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The Idiocy of Pre-Ordering Games.
Why you should never do such a thing! | Posted by djshamrock on Sep 26th 05 11:18 PM
Article By The Polygunner

I have made mention of this before, but with the release of DOD it would be a good time to use this opportunity to explain to the gamers of the world, exactly what kind of mistake they made purchasing a gold or silver package over steam 2 years ago.

Why would a game company want you to preorder a game? Well, its simple, the entier time its pre-ordered, your money is working for them, and not you! Lets take the steam packages silver or gold. My analogy won't use any numbers based on fact, I have no idea how many units were sold over steam, but this should give you an idea of the logic behind why you should never pre-order games.

HL2 has been out for a year, before that, it was delayed for a year. Before that time, people began pre-ordering HL2. So this DOD source package, which came with the Silver or Gold editions never arrived until 2 years after people ordered the product.

Now why is this such a big deal? Honestly, for you, its not a big deal. you pay your 60-70 dollars, and wait, wishing you had that money to spend on a different game, maybe invest it in your life. maybe your phone bill is a little short, so you pay some penalties, maybe you got your parents to preorder it, and you end up losing a christmas present for that year. Either way, the money is pretty irrelevant, but how do you put a price on all that frustration you have waitying 2 years for a game you already paid for?

So I may be wrong, the aggrivation on your part may make preordering not worth it, but its still insignificant, to what the game company gets.

This is where it gets complicated, and im doing alot of guessing, mixed with rough numbers I've read from interviews.

There are roughly 5 million Steam Accounts in the world. Lets imagine, that 4 million of those gamers purchased HL2. Now lets say that half of the people who bought hl2, purchased it over steam. Of the 2 million steam purchases, lets imagine that half of them preordered. Of the 1 million preordered copies of hl2, we'll imagine that 50% purchased gold or silver, at an agerage price of $65. I assume that its such a high % cause if your gonna buy through steam, your prolly gonna buy a higher package.

This leaves us with 500 000 preorders, I'm only taking into account the people who would be affected by DOD, not regular hl2.

There are some variables that of course mean free moneys to valve, and completely shafted customer. 1 woiuld of course be death, out of 500 000 people, over a 2 year period of time, the chances for some of them dying, is pretty damn good. then you also have moving, growing up, losing interest, moving to a different income class, and not affording internet or a computer, or your computer breaking.

none of that matters though, cause the money has already been acquired. Now depending on how good valve is with their investing, I would assume they would get at least a 10% rate of return on their investments. Your standard mutual fund is 7-11% gain, so ill stick with the even number in that range for mathmatical simplicity.

500 000 units
x
$65 per unit
x
10% interest.

now, for one year, with that simle equation, valve would gain 32,500,000 just off the sold games alone. interest off those games for the first year would be $3,250,000.

$3,250,000 dollars of FREE MONEY!. they didn't need to sell a single product for that money, they didn't have to provide a single service for that money, all they did, was take money from one group, the poor gamer, and transfer it to the other group, the rich company. but it doesn't end there.

for the second year, this past year that hl2 was out, you have that same 32,500,000, but you add the additional 3,250, 000 giving them a total of 35,750,000. 10% of that is $3,575,000. Add that to the investment, giving you a total of 39,325,000.

$6,825,000 is the amount of free money that valve would make, given all the numbers I put in, which are probably way off, but it gives you an idea. Simple inflation on the money would still be way over a million.

Now what are the potential consequences? Well, our frustration, and them rolling in the dough. The frustration would actually steamroll, cause where is the incentive to finish the game? with so much money sitting in the bank, the delay not affecting the hype or sales, the only potential downfall for valve delaying the game would be having to pay staff, and for software licenses. but this can be diverted by simplly applying these forces to producing other money making projects.

Im not saying thats what they did, that the delay was potentially extended by this free money for not having to actually deliver on a product, but the potential for this risk for gamers is deifinatly there. Whats the way to combat it? Its simple, don't buy things till you can actually get the product in your hands. Would you preorder a car cash up front for 2 years before you get it? no i doubt you would. what about a house? what about your college education? (some people do that but their not thinking well) all those high dollar items, makes much more sense for you to accumulate the interest on. For valve, its the same logic. it makes ALOT of sense to acquire interest off of the 30 + million dollars. that kinda money would be a great reason to lead people into thinking that there will be a sept 30th release date, when you know damn well there won't be.

any questions or comments, theories, or new variables are more then welcome

 
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