No point of arguing if physical game is more playable than digitally distributed, because most physical games require that internet anyway for activation. Some even download stuff before they let you to play. For example, I have bought physically distributed steam games, like Warhammer@ 40000: Dawn of War II. 

This is true.  Before bowing to Steam, I went out of my way to find physical copies of both Endless Space and Sleeping Dogs.  Ordered them from Amazon and then waited for a month while they shipped from overseas.  When I finally got them and slugged the disks into the drive, the first thing they both did was install steam!

That's when I gave up resistance.  Now I check Steam every night for sales.

It's not that Galciv 2 didn't make any money at all, it's that the ones sold at retail made much much less. Stardock was selling the game and its expansions online in their own store and got pretty much full price on those ones!

Lucky Jack was referring to GalCiv 1 and 2 for OS/2 and GalCiv 1 for Windows. Here is what Frogboy said about it:

If your paycheque tripled, and your housing costs tripled, and you had to start paying for work space and hire two people... would it still sound so great?

Development costs have gone way up. GC3 is going to cost far, far more than 2 did. It's selling for roughly the same price. That hasn't kept up with inflation, let alone the added cost to create it.

The only reason why that math works is because digital distribution has cut out some of the middlemen and boosted the revenue per copy. Without it, only games that could sell huge numbers of units are viable. (And even then, they pad those games with DLC because they make a lot more per unit on that then they do on a copy at Gamestop.)

And of course, Steam actually pays people, unlike the publishers Stardock had to deal with in the past.

Why did you go 'out of your way' and not research if a game was Steamworks or not......

I get it.  Why have development costs gone up so much though?

At the time, I had no idea what Steamworks was (still don't).  I guess it just never occurred to me that I'd even need an internet connection to play a single player game that came on a disk, so I never thought to check to see if steam would be required.  If a game needs Steam to play, why would they even sell physical copies?

For people like OP who still want a box.

Steamworks is the business side of steam that gives developers a set of tools to help distribute, administer, and provide options for their clients using Steam. Steam provides a lot of little services than just games for the individual, they provide the chat software, multiplayer servers for games, a convenient way to update games, and other things...

Internet connections seem to be required everywhere which is annoying, but it is a service that they are expecting to have everyone to have who plays games. Not all of the steam games have to have steam running in order to play them period (FTL comes to mind, you can turn off steam,(the program not running, I don't mean steam in offline mode) and play the game)

Assets (art and such) are one reason. Going to HD and really high polygon graphics dramatically increased the amount of work it takes to create the art for a game. Making a building takes far more work now than it did in days with simpler graphics.

Things like online integration have made games more complicated. The whole virtualized multithreaded AI stuff in GC3 for example is going to take some significant effort to build.

Inflation has driven up costs in general, with buildings, power, people, and the like all costing more. Game costs have not risen at anywhere near the same rate (in fact in absolute dollars a game is much cheaper now than it was in the SNES days, and that's before stuff like Steam sales). Plus you've got F2P iOS games that are made for dirt cheap, and $5 indie games abound.

FTL isn't a Steamworks game, it's just using Steam for distribution.

Indeed. If you purchase the game from their website, or the Humble Store, you get a DRM free version, in addition to a Steam Key.

Which is why it's always good to check if the Humble Store.

Thanks!  I thought it had something to do with mods for some reason.

Thanks for the explanation!  I'll bet most people wait for the sales though, so I wonder how much money companies actually make selling games at full price throughout the year.  If I see a game I like, I just put it on my wishlist and wait (no doubt like a lot of people).  On the Wikipedia page for Steam, there's this little graph in the sidebar that shows how a sample game sells over time. It almost looks like the regular sales would be negligible compared to the huge spikes during Steam sales.

There's a couple of reasons for starting with a high price and having sales to drop it later:

1. Maximizing profit. Some people will pay full price for the game, because they want to play it right now. This is especially true of competitive games, like online shooters or eSport games. Coming late to the party is an inherent disadvantage. So if person X will pay $50, it makes sense to charge that. Later on you don't have very many people willing to pay $50 anymore, but there's probably a lot of people who didn't buy at $50 but would buy at $25. Have a sale and get those people (and some free publicity). Because it's so easy to lower the price on digital games, you can reach those people. Eventually old games have $10 and $5 sales, and they pick up a lot of new customers that never would have touched it (and maybe they buy some DLC).

2. Psychology. People inherently perceive a $50 game that's 60% off (and selling for $20) as a better value than a $20 game. Both because the initial cost is higher, and because of a time limited sale. It looks like a great deal.

3. Marketing. Having a massive sale on an old but successful game gets it back onto the front page of Steam and gets some new players. They  might buy some DLC, and if they like the game they might become fans of the studio and buy more of your games. It's extremely valuable PR, particularly if you're about to launch a sequel and you put the previous game on sale.

You just couldn't do this kind of thing at retail because when you cut the price of the game that much, you make zero dollars. At zero dollars per copy it makes no sense to print more, so when the store runs out of stock the game vanishes. Selling digitally, an old $5 game is still making you $3.50 a copy, which is $3.50 you wouldn't have gotten otherwise and costs you nothing to do that late in the game's life.

Look at it this way - I see we both have founders badges. Considering that GC2 was just on sale for a lot off, GC3 probably will be too. Neither of us waited. Stardock makes a lot more money if we pay full price because we want it now, AND then a year from now someone who could wait buys cheap, rather than the two of us also buying cheap and that third person buying sooner.

What you say makes sense.

This depends but pre-order bonuses are ways to entice customers to pre-order. These are important on the retail space because most of your sales happen only within the first 1-2 months. So pre-orders are critical.

Steam's internal data they suggest that while some people are very 'sales oriented' this in general doesn't appear to cannibalize pre-order or full price purchases. Which is contrary to what you'd imagine. Most people are not super ultra coupon clipping crazy people. As shown by the clock work nature of posts like "OMG I PAID $50 FOR CIV5 NOW ITS ON SALE!! SCREW YOU STEAM" For literally every major steam sale. Even though Steam does sales more often that it's to teh point of when are they NOT doing sales.

Basically despite Steam literally giving away games at time, this doesn't appear to impact pre-orders or full price pruchases

Indeed Steam's data indicates that sales of # of units moved can increase at rates that are unheard of. In retail though you can't exploit this. I mean do you think Gamestop is going to stock 5000 copies of Magicka so they can sell it for Black Friday for $2.50? Nope! Retail space is expensive. Inventory depreciation costs money. So they'll take the initial bunch then fire sale everything as soon as possible.

What digital distrbution allows is the 'long tail' The fact that the graph you see is as long as it is, is what's the miracle. Normally your sales cycle would have been 2-3 months. But you can still sell relatively good # of copies of the game over an entire year. Magicka is a great example of this. It sold 1 million coipes. But did it over a long long long period of time. Something that would be impossible in a retail space. Also with GalCiv2 Stardock makes a good amount of money over the year to support the company. IT makes steady money over the entire fiscal year. Spikes are nice, but they still have a decent long tail which gives you even revenue all year long.

Steam; taking your money in style since 2003.

And you can hear plaintive crunch of crying banknotes Gabe swimming in.

I don't know, it's hard to argue with digital distribution when items you purchased could be downloaded within hours (if not minutes) after purchase. No need to wait for weeks, if not months till expensive box will arrive, visit postal office to get it (and surprisingly, PO's working hours are exactly as yours, so you have to find time to visit them during your working hours, good luck with that), and bite your nails all the time, remembing that "parcel meatball" of wet cardboard, shattered plastic, CD and figurine fragments you got once. Yikes, the horror.

I understand someone's desire to own box of goodies, as well as being able to install game from disk and play it, without mandatory connection to Internet - I've been using dialup for more than a decade, so I know how it feels when you're installing Orange box.

Funny thing is, that nowadays even the early access -accounts are on sale. For example game Planetary Annihilation, which I have been waiting ever since I did see the game on Steam's Greenlight first time. The early access costed nearly $100 if I remember correct. It's still early access, but recently there was a discounted price of 36,84€. And that is probably less than the regular full game when it comes out.

That all makes sense, and I do admit now that Steam is probably good for just about everyone (gamers and game companies), provided they have an internet connection.

Remember when Twilight of the Arnor came out and you could either get a digital download or a download plus a disk they would mail you?  It cost like $10 extra for the disk, but I got it.  Guess I'm just slow to embrace new things.  I've never even owned a cell phone.  Maybe I'm just old.

Huh, really? Not even a idiotic phone without "smart" features?  

Haha, I can relate. I never owned a phone until my wife made me get one. 

http://gaben.tv/