Upon Origin, the Value of Gaming, and the Dollars in my Wallet

While primarily penned by Johnny, stay tuned for page 4 of this editorial for an excellent contribution by the inimitable Yousif Alshaker.

If you’re a PC gamer, you may have heard by now about the interview that Gamesindustry International managed to conduct with Senior Vice President of Global E-commerce for Electronic Arts, David DeMartini. DeMartini’s charge for the past year has been to take the helm of Origin, EA’s often dismissed off hand digital distribution platform. The past twelve months have seen a lot of vitriol passed its way, some justified, some knee jerk reaction, but it’s never failed to stir up a discussion. DeMartini continues this trend in his interview (available in its entirety here, which you should read), during which he responds to a question about digital distribution king-of-the-hill Steam, and its tendency to mount frequent, extreme sales:

I’ve taken the chance for this statement (and indeed the whole interview) to percolate in my brain, worried that it might be lost in the tempestuous whirlwind of E3 news, forming some proper thoughts and getting them all in a row. Now that E3 has wound down some, I thought I’d take the time to show you the results:

The instant reaction I found myself taking was one of disbelief. The very idea that Steam’s frequent sales (no doubt putting the games of many an indie developer, as well as major publishers into what would otherwise be disinterested or poor hands) could “cheapen” an intellectual property seemed ridiculous. The number of times I’ve bought a game from Steam that I would have passed on because of a promotional sale or lowered price has certainly increased my knowledge of games, and I find I can speak more authoritatively (both to recommend or divert purchases) on plenty more games and franchises than I could before.

So then you press the "A" button, and it lights up. I picture a bright future for these… computer games.

Then it occurred to me: exactly what is the value of intellectual property measured in? The word value connotes a monetary figure, something definitive, measurable by accountants, bankers, industry analysts, and other people skilled in the usage of abacuses. Do Steam sales cheapen the profit that these games receive then?

All accounts suggest no, though the exact figures aren’t there. Last autumn, Gabe Newell himself mentioned at a WTIA TechNW panel that a 75% drop in price on their Counter Strike sales price resulted in an increase in gross revenue by a factor of 40. Newell was quick to point out that the increase was NOT a 40% increase, but 40x. He even points out that the online sales increased box sales of the product, suggesting that the increase in online purchases serves as a word of mouth style marketing stunt, players asking others if they’ve picked game X up, because it’s SO fun.

Numerically speaking, these sales don’t appear to cheapen intellectual property, so how else could it be measured? Longevity? Having people continue to play your game for prolonged periods of time? Is it to be measured in the name of your game remaining quickly recognized, or going down in history as a milestone? In short, brand recognition?

Quadrillion dollar franchise? You decide!

If that’s the case, then Pong would certainly be among the most valuable licenses around. Similarly, games like Psychonauts, System Shock 2 or Grim Fandango (largely considered to be commercial failures) should be valued much higher than they currently are, with publishers clamoring to get their hands on the rights to produce sequels to each of them. A quick look around the internet makes it painfully clear that this isn’t the case at all. Is it length of play then? Can we really call Counter Strike, a twelve year old game that still ranks in the top ten games currently being played on Steam a more valuable intellectual property than Call of Duty?