Backstepper: Axiom wants to know: Valve has mentioned before that they like to attract new consumers by giving free updates as a source of income. Then why suddenly introduce micro-transactions in TF2, and where the prices of some in-game items are even more expensive than the game itself?
Newell: So, what were trying to do -- so the way to think -- okay, so, theres this question in of how do you make money so that you can pay everybodys salaries so you can make more stuff. The term is monetization. A lot of times pricing is thought of as a way to extract the greatest amount of money from poor, unsuspecting consumers, right? So, you know, Hey, we can charge $39.95. Yeah, we can also charge $49.95! Isnt that better? The answer is that is a really broken way of thinking about pricing. Pricing is a service, right? Its an opportunity to increase the value of the thing you do by giving each person what, for them, is the optimal combination of benefits and components and costs, and each person is going to have their own optimal way of doing that. Some people are willing to have ads, and some people dont. Some people want the least upfront cost, and some people want to know that they have finished paying for something they dont ever have to pay for it again. Those are just simple examples of what you really want to do is to allow each person to craft and design their own custom option. Now, having transactions or incremental marginal content is one way of giving lots of people more flexibility in sort of putting together what for them is the best set of, you know, features and costs. And were always going to be looking for ways to give each person there more and more control over what it is that they most prefer and that its not going to look like what the person next to them does.
Part of what we did with some of the pricing was to find out how people would react and would people buy really expensive items and how would they react to it, how would they feel about it after a month later? How many people would actually be wearing those items who purchased them? The interesting data we saw was that when we launched the Mann-Conomy that the highest selling item on the store was the most expensive item, the second highest item - the second highest volume - was the least expensive item. So you look at that and you say Hmm, people are trying to tell us something, what is it that theyre trying to tell us? So were very much at the beginning of understanding what it is that were learning from this. We certainly cant say that we have this clear idea that what were doing is the right thing thats optimal for all of our customers, we are looking at this very closely all the time and trying to figure out ways to learn more about what it is that people like the most and what it is that people dont like, what are the things that we should avoid? It will be interesting and entertaining to watch us fumble around trying to understand what the best thing to do is, and hopefully people remember that our long-term goal is to create as much value and as many happy customers as we possibly can.
Backstepper: And the community also gets money from it.
Newell: Yeah! Right now, we think that thats worth touching on. Its like, we think that its an incredibly important step so that the value that the community is generating, that theyre able to vote with their dollars and say This person has created something thats more valuable than anybody else, and Ill prove it by giving them money - wether its a map or its models or whatever, and we think that thats a critical characteristic not just of Team Fortress but just about any game going forward is to create a framework in which the community can actively participate in the creation and minimization of entertainment experiences.