Valve co-founder Gabe Newell gave a fascinating insight into the pricing experiments Valve have been running with Steam at the WTIA TechNW panel in Seattle recently, revealing that Team Fortress 2's shift to free to play quintupled its player base.
During the course of the seven minute aside, covered on Geekwire, Newell also revealed that the conversion rate of the number of free players who go on to buy something is "20 to 30 percent" for Team Fortress 2, much higher than the 2-3% conversion rate seen by other free-to-play games.
Newell said that he thinks the announcement of Team Fortress 2 as a "free-to-play" game, and not just outright "free" was part of TF2's successful shift of payment model, perhaps underestimating the power of the raw, uncontrollable human drive to acquire and hoard sweet new hats.
"Why is free and free to play so different? Well then you have to start thinking about how value creation actually occurs, and what it is that people are valuing, and what the statement that something is free to play implies about the future value of the experience that they’re going to have," Newell said, suggesting that the implication that a free-to-play Team Fortress 2 would exist as a continuing service was a key motivation for new players.
It's likely that Valve's reputation for providing free updates and ongoing support was even more of a factor than the "free-to-play" label, but Newell admits that Valve are generally stumped by their observations. As an example, Newell commented on the remarkable but confusing success that Valve saw early on with Steam sales, saying "we do a 75 percent price reduction, our Counter-Strike experience tells us that our gross revenue would remain constant. Instead what we saw was our gross revenue increased by a factor of 40.
"Not 40 percent, but a factor of 40, Which is completely not predicted by our previous experience with silent price variation."
"We don’t understand what’s going on," he added. "All we know is we’re going to keep running these experiments to try and understand better what it is that our customers are telling us."
Team Fortress 2 players are currently gearing up for the incoming Halloween Update, which among other things, is sure to add new hats.
