Valve and Bethesda decided to kill their profitable new venture on Monday night, mainly because they were losing too much money from angering the internet.
The joint venture was announced last Thursday: Bethesda, the maker of the popular game “Skyrim,” struck a deal with Valve, which runs the world’s most popular store for distributing online PC games. It allowed anyone that makes modifications to the game “Skyrim” to sell their content at a price of their choosing.
But there were problems: “Skyrim” modders complained about setting their own prices but getting only 25% of the revenue, for example, and with so many mods including works from other modders, it was unclear how to credit everyone involved.
So, four days after it was announced, Valve and Bethesda killed their paid “Skyrim” modifications, promising to refund any customers that paid for them.
So why was the decision made so quickly?
Valve CEO Gabe Newell offered an insightful answer while responding to the consumer backlash over the weekend. He gave this answer to one Reddit user that accused his company of chasing profits:
Let’s assume for a second that we are stupidly greedy. So far the paid mods have generated $US10K total. That’s like 1% of the cost of the incremental email the program has generated for Valve employees (yes, I mean pissing off the Internet costs you a million bucks in just a couple of days). That’s not stupidly greedy, that’s stupidly stupid. You need a more robust Valve-is-evil hypothesis.
But most importantly, it didn’t make financial sense for Valve to push paid mods — $US10,000 in revenue cannot possibly overcompensate for the potential loss of millions of dollars from angry emails and messages, especially when you’re losing your customers’ trust in the process.
Newell publicly acknowledged that Valve’s decision had “pissed off the internet.” He said he personally got 3,500 messages in two days before he decided to host his emergency Reddit AMA over the weekend to calm the masses.
The fact is, Newell isn’t only a businessman; he’s an icon in the gaming industry and a hero to many, having created Valve, which is easily the most popular hub for PC games — it has over 125 million customers worldwide — and producing some of the world’s most beloved PC games, including “Half-Life” and “Portal.”
It was a simple choice: Valve had too much to lose, and not enough to gain financially, from a paid mods store.