Team Fortress 2 by Valve Software: From Product to Platform

How Valve's value creation keeps people playing this game years after its release.

Team Fortress 2 (TF2) by Valve Software is a multiplayer first-person shooters (FPS) similar to Halo. It also represents a video game that was once sold without any microtransactions became a free platform which is constantly updated with new content, some created by the users themselves.

When the game came out in Fall 2007 it was considered a great game, but it was a different one.In this game you can play as a variety of characters such as the (faux-Australian) Sniper or the (faux-Bostonian) Scout. Each character had an unchangeable “loadout” with a primary weapon, a secondary weapon, and a melee weapon. Finally, you were put into either the Red Team or the Blue Team, and your team’s goal was usually to kill as many members of the opposing team as possible. Most of that has changed in the last eight years.

At some point in 2008, Valve used network effects to create more value by adding more content. It updates the game to maintain a “balance” between the characters (that is, make sure no one character was too strong or weak vis-à-vis the other characters), but it also constantly adds more content. They are constantly adding more items to each character’s arsenal; none of them are tied to a single loadout. For instance, the Pyro can swap out its shotgun for a flare gun that could burn people from afar. Over time Valve created (and creates) variety of new updates, from new modes such as Mann vs. Machine to cosmetic hats that help personalize each character. The updates create direct network effects by keeping the game’s current players engaged and enticing new ones as well.

These changes allowed Valve to make some changes. It put in a “trade” mechanic so that people can trade items and captured monetary value from its users by creating a store where people can buy items. While some of the items required to play parts of the game have to be bought (such as the Tour of Duty tickets), most of them can still be found, created, or traded for within the game, and none of them are needed to play the vast majority of the game. The game’s economy became so big that Vale hired future Greek finance minister Yanis Varoufakis to study it (you can see some of his blog posts here). Eventually, Valve realized it made so much money from its game’s store that it apparently realized it would make more money by lowering the barrier to entry. To do that, it made the game free, so that price would not be an issue, and made the game available on Mac and Linux.

Valve enables indirect network effects by encouraging its players to create new items, such as the Pain Train- a piece of wood with a big nail in it- and the “Bushi-dou” jacket (https://wiki.teamfortress.com/wiki/List_of_community-contributed_items). In return for putting these ideas in the game, Valve gives a portion of the money it makes from the items to the users who make what it considers to be great items (see http://www.gamespot.com/articles/steam-workshop-introduces-revenue-sharing/1100-6410859/). This encourages people to come up with more ideas and contribute to TF2.

There are also some indirect network effects in play. By allowing people to create their own items and submit them for permission to be bought with royalties for themselves the game creates an indirect network effect where people contribute more hats and weapons ideas that grows the ecosystem of the game. Some of them created servers with their own rules, which means some of them have found their own ways to play with the game (such as playing with the game’s code to play a version where every player has a random loadout) and find money to pay for the servers (whether it be through donations or another method). Taken together, Team Fortress 2 is now a sort of “platform” where the users can make their own contributions that help build the platform as well as entice more people into joining the game years after the game’s release.

This game is not wholly unique. The characters’ ability to wear different, cosmetic hats resembles that of online role-playing games like Everquest. However, the game’s resilience is striking; most online games have dipped, but the game still hovers between having a population of about 30,000 people to about 60,000 people on a monthly basis (http://steamcharts.com/app/440). Valve is still adding new items and modes to the game, whereas it could have just made new games. It may not have as many consistent players as World of Warcraft had subscribers in Q2 2015 (5.6m), but it is still high (http://www.statista.com/statistics/276601/number-of-world-of-warcraft-subscribers-by-quarter/), but most games are not World of Warcraft; most online games have their servers taken down after a few years, never mind have new content added more than a few years after launch. Thanks to Valve’s commitment to constantly improving the game and taking in user feedback, the game is still making Valve money eight years later and it is still going strong.

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