Deffo long live Steam, but they may simply be trying to boost the sales figures. Once they recoup the producton cost of the game, then they are only really paying for the bandwidth to send you the game, which is not that much. It's the same for iTunes - they make about 30p per song, after fees to the record company, artist and bandwidth, it's all profit.Originally Posted by D_K_Head
Say for example Valve made a casual game for £500k. If they then sold it for £10.99, assuming the 99p is the bandwidth (this is all guesstimates, so not accurate at all, just showing the point), then they would need to sell 50000 units to recoup the costs of the production. But after they have done that, they could sell it for £2.99 and then make £2 profit as the costs of production have been paid off, and the 99p pays the bandwidth. This then brings in all the players holding out of purchasing the game in order for the price to drop, because they feel that the game is worth the lower price. So say they sold the 50k at £5.99, then sold another 30000 units at the £2.99 price, then over the course of the timeperiod, the venture in total has made a profit of £60,000, which can then be reinvested into development, upgrading services, or line the pockets of Gabe Newell.
It's an economics concept, the name of which escapes me, but it essentially (yes, it's back) stems down to something along the lines of this diagram;
This isn't exact, and the cost lines should be a lot lower, but those who understand it will get my gist.
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