EA Origin's discounts won't be like Steam's "75% off going-out-of-business sales."

• Rin wrote on 2012-06-07 03:03

  Quote from gameindustry.biz:

  Q: One of the things that Steam does is this random deep-discounting of software, and it works well for them. Do you see that as something you want to do?
  
  David DeMartini: We won't be doing that. Obviously they think it's the right thing to do after a certain amount of time. I just think it cheapens your intellectual property. I know both sides of it, I understand it. If you want to sell a whole bunch of units, that is certainly a way to do that, to sell a whole bunch of stuff at a low price. The gamemakers work incredibly hard to make this intellectual property, and we're not trying to be Target. We're trying to be Nordstrom. When I say that, I mean good value - we're trying to give you a fair price point, and occasionally there will be things that are on sale you could look for a discount, just don't look for 75 percent off going-out-of-business sales.
  
  Q: Isn't that in some sense an old-school way of looking at it based on cost of goods? When your cost of goods is basically your transaction costs and your server costs. Even when they discount a game by 75 percent, they're still making money on it. It's not the margin that's important, but the total amount of revenue that's coming in. If by discounting it that much on a weekend they then kill the sales going forward, or they kill the sales in retail stores for the packaged versions, that could be a concern. But Gabe has said that as far as they can tell when they've done that it hasn't affected sales in other channels.
  
  David DeMartini: Actually, Gabe will usually say it improves sales in other channels because if the game is good there are some water-cooler moments and it has a spring-up effect. Without revealing too much, what I'll say is one way to deal with aging inventory is you do deep discounts like that. There are other ways, which I can't really talk about, of dealing with product as it ages over a period of time, where you present a value to the customer and you engage them in your service on a going-forward basis. We don't believe in the drop-it-down, spring-it-up, 75 percent off approach, but we've got something else that we do believe in that we'll be rolling out.
  
  But I absolutely understand your point, and I'm not not-hearing what you're saying. We don't have the old-school approach that you're describing; we're all about building as big a universe as we can, and there are multiple ways to build the universe. One way is to discount the price, the other is to form a longer-term relationship with them and draw them in that way.
  
  Q: I do think the downside of what Steam does might be damage to the brand.
  
  David DeMartini: Also what Steam does might be teaching the customer that "I might not want it in the first month, but if I look at it in four or five months, I'll get one of those weekend sales and I'll buy it at that time at 75 percent off." It's an approach, and I'm not going to say it's not working for Valve. It certainly works for Valve; I don't know if it works as well for the publishing partners who take on the majority of that haircut.

  
  
  In case any of you held onto the idea that Origin might do discounts as low as Steam can.
• Tarvos wrote on 2012-06-07 06:09
  And that's why I won't buy anything off Origin. They said it themselves, they don't want their customers to get used to paying low prices. Understandable since they're a business, but since I'm the customer...
  
  Nooooope.
• Kendoza wrote on 2012-06-07 14:07
  I laughed at "going-out-of-buisness sales"
  
  This is why Origin will probably never really beat steam. Those sales are just too damn good.
• TLCBonaparte wrote on 2012-06-07 14:17
  From the company that won worst company of the year, brings you the amazing "Origin", Origin "elevates" your game's value by... never give you discount. That's right, in a world where everyone loves discount, Origin offer you the unique experience of ... "Paying things full price long after initial release". Stocks are limited, order a Origin now and we will give you another Origin ABSOLUTELY FREE. Call 1800-RIPMEOFF, that's 1800-RIPMEOFF.
• Excalibur wrote on 2012-06-07 21:51
  The DRM on Origin is pretty dangerous, the really only dangerous things of Steam is their ridiculously SLASHED prices.
• Sumpfkraut wrote on 2012-06-08 15:17
  I'm glad to see EA doesn't jump into the crazy "we are the cheapest!" race, but I'm not sure they'll actually offer something good in return.
• TLCBonaparte wrote on 2012-06-08 16:38

  Quote from Sumpfkraut;882914:

  I'm glad to see EA doesn't jump into the crazy "we are the cheapest!" race, but I'm not sure they'll actually offer something good in return.

  
  
  Sure, normally you don't want to compete with someone's competitive advantage, but EA has nothing to offer that give consumer more value other than exclusive games. Frankly I would rather not buy the game if it means I have to use Origin.
• Sumpfkraut wrote on 2012-06-08 16:47

  Quote from TLCBonaparte;882940:

  Sure, normally you don't want to compete with someone's competitive advantage, but EA has nothing to offer that give consumer more value other than exclusive games. Frankly I would rather not buy the game if it means I have to use Origin.

  
  You don't know about that yet. They might actually pull something new out of their sleeves. After all they received a lot of flak for a good while, so maybe the decision-makers stopped being idiots, or were replaced by the top decision-makers. I wouldn't bet on it, but you never know. The market is a dynamic environment!
  
  That's not even waht I was refering to, but the fact that excessive price-based competition can completely ruin a business, or even complete branch. Two good examples are the German hardware store chain Praktiker and the German textile industry, if you can find it. Competition is great, but there's no point to it when it starts to destroy rather than build.
• Akemii wrote on 2012-06-08 16:50
  Having excellent sales on games that are already low, which only makes people who didn't buy it when it's already cheap, buy it now just to try it since it's so cheap it isn't really a loss isn't considered a bad business move in my opinion. Oh, EA.
• TLCBonaparte wrote on 2012-06-08 18:28

  Quote from Sumpfkraut;882948:

  You don't know about that yet. They might actually pull something new out of their sleeves. After all they received a lot of flak for a good while, so maybe the decision-makers stopped being idiots, or were replaced by the top decision-makers. I wouldn't bet on it, but you never know. The market is a dynamic environment!
  
  That's not even waht I was refering to, but the fact that excessive price-based competition can completely ruin a business, or even complete branch. Two good examples are the German hardware store chain Praktiker and the German textile industry, if you can find it. Competition is great, but there's no point to it when it starts to destroy rather than build.

  
  
  You need to take the context into consideration, as a digital distribution service they don't incur much cost if any, pricing competition can afford to be lower because once again it's not like many other business where you need to meet contribution margin by having enough sale. Steam's sales are normally on older games anyway, it's very lucrative even if they slash price, and honestly I am one of those people who put heavy weight into pricing consideration so if Origin won't even try to have discount I simply won't use it.
• ♪ wrote on 2012-06-08 18:35
  if they want a bigger buyer base than they better start dropping them sales or people are going to look for them somewhere else.
• Sumpfkraut wrote on 2012-06-08 18:57

  Quote from TLCBonaparte;882984:

  You need to take the context into consideration, as a digital distribution service they don't incur much cost if any, pricing competition can afford to be lower because once again it's not like many other business where you need to meet contribution margin by having enough sale. Steam's sales are normally on older games anyway, it's very lucrative even if they slash price, and honestly I am one of those people who put heavy weight into pricing consideration so if Origin won't even try to have discount I simply won't use it.

  
  Right, there's that... you have a good point. And it's not like they have constantly been calculating with 50$ per sold copy since they never got that much anyway, so reducing prices won't actually mess with their budget.
• Lan wrote on 2012-06-08 19:31
  Only thing I use Origin for is ME3 and I hope it stays that way.
• Osayidan wrote on 2012-06-09 00:52
  Wasn't origin considered considered spyware at some point?
• Lan wrote on 2012-06-09 00:58

  Quote from Osayidan;883251:

  Wasn't origin considered considered spyware at some point?

  
  
  I think it did things similar to what steam does but you couldn't opt out.