Gabe Newell: 'Online jerks could be punished with price'

Insight: Valve boss on future pricing structure ambitions...

Valve has never exactly been a company to adhere to traditional pricing models.

From its revolutionary online Steam service to its mega-value Orange Box bundle, the Seattle firm has often looked for ways to reward its community with deals that shock the High Street.

That is never more so true than with its multitude of free updates to Team Fortress 2 - which were joined by micro-transactions for the first time last year.

Speaking to US marketing students last week in a video conference call, Gabe Newell explained how these paid-for TF2 additions have played a key role in Valve better understanding its customer base.


He also hinted at a future where friendlier online players are rewarded with price perks for growing or enriching a game's community, yet where "jerks" are punished.

Check out his full comments below - and let us know what you think under the article.

With Tf2 we try a bunch of stuff. We say: 'Okay, we're going to put out a bunch of different options for people to purchase.' And then they come back and they do this weird things, where the No.1 most purchased item in TF2 was the most expensive item in the store.

The second-highest unit volume item in the store - and actually also the second highest gross revenue - was the cheapest item in the store. So what does that tell you? Well, it tells you that you need to run a bunch more experiments to try and figure out what customers like and what customers don't like. And one of the things that leads us to believe is pricing as a service - that sounds kind of weird. Well, bricks and mortar teaches you and pricing is sort of a broadcast mentality: one price for everybody. But it turns out that what people want is an optimal set of trade-offs between what they get and how they create value for it.

Here's a concrete example: most of us have played multiplayer games on the internet - CounterStrike, Call Of Duty, Team Fortress 2. So here's the weird thing about those games: right now, who's ever played with somebody who's a total jerk on one of those games? And how many people know that when [their friends] go online, they want to play with those people because they're a lot of fun?

Those two people are creating different sets of value for everybody else, and they should be charged accordingly. The person who, when he or she starts playing a bunch of other people join their team... you might even think about giving the product to them for free. The person who is hated and everybody else leaves [when they're online], you might want to make that person watch a bunch of ads to help compensate for the negative externalities they create.


So you want to value people and essentially create different ways for different people to create value. For example, the jerk guy or girl might put up a server for people to play on, and that's a way for them to create value for the overall community. The person who everybody likes should receive some affinity or status - they should be a 'friend of the developer' or 'friend of the game' or some other benefit. What we're trying to figure out right now is how you create a custom package for each person.

Some people want to pay the least amount of money and are willing to value their time at a very low rate. Other people value their time really highly and so are perfectly happy to give money in order to end up in the same place. Rather than thinking about how people inject value into this overall gaming community as being one size fits all and the way that monetisation occurs, you want to create something that's completely custom to each person. That much we know, and we're only know starting to find some of the ways that make that possible.

When we look around for good role models for this, they don't really exist. This really is something that we're going to have to discover, so we forced ourselves to try and be as quantitative as possible, simply because any time we measure something we end up being smarter about it.