Would Steam Points Work?
Steam’s having great success at the moment, with 40% market share making it the #1 platform for online game distribution. They’ve expanded from in-house games to publishing titles of all shapes and sizes (from Modern Warfare 2 to Osmos). I’ve always thought they were missing something, Steam Points. Steam Points would be to Steam as Microsoft Points are to Xbox. This entry discusses why this would be a valuable addition for Valve, developers, gamers and even retailers.
Features
Steam Points could be used to buy games, Downloadable Content and even in-game assets (through micro-transactions). They open up the option of gift cards rather than buying a specific game for someone. This would be perfect leading up to Christmas as non-game savvy friends and family could buy gift cards rather than guessing and thinking “Diaper Dash” is something you’d enjoy.
All payment would still go through PayPal keeping the security burden on them. Keeping payment with PayPal also stops Valve from watering down their focus by becoming a merchant facility. It will simply give gamers more options with how they buy their games.
Advantages for Valve
- Create new revenue sources – gift cards and micro-transactions
- Encourage micro-transactions within games, increasing revenue
- Bringing more developers and gamers to their platform
- Another differentiator to their competitors (not that they really need one)
Advantages for Developers
- A new revenue source
- Revenue during the life-time of the game rather than only at the point of sale
- Reduce barriers for customers as the initial cost of the game can be lower
- Micro-transactions allow more styles of games to be developed
Advantages for Gamers
- Using a trust company for purchasing points. Valve isn’t going bust any time soon
- Initial cost of games will be lower, increasing the number of games a player can afford
- More options for how players want to play (pay for convenience)
- Can purchase points at a retailer removing the need for a credit card
- Unifies the currency leading to less confusion for the international market
Advantages for Retailers
- Gives them a simple avenue into online distribution
- Can sell cards in their shops and make a cut of online sales
- Game retailers may resist however it’s similar to “iTunes credit” which most music shops now sell
Conclusion
Whether you love or hate Steam, it’s here to stay. I see a lot of great opportunity for Valve in the future and Steam Points are a great way to begin their move forward. Some people I’ve discussed this with are against the idea as they already see Valve as having a monopoly over online distribution. What do you think? Would you be happy to start spending Steam Points to buy your games and make micro-transaction? Should other platforms like Impulse use this system to differentiate themselves?
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I find it hard to believe that steam points would benefit consumers.
Non currency based purchase systems like msft points are used to hide the real cost of items and control fluctuations in currency which allow consumers to purchase games at cheaper rates.
Money is already pretty good at being money.
I’d really like to see Steam as a subscription service, ala Gametap
I have to agree with the thought that ‘money is pretty good at being money’. Why do we give people gift cards instead of cash? Perhaps because of the socially unacceptable stigma of cash compared to an explicit gift, which must be redeemed? I’m sure the recipient would always have preferred plain cash as it maximizes opportunities.
All ‘points’ systems ever attempt to do is hide or manipulate the true cost of something. It effectively allows manipulation of the money system by setting the exchange rate. In the case of MS Points for Xbox purchases, the exchange rate was set unfairly many years ago so for example, the Australian dollar is worth ~60c, not ~90c. Because purchases of points has to occur with real money, the cost of micro payments is no different than recharging a smart card or paying a tab (accumulated bill).
The only time I see a benefit to (some) customers is when the world market is split into regions and some regions, based on cost of living etc are given cheaper price points. This however flies in the face of free trade and is illegal to enforce in countries like Australia. Australian consumers have the right under the Trade Practices Act to outsource their goods and services from foreign sources just as businesses do. Region pricing already occurs for both retail and online sales (for Steam products!), so even this argument is invalid.
The value and advantages all lie in the publishers court. When people carry cash in their wallet/purse, they tend to spend it. When spare points are lying around they are more likely to be spent. Turning cash into a retail product allows more people to participate, which will persist as long as ‘online trade’ is a novel or new concept. Selling large blocks of points to be spent in tiny quantities over time can disassociate a customer from the true cost of their habitual spending, in the same way tokens and tickets can assist gambling machines. Finally, as bankers know, manipulating the cost of money enables a massive advantage to whoever can pull off that charade.
Seriously, encouraging in-game micro-transactions makes my eyes roll back into my skull.
That aside, the whole “points” thing on XBox and Wii irritates the shit out of me. They inevitably pull this crap where they only offer certain price-points, and the games themselves are almost always priced slightly out of sync with that so you’re forced to buy excess points which encourages you spend more since you don’t want the points going to waste.
If I could do a straight X points for X dollars purchase, it wouldn’t *quite* so irritating, but there’s no extra profit in that, of course.
Doolwind, just curious, is this Steam Points as well as the current system or instead of. I personally don’t have too much of an issue with points systems, but I do like the fact that on Steam I can tell exaclty how much money I’m spending.
Also I’m curious about the initial cost of games being lower point. Could you spell that out a bit more clearly?
I can see the value of points purely from the gift voucher point of view. The author of the excellent book “predictably irrational” posits that we live in two distinct worlds – one of “social” norms and one of “market” norms. As soon as money is mentioned we immediately switch to “market” mode where we are either a buyer or seller and rules appropriate to buying and selling govern our actions. Imagine going to your mother-in-laws house and having a great dinner and when everyone’s full and happy you stand up and pull out your wallet. “That was great Janice, how much do I owe you.” Giving money makes a gift a transaction.
However I really can’t get with the idea of exchanging money for something that’s less flexible than money. Especially with the side effects of obfuscation and inflexibility above. I swear that some mathematician has earned his PHD working out exactly how to organise microsoft points and game prices so you must continue to buy cards or forever feel like you are losing out because you have *Not quite enough* to buy that next game.
Also, it’s possible to look at one of your statements about security differently. While the purchase of steam points would be through paypal, this doesn’t completely relieve Valve of it’s security concerns.
Holding steam points – which are effectively money – makes Valve a holder of credit which they still need to protect as though it was in your bank. Microsoft and Apple seem to manage it ok of course, so no reason why Valve couldn’t. But I do think that purchasing points through Paypal falls short of tying up the security question. The points that you purchase still have to be held in safekeeping by Valve.
Steam points is a terrible idea. How is this helpful to the consumer? They get to earn interest on my money that still in the form of points in their system.
No. There is nothing good about a point system.
For gifts you can buy a Visa gift card with $50 bucks on it. Or something like that. At least that can be spent anywhere that takes Visa.