the TF2 business model.

so Valve spent 10 years working on TF2, and now we know that they basically re-built the game 3 or 4 times during that period.  and they're still building it, nearly a year after it's release.  i mean, if you think about it, the constant patching and updating TF2 is similar to an MMORPG, most of which require a monthly fee to support this continuous content. but valve doesn't - they're continuously adding new content for free.

now Wikipedia states that about 4 million copies of the Orange Box have been sold, and at 50 bucks a pop that comes to $200 million.  which is freakin amazing, but that's still spaced out over, well, going on 11 years now, so let's say 18 million/year, and including the new players that buy in due to the new content and free weekends, say 20 million/year, and that's the only fully-priced game Valve has released since HL2.  now i've long left the area where i know what i'm talking about, but the 2008 gross incomes of some video game companies are (again, from wikipedia):
Nintendo: ~ $13 billion (1.672 trillion Yen)
EA: $4.02 billion
Activision: $2.9 billion
Valve: $70 million.

now, $70 million is gross income, and i have no idea what they're putting into production costs, but these-a-days they don't make games cheap.

that's a lot of numbers, and i don't fully understand them, but i just keep going back to my original point - valve has spent 10 years making a game, and is still working on it.  and i'm glad that they've put their commitment to making an awesome game above making those EA level dollars, but i'm just concerned that they'll not make the keep-us-in-business level dollars.

*EDIT* - damn decimal point.  i always do that..

No, you're wrong. Valve is just a money hog who hates us and ruins the game all the time.






















Yeah, Valve rules.

Valve is doing just fine, they'll be around for a long while.

They keep the updates as long as the game still sells. When the game sales slow down....new game.


Its an interesting business model, I had this discussion with some friends a couple of weeks ago, and we came to that conclusion.

Wow I didn't know EA made THAT much money, thats pretty crazy considering how many bad games they come out with. I'm sure L4D will give Valve another big boost, which could possibly lead to other Valve games being bought.

Valve obvioulsy has a great business model because everyone loves them and they produce great games.

I wonder if Valve gets some commision, or charges a flat rate price to put up games on steam.

I doubt it.

But anyway, when you run a creative buisness that's not "about the money", you invaribly attract the best and brightest in your field. That's a universal truth, and that's why valve always has a quality of product seal in my opinion.

EA does not have a gross income of $402 billion. Citigroup "only" did $160 billion in 2007, to put that number in perspective.

EDIT: Looks like you forgot the decimal point, EA's gross income was $4.02 billion in 2007. Still a very good number.

Quote:

The post correcting the OP on his figure was after yours, but on the subject of EA making tons of money... Ever heard of this series called the Sims?  It is almost as useful for printing money as WoW is for Blizzard. Well, nothing prints money quite like WoW... 

(Also, EA has some other huge revenue generators besides the Sims.  Like Madden, and the whole EA sports major titles, like FIFA (huge sales) and NBA Live, among others like the NCAA titles.  And then you add in all the movie tie in games, and the huge catalogue of games EA produces... it really isn't that suprising when you think about it.  It actaully seems a little low of a figure, 4.02 billion that is, but your right about a high number of rather crappy games being put out.)

Anyways, on the subject of Valve, I read an interview with Valve (which I'm sure many others read as well) and it was said that the "free" content they have released in the form of updates has shown an increase in sales following them.  Also, the free weekends (also referred to as the noob slaughter or as the free stats buff weekends) have shown that sales increase greatly.

The game industry is recording huge profits.  Honestly, any game that sells reasonably well makes money right now.  And TF2 has sold very well.  Valve's production costs (on TF2 especially) are not all that high, this isn't a 50 million dollar game like GTA4 was. (Note, despite the record high costs for a video game to make GTA4, they had made the money back before the game was released with pre-orders.  And opening weekends sales made it back 10x.)

So TF2 has been a success in terms of profit margins.  Before any updates were released, it had achieved that intial goal, which is great.  Now the "free" updates (free to us... but they make money for Valve.  Everyone wins!  Except the other companies whose games are getting owned by TF2... can't please everybody...) are forming a sucessful business model as well, so far.  Hopefully that will continue.  And though I'm sure free weekends show increasingly dimishing returns every time you do one, those should continue to be somewhat sucessful.  (And remember, those free weekends don't cost Valve a dime.  So even if they get a small number of new buyers, it is worth it.  So even if the large jumps don't continue, small ones are all gain.)