"Instead what we saw was our gross revenue increased by a factor of 40. Not 40 percent, but a factor of 40." http://www.geekwire.com/2011/experiments-video-game-economic...

MS might be too wedded to old norms to understand that being able to lower prices can actually dramatically increase total revenue in a digital world but Valve very much does.

Here, read this: http://www.geekwire.com/2011/experiments-video-game-economic...

That's some background about Valve's early experiments with Steam sales. Early on their preliminary research indicated that sales would pretty much leave total revenue unchanged, with the increase in purchases balanced by the reduced per-game revenue. However, they found out quickly they were very wrong. What they found was that with a 75% reduction in price their total revenue increased by 40 times. Not 40%, a factor of 40, 4000%. And not sales volume, total revenue. Which translates to much higher profit in the digital realm where per-sale overhead is small.

Game makers and publishers who actually understand economics, instead of companies like MS who merely pretend to, have the opportunity to greatly advantage both consumers and game makers. Cheaper games means more people can play them, but it turns out it also means more money in the hands of people who make games. Which helps those companies survive and makes it that much more possible for them to make more games.