State of Origin: Steam’s summer sales show EA needs to work harder

Steam and Origin Logos

By on July 18, 2012 at 12:21 pm

There are 3.5 million people using Steam right now. Overnight, there were 5 million. Many of those people are there with one, single aim in mind: to take advantage of Steam’s ridiculous summer sales.

Steam’s sale prices, generally considered by all and sundry to be a good thing, have been an unusual talking point lately. David DeMartini, the head of EA’s competing digital download service Origin, famously said in early June that Steam’s sales “cheapen intellectual property” by teaching consumers that they just need to wait in order to grab games for massive discounts.

Confusingly, even EA’s games are on sale through Steam for criminally low amounts of money. Crysis went on a flash sale yesterday, allowing me to pick up Crysis, Crysis: Warhead, and Crysis 2: Maximum Edition for a paltry $19.99. Mass Effect 2 is half-price at $9.99. Dead Space 2, Bad Company 2, The Sims… the list goes on.

Meanwhile on Origin, the same games are twice the price. They’re not having a sale.

“We’re not trying to be Target”

This isn’t surprising, after all: DeMartini went on in his interview to liken Steam to Target, and themselves to Nordstrom – or for our Australian purposes, let’s just say David Jones.

DeMartini’s claim that deep discounting cheapens intellectual property is certainly an interesting one, but it’s the idea that Origin offers a somehow more up-market game service that is actually legitimately confusing. This isn’t some sort of situation where the games you buy on Origin are somehow better quality, or less likely to crash, or more efficient on your CPU cycles. It’s literally the same product in every way – only more expensive.

Origin not only doesn’t offer a superior quality of games, but it actually can’t. If the games you purchased from Origin were better than those of Steam or any other download platform, there’d be blood in the streets

If you go to David Jones over Target, you might expect that you’d get access to different, more costly brands. Maybe you do want to pay more and get the Scanpan set of cookware, rather than rummaging through Target’s frying-pan bargain bin. That’s fine. But if I buy Mass Effect 2 from Origin over Steam, I’m still getting Mass Effect 2. I’m not getting Mass Effect 2: Optimised Edition (Now With Fewer Bluescreens).

Origin not only doesn’t offer a superior quality of games, but it actually can’t. If the games you purchased from Origin were better than those of Steam or any other download platform, there’d be blood in the streets.

They have to offer the same product that’s available everywhere else, so the only room left to establish the upmarket brand that they’re seeking to cultivate is in the service they provide.

So far, it seems that the only thing that differentiates their service is a client with less functionality, and a range of games at generally higher prices. Needless to say, the PC gaming community hasn’t been quick to embrace it. This is a shame, because so far Steam has an effective monopoly on the digital distribution service, and EA is in a position where they could be the ones to break that monopoly.

There’s certainly a lot of ways that Origin could stand to improve. Hell, there’s certainly a lot of ways that Steam could stand to improve. But Origin’s (relative) new entry into the market means that it’s the new guy with a lot to prove, and so far it’s used the spotlight to make claims that only serve to annoy the people genuinely looking for a viable Steam alternative. DeMartini might have come to terms with the fact that everything Origin does is “going to generate a certain amount of reaction” from hardcore gamers, but that’s an unhelpful dismissal of what is, beneath the hyperbole, a consumer frustration with a product that lacks any real reason to voluntarily use it.

Origin is for companies, not consumers

From the original interview with Games Industry International, DeMartini’s approach is clearly outlined. EA wants to build Origin as a service – as a “universe”, in fact – one that encompasses all aspects and all platforms of your gaming life. It’s clear that they’re very serious about this goal, and they’ve thrown a lot of money behind it. But from a consumer’s point of view, I don’t look at a game on Origin and think “Great! I’ll buy this here, so that sometime in the future, my friends on the Xbox can see how well I’m playing!”

Instead, I think: “Wow, I could buy this on Steam for half price.”

And that’s because as it stands, Origin is not a consumer-facing operation. Rather, Origin is a company-facing operation. DeMartini’s comment that he doesn’t know if Steam’s deep-discount system “works as well for the publishing partners” is telling. His concern is primarily for developers and publishers, who do, as he says “work incredibly hard”, which fits in perfectly with the idea that having a sale on intellectual property “cheapens” it for them. It’s entirely correct to be worried about them. Nobody wants to rip developers off.

DeMartini also recently announced that indie developers who successfully crowdfunded a game would get 90 days of fee-free sales on Origin, to much delight from audiences. A fantastic and forward-thinking move to be sure, but again, one that directly benefits developers, not consumers. Consumers are left wondering: what’s in it for me? Will the price go up after ninety days when Origin’s fee kicks in?

The future of Origin

The most positive opinion you’ll hear about Origin from PC gamers is “Well, I’m only using it because I have to, but it’s honestly not as bad as some people say.” This is, understandably, not an ideal situation

Origin’s immediate concern should be to start directly addressing consumers rather than publishers and developers. So far, Origin has coasted along on the popularity of EA’s core PC franchises, which is why forcing people to use it for games like Battlefield 3 was a smart business decision. They’ve used that leverage to get people in there, but now they need to figure out a way to make them stay beyond “this will be the only place to play Battlefield 4”.

At the moment, the most positive opinion you’ll hear about Origin from PC gamers is “Well, I’m only using it because I have to, but it’s honestly not as bad as some people say.” This is, understandably, not an ideal situation for a product. If all Origin has to offer are EA big-name titles, what happens when one of them is an inevitable flop?

When the consumer reaches for their credit card, they’re not buying into the potential future of Origin, into the “Origin universe” that David DeMartini is envisioning. The consumer wants to know, right now, what Origin offers them.

Unless there’s some economic reason I’m not comprehending, it seems like EA could start by lowering prices on their own games. The price of EA games on Steam incorporates a fee from Valve, generally believed to be about 30% of each transaction. So when the consumer sees an EA game on Origin for the same price as on Steam, it doesn’t take a maths wizard to work out that EA is just keeping Valve’s cut of the profits for themselves. And that’s fine – that’s the way business works.

But is EA actually under any obligation to price match? If they’re happy with the profit they’re getting on Steam sales – and presumably they are – then why not simply take 30% off their Origin prices and let the market run its course? At least that would give the consumer some reason to put Origin first – at the moment, it’s cheaper to buy EA games from a third party rather than through EA themselves. This is, to say the least, counter-intuitive.

“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,” said DeMartini in the same interview. What this “something else” is remains to be seen, but if it’s not something that immediately grabs consumers by the wallet, then nothing is going to change.

A tried and true formula

Steam’s rampant success, and the money-throwing furore that surrounds every single Steam sale, shows that consumers actually don’t care about cheapening intellectual property. In fact, they love it. For many people, it’s the time of the year they spend the most money on games. It’s also the time of year that Valve makes money hand over fist.

“If we thought having a 75 per cent sale on Portal 2 would cheapen Portal 2, we wouldn’t do it,” claimed Valve’s Jason Holtman. “If we were somehow on a cycle where you could see (a negative impact), you wouldn’t see us repeating it. We wouldn’t repeat it with our own games. We wouldn’t repeat it with partner games.”

With even brick-and-mortar kings Gamestop now rolling over and accepting that Steam’s approach to digital distribution has been overwhelmingly successful, EA are left in an odd position where they publicly claim that they’re not going to copy Steam, but not offering any real alternative. The bottom line for Origin is that unless consumers see a real reason to voluntarily use their product, they’ll continue to throw their money at Steam in droves.

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30 comments (Leave your own)

There is one thing that Origin offers that blows Steam away – reliable bandwidth. Every thing I’ve downloaded from Origin (Mass Effect and BF3 clients/patches) have downloaded full speed every time. It’s anyone’s guess what download speed Steam will give me. Maybe that’s a side effect of the size of the userbase, but it’s still a definite plus in favour of Origin. Even if it’s the only plus…

 

Having regular sales is more or less about capturing consumer surplus – standard economic theory in textbooks. Say 3 classes of customers: Enthusiast, Mainstream, Value.

Enthusiast will pay any price as long as they can buy the game on release
Mainstream will pay full price if needed but would be willing to wait for sales
Value will only buy at sale price

Say there are 5 Enthusiasts, willing to pay full price $70 at release. 5 Mainstream, willing to pay full price $70, but if they know a half price sale is possible, would wait for it. And there are 10 Value customers, who only buy on sale at half price.

EA’s model is to sell at $70 forever. They get 5 Enthusiasts and 5 Mainstream. Total = $700

Steam’s model is to sell at $70, but have random sales at $35. They sell 5 units at full price to the Enthusiast, and sell 15 units at sale price to the Mainstream and Value. Total = $875

The strategy you pursue depends on what your marketing department thinks the market is like. Steam obviously thinks there’s plenty of people in the value segment, more than enough to offset the loss from Mainstream buyers holding off until sale time. They are also counting on network effects to reinforce buying patterns: when a game gets enough critical mass, sales go up – when you see everyone on your friends list playing or buying something, you might be more likely to buy it.

Ultimately though, this is getting to be a moot point: it looks like the evolution of games is trending towards companies providing services rather than pure product – witness Diablo3′s and DoTA2′s funding model – they provide a service (hosting games and services) in return for fees over time – in which case the list-price of buying a game becomes less relevant.

 

aetherfox:

Say there are 5 Enthusiasts, willing to pay full price $70 at release. 5 Mainstream, willing to pay full price $70, but if they know a half price sale is possible, would wait for it. And there are 10 Value customers, who only buy on sale at half price.

EA’s model is to sell at $70 forever. They get 5 Enthusiasts and 5 Mainstream. Total = $700

Steam’s model is to sell at $70, but have random sales at $35. They sell 5 units at full price to the Enthusiast, and sell 15 units at sale price to the Mainstream and Value. Total = $875

The question is though, that IF those ‘value’ customers KNEW there was no chance of the game being on sale in the future, would they cave and buy it for $70. I think that’s what Origin were getting at when they said steam sales de-value IP’s. Some of them would probably pirate it etc – I don’t think they’d all cave, but I think more people than before would pay the full price. I think that’s the jist of what EA were gettin at.

In saying this though, you’re right – I think the profit from the fringe customers that steam captures with sales would be FAR greater than the ones that EA hope to force to pay full price. Well written insight – kudos buddy.

 

agentdark:
There is one thing that Origin offers that blows Steam away – reliable bandwidth.Every thing I’ve downloaded from Origin (Mass Effect and BF3 clients/patches) have downloaded full speed every time.

I can go one better! Everything I have downloaded from Origin has downloaded at close to double the actual bandwidth of my DSL.

So more likely the Origin client is just BSing you.

 

agentdark,

While I somewhat agree with this, it doesn’t blow me away at all for one, and two It is purely because of the userbase, and activity times, More often then not I can download from Steam at 3.5MB/sec, which is my max (30mbps cable) only during sales or high profile games at release will it go below this speed. If Origin had the userbase and activity of Steam I’d have to question what speeds you’d actually be getting.

 
James Pinnell

phx: I can go one better! Everything I have downloaded from Origin has downloaded at close to double the actual bandwidth of my DSL.

So more likely the Origin client is just BSing you.

I don’t think so – Battlefield 3 downloaded for me in 20 minutes, it’s pretty hard for the client to lie about that. I have a 100mbit Telstra Cable connection, and it maxed it out for the entire trip.

Since EA take up a big chunk of a Datacentre in Sydney, I dare say that’s where Origin is getting its superior bandwidth from.

I like Steam a lot but Origin has been, without a doubt, a much faster download every time. Steam has gotten a lot better as of late though, but they still fail to consistently prioritize local connections (even when they are on the same network as the customer’s ISP).

 

Actually, I lie. getting 2.2MB/sec right now during the sale.

http://img407.imageshack.us/img407/5794/dddownload.jpg

 

agentdark,

That’s because nobody uses Origin :>

 

Yo Homeboy this is a really well written article. Changed my mind on a few things and cemented other thoughts. Bravo Sir.

 
MuscularTeeth

origin is horribly buggy for me.
mass effect 3 – when i click on the play button nothing happens anymore except me3.exe running at some 600kb in the back ground. i dont know how or why this has happened, but i cannot play me3.

bf3 – i cant his play button in origin. again i get a bf3.exe at 600odd kb and nothing happens. (i can get the game running if i go directly to battlog webpage).

ive uninstalled origin and the games… a number of times. ive got all my drivers up todate… it just refuses to work. i need to format my pc and try that as a last resort but needless to say its not something i want to do.

it REALLY annoys me.

 

Origin will not die, I know. But I wish it would.
Steam too for that matter.

 

agentdark:
There is one thing that Origin offers that blows Steam away – reliable bandwidth.Every thing I’ve downloaded from Origin (Mass Effect and BF3 clients/patches) have downloaded full speed every time.It’s anyone’s guess what download speed Steam will give me.Maybe that’s a side effect of the size of the userbase, but it’s still a definite plus in favour of Origin.Even if it’s the only plus…

I actually don’t mind Steam, because Internode mirrors all Steam content. For me, my download region is “NSW (Internode)”. Since I’m with internode that means non metered content downloaded as fast as my connection would allow.

 

vencha88:
Yo Homeboy this is a really well written article. Changed my mind on a few things and cemented other thoughts. Bravo Sir.

Thanks man!

 

I like both

 

I’ve always downloaded all my Steam games at my full speed.

But if Steam is a Monopoly, it’s a very consumer friendly monopoly probably due in part to Valve being a private business where they don’t have to bow down to the demands of ever greater profits for the shareholders.

I for one, welcome cheap games, I don’t mind paying full price for a game that I know I am going to play the hell out of like Skyrim, but other games like Crysis 2 where I was always on the edge… I’ll buy it when it is cheap. (Like I did, thanks Steam!)

Plus, ever tried getting a refund out of EA because their games don’t work? Took a complaint to the ACCC to get them to do it for me, even then it took months and I even had their tech support call me some horrible names.
They even pointed me to the Eula stating they don’t provide refunds and I in turn pointed them to Australian law.

I for one, will not use Origin, Steam or Retail+No Origin or it’s no sale.

 

I have bought quite a few games in the “Humble Bundles” and also Steam Sales that I have not played for much more than an hour.
Steam sales increase the revenue of games we think may be alright to play but may otherwise pirate and treat as a Demo due to the uncertain “value”.
I am happy to pay a few dollars for a game I am interested in but wouldn’t necessarily purchase.

 

I am a relatively cautious buyer now whether its from Steam or otherwise. I did however get offered some deals on steam that I could not refuse. Such as LA Noire for $3.74 (and the DLC bundle for another $3.74) or DCS Black Shark for $5. I also managed to get a bargain via an American friend for Max payne 3 ($30). Thankfully Max Payne 3 was unmetered for me and was fast but DCS Black Shark is quite slow atm (100KBs up and down). Origin wins on speed but nothing else as far as Im concerned.

 

If I’m going to buy a game on the cheap, I’m going to buy it on the cheap. If it gets on sale for cheap I’ll buy it then instead of when it comes down naturally. In the end it just depends, when do they want my money.

There are games I do buy full price and by that I mean $50 tops but the company has to make me want it.

Don’t make it hard for me, don’t have artificially high prices and I’ll go buy your product.

 

phx,

Neg, that’s measured with independent bandwidth monitors. Origin has always maxed my connection out for downloaded. I rarely see Steam do the same anymore. But like I said, that could well be due to the fact that Steam has far more users.

 

hmm Origin… I’m not so sure if it was a good idea of them to abuse BF3 for leveraging it.

Because having to start AND join a multiplayergame AND spawn in it, before you’re even able to adjust your controls/graphic settings is fun, isn’t it?

That, among other things left me kinda preoccupied about origin.

 
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