood on the soapbox to serve as a distraction for the ire of the masses. Allow me once more to entertain you with news of the exciting events of our times.
Big time 800lb gorilla monopoly stakeholder Valve announced a week ago a wonderful u-turn on their famously awful refunds policy, and frankly, about fucking time.
Now you can get a refund for stuff that doesn’t work properly, which, if I’d only had the ability about 3 months ago, I would have exercised on my purchase of Alien Isolation because I foolishly bought it without realising it needed a DirectX12-era card and my cranky 6 year old rig could only pass muster at DirectX11-level. Fortunately for me I instead decided to buy a spiffy brand spanking new development machine instead with a whizzy new Nvidia beast in it and Alien Isolation turns out to be brilliant, so I’m glad I didn’t. But I digress.
In fact it turns out you can get a refund for games even if you don’t like them much. Or if you play them for a couple of hours and finish them. Or see enough that you reckon you might as well just get it refunded and try something else.
Right now there’s no real hard and fast rule about what you can get refunded – at the time of writing it’s anything up to about 6 months old, regardless of play time, depending on your luck. But otherwise it’s within 14 days of purchase and under 2 hours of recorded running time for an automatic, no-questions asked, no-quibbles money back guarantee.
This is actually quite extraordinarily generous. A whole lot of people have been merrily misquoting the EU laws on refunds without realising they are in fact absolutely wrong (see here). There is actually virtually no protection in law for consumers of digital goods. Once you start downloading it, provided the vendor has met certain conditions, that’s it. Under EU law, no refund entitlement whatsoever. So what Valve have done is well beyond their obligations, and I personally think it’s awesome.
But what does it mean for the games industry ecosystem? Here we hit a few snags.
The main snag is, Valve have overnight utterly changed their business model forever (and when I say forever, I mean it’s because now this particular cat is out of the bag it’s never going back in). The model they have so carefully built up over the last 10 years is based on having millions of consumers utterly locked in to their delivery platform, Steam. They wave games under peoples’ noses, and flog them remarkably cheaply, on the basis that before, there was no refund policy. A sale was a sale. Valve had shifted some of the burden of risk in trying unknowns out by simply eroding the price to the point where games have virtually almost no value at all. What’s $10? Not even a Spoons Large Breakfast and coffee. It’s peanuts. Trivial. If you get something for $10 you can’t fail to be at least entertained by how bad it is for an hour, never even mind if it’s good. Well worth the money for shits and giggles, and you might even gain further entertainment by writing an amusingly insulting review of your experience. And they further compound the devaluation of games by dropping huge discount coupons so you can get games for a single buck. You can’t even buy a fucking chocolate bar for a buck! And of course, all those sales. So many sales. Much discount. So cheap.
And it was all based on this one thing: a sale is a sale, and that’s it. But that’s no longer the case. A sale is only a guaranteed sale after it’s been played for 2 hours. That’s a bit awkward because the median time game play for most titles on Steam is only about an hour, which does rather beg the question why they chose a 2 hour window, but that’s part of the meta-problem Valve has, which I’ll get to.
So overnight… suddenly all games are demos, now, for very, very cheap games. Whether there’s a demo or not. And not only the usual cripply demos where you only get levels 1 to 10. No, you get the whole game as your demo. That’s pretty awesome for consumers. It’s pretty awesome for me as a consumer (yes! you do realise I actually play games too, right?)
It’s not so awesome for developers though. Over the years, developers have been designing games lately that have been freed of one of the original shackles of design that were imposed by the old demo conversion model. Back in the day, we had to design games that crammed in all the awesome we could into the first hour or so, relentlessly attempting to make the game look like we could actually manage to make the next 50 hours of play continue throwing amazing stuff at you at the same rate as the first hour. We needed to hook the players and leave them wanting more by the time that hour was up. Needless to say, this model favours some sorts of game design over others, and of course there are ways to game it, but let’s not get into details. You design your game to convince people to pay for it after an hour of play (or less if you’re lucky) and what would happen is that for every 100 people who tried the game, about 1 would buy it. Some of the really clever guys could get this up to about 5 in 100 or more but alas we weren’t one of them as we weren’t really very good at it, making rather niche titles as we do.
Your success is driven by the “quality” of the players trying the demo – that is, the likelihood of them being a genuinely potential customer versus a random tyre-kicker – times the number of people you could get to try it out.
The problem is, as you can see, that most people don’t buy your game after they’ve played a demo. Most. As in, maybe 99% of them. The reasons are legion but frequently they boil down to the fact that a large number of them just aren’t actually looking for something to buy, just something to play for a bit before they move on. Then of course, a fairly large percentage just don’t think it’s their cup of tea. I expect there’s also a pretty significant percentage of people who just consume all the front-loaded shiny and then, after they’ve gotten that sugar rush… well, why pay for the bit after the paywall? You’ve already slobbered all over the lolly and found out just how nice it tastes. Go try another one.
The AAA industry noticed this and stopped doing demos of their titles years ago, because Joe Punter got his fix of shiny from the demo and then found themselves not too bothered about paying to see the rest because of course all the best shiny is right at the start. All the new and exciting. All the wow and look-at-that.
Then all the indies stopped doing demos too, for exactly the same reason, and partly also because maintaining demos is work and indies make generally so little money for all the work you’ve gotta be smart about what you actually work on. And why create a demo when it simply reduces your sales? Good old Valve with their lock-in and zero refund policy means you can pile up games and flog them for a few dollars and still just about pay the rent. Some indies have gotten extraordinarily rich, though sadly we’re not one of them.
But now, everyone has a demo. Whether we’ve designed for it or not. Whether we like it or not.
And our games are still utterly dirt cheap.
What’s the result?
Oh yes. That graph. Thanks to some fairly shockingly shoddy “investigative” journalism this graph was plastered far and wide across the gaming newsphere to the delight of shitbags everywhere who revel in our downfall for some perceived slight once upon a time.
It doesn’t say what you think it says
Look at that! Actual proof that Puppygames makes shit games. We got the whole gamut of predictable commentary from the internet based solely on the fact that no-one bothered to actually follow the conversation about the data behind the graph, ranging from the face-palmingly ignorant:
“Simple. Just make good games”
to the straightforwardly cruel and gloating,
“I love how these wannabe devs can’t accept the reality that they’re utter shit. There’s a reason you can’t sell your game for more than 10 cents.”
And there were even conspiracy theorists imagining that they were the vanguard of some enormous GamerGate army and that this was revenge on us for pointing out that Valve had devalued them to the point that it wasn’t even worth talking to them any more, and that people were buying our games just to refund them and spite us! Truly insane gibber.
No, the actual reason for the graph’s rather strange shape was that Valve turned off the discount coupon supply at about the same time, and as we make most of our sales through the coupon scheme, well, that’s where they all went.
What it left behind was quite interesting.
The little dribbly bit at the end showed sales of only full-price games, and a refund rate of about 55% for Revenge of the Titans. It’d be easy to be really upset by that but actually I’m rather happy, because firstly, it means half the people who played it liked it enough to keep it (well… so far anyway), and secondly, that rate is, ooh, about 50x better than the old 1% conversion rate standard. So hurrah! It’s all good. What a shame that the news outlets didn’t notice the data analysis we did and wrote their own headlines to put words in our mouths.
The Insane Evil Genius Of Gaben
Now, let’s look in to the crystal ball and see what will happen in the future. This is pure conjecture, so feel free to argue with me, except of course the comments are off and I’m not listening. Here goes:
Valve had created a bit of an albatross for itself with the old way of piling games high and floggin’ ’em cheap with no comebacks. Not only was there a rightly massive amount of bitching about being ripped off when something didn’t work and you wanted your money back, it was creating a real and insidious problem which was like a cancer gnawing away at the foundations of the industry. Games were being devalued to the point of … well, the App Store (or Google Play), and we all know how that’s turned out for everyone. The effect has been, in the last 10 years alone, that things that people were happy to pay $20 for, are now things that they get angry about paying $1 for. Or even anything at all. This has created the famous “race to the bottom” which we hear so much about. The race to the bottom has this notable characteristic: nearly everybody makes fuck all money, apart from a very few, who make obscene amounts. There’s a tiny shade of grey in the middle. We were just about positioned in that rare grey area of almost making enough money to sustain the business. Almost everybody else… is fucked.
With a curve of success shaped liked that, you do everything you feasibly can to try and get at least into that grey area, or maybe even the strike-it-rich and retire spike loaded at one end of the graph. And of course one of the things you have to do to get there is you’ve got to fundamentally change the games you design to coerce your chances. You have to engage in bullshit marketing practises (“build it and they will come” – really, now).
If you’re in the little grey patch that we’re slowly slipping out of right now you’ll also notice something else. You’ve got a hell of a lot of customers and most of them gave you almost no money. Like, a dollar or two. Maybe you’ve got 4 games on Steam like we have – woohoo, each customer you hook has made you $4! And that’s before tax and Valve taking their somewhat generous 30% (for the record: that’s about 10x what it costs to actually host, deliver, and process sales yourself as a one-man band). See this rather infamous article on the subject where I explain this. Now go back and read it again before you make the wrong conclusions – I really am sick to the back teeth of semi-sentient readers somehow getting the impression from that article that I’m insulting customers by telling them they individually have no value any more under Valve’s regime. Perhaps the follow-up article will help you understand. Got it? Good. Valve has done this to us. Valve has done this to you.
So you’ve now got 500,000 worthless customers. I bet half of those customers bought the game on sale or with a discount and then haven’t even played the games. Of the other half, some percentage have technical problems or just need their hand holding a bit (especially with Revenge of the Titans, which is a far more deep, complex game than it looks). And of course, they’ve paid actual real money so they all have a little crown and sceptre and assume that they’re the King and you’re a menial scullion and should run to do their every bidding. Even the ones you like to talk to… well, there are a fucking lot of them. You never get any work done because you’re too busy doing that thing that you always wanted to do as an indie developer – get close to your customers! Just ironically, there are too many of them now, and you just have to stop talking to them.
We now have overloaded developers, worthless customers, unhappy consumers, devalued computer games, no more demos, and a relentless drive to make free to play games (heh). What could possibly fix this utter car-crash of an industry? Who fucked it up? Who could fix it? What could they do?
It turns out Valve fucked up the industry, and Valve had the answer all along. You introduce a no questions refund policy unilaterally overnight. Suddenly everything is a demo. Suddenly consumers are happy because they get to see if games work and if they’re any fun for them before they commit to purchase. Suddenly, we’re only selling half as many games as we were at full price, and there’s virtually no point at all selling them at huge discounts, and this can only mean one thing: if we’re to stay in business – if any of us are to stay in business – we’ve got to put those prices right back up to what games actually should be to cover the cost of making them, and keep them there. That means at least doubling their prices for us to make the same (risible) amount of money. But look! We suddenly only have genuinely interested fans playing the games, and a hell of a lot less of them. It means that if someone actually buys a game then they’re really invested in playing it. It means that we can talk to fans at length again because there aren’t so many people clamouring for attention. It means technical support once more. It means games are no longer shitty disposable commodities with less perceived value than a chocolate bar, but worthy, considered purchases. It means individual customers are worth loads of money, and even if they don’t quite get to have the crown and sceptre they can at least have a cape and perhaps sit on a golden throne for a bit. It means making customers super happy and being really helpful and nice to them might actually be worth it again.
You’ll also be seeing the last, triumphantly firm reassertion that DRM is here to stay, as not one developer with an ounce of sense will deploy games on Steam without the Steam DRM. So, there’s that. I bet you can live with that though, because ooh look at all my achievements and badges.
Sadly I think you’ll also be seeing the last of bite sized entertainment like our arcade games. People consume the fun for a couple of hours and there’s no real obligation to actually permanently give any money for it unless you get addicted or want to see more content, and of course, we’ve designed our games for people who paid up front. We had a philosophy that if you paid for a full game, then you should damn well get to see everything you paid for, and not have to beg for it. A competent teen can see everything there is to see in Ultratron inside an hour, because we designed it like that. It was designed to be played over and over, not consumed – it’s chewing gum, not a biscuit. Not such a great fit for the demo model, which is attested to by its absolutely terrible sales when it was in demo form. This is probably the biggest shame of all, because they’re a style of game we love to make and play, but they might simply prove too expensive to produce to the level of quality we hold ourselves to if they can’t be sold.
One last thing though: Valve’s lumbering heavy handed unilateral approach to dealing with developers might swing a bit away from consumers slightly as they get the stats and tune it to make as much money as possible. I predict the refund period will drop to a week, and maybe an hour of run time. It might vary by title. It might be specifiable by developers in future.
Blog post too long now. TL;DR: Steam’s refunds are great for everbody, but only when the pricing returns to normal.