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Nick Gravelyn, Blogger

June 5, 2015

7 Min Read

With the news that Steam will be offering refunds, a lot of people have taken to the internet to express their concerns with the new rules. Personally I'm more optimistic about the situation and wanted to give two big ways I think refunds will improve the ecosystem on Steam.

But first, a quick explanation of why I think most concerns are premature or misguided:

  1. Steam specifically calls out that refunds aren't for getting free games in their terms and states that they can stop offering them to people abusing the system.

  2. Lars Doucet's Four Currencies model applies as well to refunds as it does to piracy and shows that there still is a cost to the customer, even ignoring that they lose access to the game. 

  3. Most customers are not your enemy. They're not trying to scam you out of money, they're just trying to find the best trade off of time and money for enjoyment. If they were your enemy, they'd be pirating your game already.

Those are the three main reasons why I think the negatives raised by others are likely to be far more minimized than some believe.

With that out of the way let's talk about some of the ways I think refunds will benefit the whole of Steam.

A More Positive Space

Some people that buy your game won't like it. This is a simple fact of reality. They may have thought it was slightly different, or it just might not strike a chord with them, or something else. But they bought it and they don't like it.

In the pre-refund world, users who felt regret over a purchase may go and advise others to avoid the game. They'd leave a negative review on the store, post in the game's forums, or otherwise try to discourage others from the game. They may feel "wronged" and want to help others avoid the mistake.

Beyond trying to help others avoid the game, they may also end up spoiling the community for the game. Negativity in the game forum could swell and cause those who do like the game to enjoy the community less, which can also negatively impact a game in the long term especially for games that are trying to build a community around updates.

In the new refund world, however, users who have that immediate regret can simply get a refund. They no longer have to feel wronged and once it's no harm, no foul they may not feel the need to go and negatively rate the game. Some still will, of course, but some may only be reviewing to feel a sense of "payback" at a system they feel mistreated them. Once that system allows them a way out of a decision they regret, they may not feel it's worth the hassle to bother.

With these changes you have the potential for fewer negative reviews and fewer angry customers in your forums. Many of these users will simply get a refund and move on. Yes, you made less money but you also now have a higher review score and a more positive community around your game, two things that are far better in my opinion.

Also worth noting is that Steam reviews currently require that you own a game. In theory once you get a refund your review would disappear, but I haven't seen any indication one way or the other on that.

Comfort in Spending

One of the larger shifts in gaming is the drive towards the cheaper game. Lots of games launch at lower prices than they would have a decade ago and many do discounts or bundles frequently to grab players. This leads to a situation where customers have been trained to avoid buying full price games. While some of this will stay for quite some time, there's also a component here that may change.

In today's price landscape it can be a hard sell to ask for $10, $15, or $20 for your indie game. Many gamers are hesitant to spend that money on a potential unknown. There's an inherent risk that if the purchase doesn't work out, that's money they have effectively wasted. Many wait for discounts not strictly to save money, but to minimize risk of that buyer's remorse.

For some games, a great response is to offer a demo. This method is a great way to allow gamers to try a game out and see if it's something they'd want to spend money on and is a model that will still be applicable in the refund landscape. There's no upfront cost to players, they can play it as long as they like, and if they choose to do nothing they've still spent no money. However there are negatives for the developer in not only having to create the demo but in hoping users who enjoy it end up buying the game. Distractions, other games, or simple forgetfulness may lead a player to simply never buy the full title.

With refunds, however, many gamers who are willing to spend that money can do so at a far lessened risk. They can try the game out and see if it starts to feel like something they want to spend more time with. In this model the developer has already made the sale so the default action is that the developer has made some money. There's also no extra development work since it's simply a function of the store.

Once risk has been reduced, some gamers will start to be more comfortable picking up games at full price that they may have otherwise held off one until a discount. While you can think of refunds as losing you a sale, they're really only costing you your eventual discount price revenue.

As an example, let's say your game is listed at $10. With no refunds, I may feel it's a risky use of my $10 so I'm going to hold off until your game is discounted to $3. Without the possibility for a refund, you're only getting 30% of what you could have made because the risk to the customer dictated spending behavior. But with refunds I may buy your game at full price in which case the two potential outcomes here are

  1. I enjoy the game and keep it. I've now got a great new game to play and you've sold your game at full price. And as a side bonus, I didn't have to wait for the sale (immediate gratification) and you didn't risk me getting distracted by other games in the process or me simply forgetting about your game.

  2. I dislike the game and get a refund. I get to avoid buyer's remorse and while you've lost money, you've only "lost" the $3 discounted revenue since without the refund I wouldn't have ever bought your game for full price.

The net result here is a higher potential for sales to people who are willing to spend more but still want to minimize the risk of buyer's remorse. Anecdotally I've already started doing this with games on my Steam wishlist. A few of the titles I had deemed risky purchases are feeling much safer knowing I can get a refund out of them. This should hopefully lead to a more sustainable environment for developers who can feel more comfortable leaving their games at full (or at least higher) prices more often.


So there are two big reasons I can think for why refunds will work out for the ecosystem. Of course I'm no psychic so I could be wrong, but the same can be said for those who see this as a sign of trouble ahead. As with all changes, it will take time to see how it shakes out in the end.

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