A Few Days’ Drama on The Internet Could Cost Valve ‘A Million Bucks’

Angry emails from consumers could cost video game software company …

Angry emails from consumers could cost video game software company Valve over $1 million in “just a couple of days,” according to CEO and founder Gabe Newell.

Writing in an “ask me anything” (AMA) session on the social news site Reddit, Newell revealed that a consumer backlash against his company’s controversial decision to allow paid mods on its Steam gaming platform has had a significant impact on the company. Responding to a Reddit user who accused Valve of profit-chasing, Newell said:

Let’s assume for a second that we are stupidly greedy. So far the paid mods have generated $10K 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.

Newell initiated the Reddit AMA in response to consumer concerns, noting that he had personally received 3,500 messages within two days, and acknowledging that Valve’s decision had “pissed off the internet.” Newell also pledged to personally tackle the problem of overzealous moderation on Steam’s community forums, where consumers are also speaking out against the change.

“If we are censoring people, that’s stupid [and] I’ll get that to stop”, said Newell. “On top of it being stupid, it doesn’t work”, he added.

Valve has been hurt by this controversy. Steam holds a virtual monopoly on the digital distribution of PC games, and the gaming community has developed a fearsome reputation for successfully exercising consumer pressure. Although the financial impact of angry emails isn’t immediately apparent to onlookers, the opportunity cost to Valve could be significant.

Gabe Newell is no fool when it comes to dealing with the internet, of course. His significant personal fortune has been built on his understanding of online consumers and the gaming community. He also takes a dim view of traditional PR techniques, preferring to address his critics directly.

Indeed, one of his most viral quotations is a warning against using traditional PR spin with online consumers. Newell clearly hasn’t abandoned this philosophy, and his answers on today’s Reddit AMA were characteristically frank.

Nonetheless, Newell is in a difficult position. To many gamers, he is less a CEO and more of a rockstar, with YouTube memeifications of him racking up millions of views. Newell also gained many admirers among anti-censorship gamers last year after personally intervening to restore the ultra-violent game Hatred to Steam, after another Valve employee had removed it from the platform.

The current controversy puts his pro-consumer credentials at risk. Then again, there are few people who understand online consumers better than Gaben.