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The Price Tag of Exclusivity: ATI and Valve 41

Posted by Zonk from the win-win dept.
The Inquirer has a piece up breaking down the millions of dollars ATI spent securing a "special relationship" with Valve prior to Half-Life 2 being released. The relationship resulted in a voucher being included with ATI cards for a free copy of Valve's hit game. From the article: "ATI gave Valve $2.4 million in cash for the deal. ATI also invested $1.2 million in marketing this great game. And last, but not least, was a cool $4.4 million that ATI and its partners spent for bundles. That amounts to some $8 million dollars....[ATI] sold an incredible lot of 9800XT and 9600XT cards just because of the nice voucher [for Half-Life 2]. That small piece of paper convinced many people to go out and buy an ATI card." A little salt with this article will help it go down easier.
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The Price Tag of Exclusivity: ATI and Valve More

The Price Tag of Exclusivity: ATI and Valve

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  • One year later, HL2 came out. (Score:4, Insightful)

    by 88NoSoup4U88 ( 721233 ) on Wednesday July 06, 2005 @01:36PM (#12995708)
    And then to imagine that once Half-Life 2 finally came out, most of those videocards the game came bundled with were allready quite outdated.

    Still, I know alot of people who, imo, fell for it.

    • I would hardly say they "fell for it." They still had the video card for that time, and it kicked ass. The game was a bonus, as the prices on the video cards were still very competitive, and the video cards which came with the voucher run the game just fine.

    • Re:One year later, HL2 came out. (Score:4, Insightful)

      by mog007 ( 677810 ) <Mog007NO@SPAMgmail.com> on Wednesday July 06, 2005 @05:48PM (#12998113)
      I bought my 9600XT just because it came with the voucher. I won't lie. I needed a video card, and I had just received my second batch of bad luck from an Nvidia offering. I figured ATI must be better at it, hell they make cards themselves, not solely whoring out the GPU to other third parties. Sure, they whore out their chips too, but they'll also sell the card themselves. Just tells my subconcious that ATI has more pride in their work than Nvidia, that's all.

      Granted, I had to get my card locally for the voucher, but I was in dire need of a new card, and the 9600XT was in my price range, and it had the horsepower that I could use.

      I still use it today, and it holds up pretty well, so I'd call it a sound investment.
      • I figured ATI must be better at it, hell they make cards themselves, not solely whoring out the GPU to other third parties. Sure, they whore out their chips too, but they'll also sell the card themselves. Just tells my subconcious that ATI has more pride in their work than Nvidia, that's all.

        Actually, nVidia's business model is one that was pioneered by the defunct 3dfx. They are a fabless chip manufacturer, which means that they focus on designing the chips and let other companies worry about the nitty g
    • My $120 9600XT is still running wonderfully. Maybe in two or three years, I'll spend another $120.

  • ATI troubles (Score:5, Interesting)

    by niskel ( 805204 ) on Wednesday July 06, 2005 @01:38PM (#12995729)
    I got an ATI card because I was told it had better performance than nvidia, especially in HL2. Now that I have my 9800, I realize what a waste it was, especially in Linux. HL2 was okay but definetely not worth getting this card for, especially for all the trouble it has caused (in an amd64 system). Next time I'm going nvidia.
    • Ditto. I was pretty split up on getting an Nvidia at the time of equal performance and price, but the voucher pushed me towards ATI (even though I had a long history of hating ATI and loving Nvidia).
      Now I regret it, a lot, especially now that I run Linux exclusively.

      Worst part, I never even bothered redeeming the voucher, since ATI insisted that I pay for the shipping both ways, and also had to have a proof of purchase. A purchase that was made over a year before the game came out.
      And to top it off, I got
      • Yeah I saw all those HL2 and ATI compatibility and I flocked out to get a 9800 Radeon 128MB way before the game came out.

        I am on my 3rd replacement under warranty now since it fried so many times on me in 1 and a half year. Had I known Nvidia would have had equal performance, I would not have rushed out like this. This is probably my last ATI card EVER due to extreme disappointment with the stock fans overheating.

        • At the time ATI's cards were faster than Nvidia's 5x00 series. I upgraded to a 5600 Ultra from my older 4400 and noticed almost no performance gains. While the 5x00 parts were direct X 9 compliant you couldn't use the DX9 game options because the impact on frame rate was severe.
          Although my experience with the 5x00 Nvidia series was less than spectacular, the card was very stable, just as my 4400 before it was.
          I've avoided ATI due to have bad luck with their drivers in the past. So although I was tempted to
        • I also upgraded from my Nvidia 4x00 series cards in my boxes to ATI 9600 series cards, but it's not because of HL2, rather because nvidai 5x00 series cards were such a big problem (noisy and performance issues). but ATI's driver is such a big problem down the road (especially the ATI Multimedia Center part.. I have 2 AIW cards). and now I'm swearing off ATI for good.. next time I upgrade, it'll be nvidia again. (6x00 or 7x00 series)

          until ATI can pull their shit together on the capacitor issues(maybe) a
        • do you have any case fans installed and is your case airflow any good? there is no wayin hell you should be on your third video card within warantee. do you have a PCI slot fan installed to pull hot hir off the video card? do you have at least one dedicated case fan (not PSU fan) and do you have a decent PSU.
          • I'm on my 4th Radeon 8500. The first one lasted two years, then the fan must have wound itself too much with all the dust surrounding it.
            The second card's fan was tilted and very loud.
            The third card had horizontal lines going across the screen under Linux, and Windows XP gave me the BSOD when I tried to play a DVD with it.
            I've had the fourth card for maybe almost a year now, and it's still chugging along, playing The Sims 2. All in all, I had to spend money for shipping on the first two cards to get th
    • Yeah, if you are going to install Linux, BSD or Solaris simply forget about ATI, it will make life a lot easier.

  • What d'ya mean, salt? (Score:2, Interesting)

    by AkaXakA ( 695610 )
    This article simply gives some facts about how much ATi 'spent' on Half-Life 2.

    However, how much the gain was is just speculation, but that there was a gain is sure.

    The real winner here is Valve, of course.

    • Re:What d'ya mean, salt? (Score:5, Informative)

      by Ford Prefect ( 8777 ) on Wednesday July 06, 2005 @01:52PM (#12995878) Homepage
      The real winner here is Valve, of course.

      Yup - and there doesn't appear to be any ongoing appreciation of ATi by Valve. After all, the upcoming Lost Coast expansion needs an Nvidia card to run fully [hlfallout.net], the appropriate ATi hardware not actually being available yet...

      Oh, and I'm still rather fond of the tale of the terribly expensive 'launch party' funded by ATi [gamespot.com]... ;-)
      If Gabe Newell had his way, he would have spent September 30, 2003, lying low at the Valve office. He was deeply embarrassed by the slipped date and frustrated that the fans were berating Valve on the Internet. In other words, he just wanted September 30, 2003, to quietly pass. Unfortunately, that wasn't a possibility. He had a prior obligation: the Half-Life 2 launch party, which graphics-card manufacturer ATI had scheduled months in advance--fully assuming, of course, that the game would ship on September 30.

      ATI, which is rumored to have paid more than $6 million to Valve as part of a broad endorsement deal, planned a massive fete to celebrate the launch of the game and a new ATI graphics card. ATI rented out the entire island of Alcatraz in San Francisco and planned to host the party inside the prison. Newell wanted to pull out of the event but couldn't. It was an obligation to a business partner--a partner that was "none too pleased we missed our date," he says.

  • No Kidding! (Score:5, Informative)

    by Ieshan ( 409693 ) <ieshan&gmail,com> on Wednesday July 06, 2005 @01:40PM (#12995747) Homepage Journal
    This is marketing. Plain and simple.

    The real "dupe" is in the price per unit of HL2. Although to the regular consumer, HL2 is around 50 bucks, to the company making the game, HL2 is pennies to produce once they've paid back RnD costs. HL2 units are CDs and booklets, nothing more, and valve can mass produce them like crazy.

    Which means ATI can buy lots and lots of them for mucho cheap. And means that your "50 dollar value" game isn't really worth 50 bucks to either company.

    But this sort of thing is done all the time. Macys, Filenes, Sears... almost all of them give away free gifts with purchase that cost little to the company but appear valuable to the consumer. Perfume cases, and samples, pretty silver trinkets, or computer games - really all the same. It just happened to bait lots of geeks this time.

    • Re:No Kidding! (Score:4, Informative)

      by FriedTurkey ( 761642 ) * on Wednesday July 06, 2005 @01:59PM (#12995930)
      Paid back the R&D costs? Do you have any idea how much it costs to produce a game like Half Life 2? The CD manufacturing costs are nomimal but paying back the programming and overhead costs isn't going to be recouped in selling a couple of boxes. It wouldn't be wrong to assume Half Life 2 has to sell a million copies to break even.

    • Re:No Kidding! (Score:4, Interesting)

      by Ford Prefect ( 8777 ) on Wednesday July 06, 2005 @02:00PM (#12995945) Homepage
      HL2 units are CDs and booklets, nothing more, and valve can mass produce them like crazy.

      Hellooo, Mr. Ieshan, 2005 called. Remember that Steam [steampowered.com] thing?

      My copy of Half-Life 2 is just bits and bytes, and my authorisation details in a database somewhere. No physical packaging whatsoever - and I believe this is how many of the ATI vouchers were redeemed.

      If the cost per unit allows them to hire talented people and take as long as they like on Half-Life 3, just like 2 was funded by the sales of the original game, then I'll be happy. Plus I've had excellent value for money [valvesoftware.com] out of the game so far anyway... ;-)
    • But for somebody who was actually planning on buying HL2, this translated to $50 off (assuming that the person wanted to buy both) when you purchase both, essentially. I've had a lot of crappy throwaway gifts before, but HL2 definitely seems to have been worth it.

    • Re:No Kidding! (Score:5, Insightful)

      by Leroy_Brown242 ( 683141 ) on Wednesday July 06, 2005 @04:00PM (#12997083) Homepage Journal
      If you think the cost of an application is just the CD and leaflets included, you are obviously not a programmer.
    • Yeah, and books are just paper with toner sprinkled on it. I can buy 500 blank sheets of paper for $3 and toner is like $60 for a 5,000-sheet cartridge.

      Therefore, a 250-page book ought to cost $4.50. Probably less, since those "printing" companies buy in bulk.
    • If they give me something for free that I definitely would have paid $50 for, doesn't that make it a "50 dollar value"? It's the flip side of most pirating issues. Many pirates claim that their downloading an Mp3 or game or whatever doesn't really cost the owner anything, since there was no way they'd actually pay money for the product.

      By the same token, I was definitely going to buy Hl2, and I was going to buy it the day it came out. If I have a coupon that lets me get the game for free, doesn't that m

  • Lack of information (Score:4, Insightful)

    by deinol ( 210478 ) on Wednesday July 06, 2005 @01:42PM (#12995775) Homepage
    Ok, so they spent 8 million getting peoples attention. That's nice. Did they sell 8 million worth of video cards? Or even better, did they even sell enough to make 8 million in profit from video cards? It's been a while since I felt the need to upgrade my video card. Then again, I don't have as much time to play games as I would like. And when I do, a console game is cheaper.

    Certainly I like the fierce competition between Nvidia and ATI. The more they try and get an edge over the other, the better and cheaper the cards that end up in my PC or Console. I wouldn't want either to win however.

    • Re:Lack of information (Score:3, Insightful)

      by harks ( 534599 )
      Even if they didn't, they have increased their market share and (hopefully) attracted some satisfied customers who could buy more ATI cards later on.

  • Valve did some work on their part too (Score:5, Informative)

    by misaochankun ( 714268 ) * on Wednesday July 06, 2005 @01:50PM (#12995860)
    I bought one of these bundles as well, and the instructions said you had to mail it in to get the game software.
    However, when the game came out, I put in the code directly into steam and it worked. No pesky snail mail, no need to wait for hard media. It gave me access to everything software wise. I think Valve did a good job on this, even if steam is a little clunky to deal with.

  • Bought the card for the game? (Score:3, Insightful)

    by faloi ( 738831 ) on Wednesday July 06, 2005 @02:13PM (#12996053)
    Nah, this is just like any other incentive. Not much different from bundling games with video cards (as has been going on for a while). The only difference was they bundled a game that didn't exist yet. I don't think anybody bought the card because it "came" with HL2. Having HL2 bundled with it *might* have been the last straw that pushed someone on the Nvidia vs. ATI fence over toward ATI. So ATI wins, they get possibly more people buying their card. Valve wins, they get pre-market sales to count on their accounting sheets before. And the customer wins, they get a decent video card and a good game.

  • ok (Score:2)

    by nomadic ( 141991 )
    Can someone please explain the slashdot story title to me? The price of exclusivity? Where's the exclusivity?
    • 'exclusivity' is supposed to be a bad word, and reflect badly on ATI, or Valve, or something.

      (Footnote- All I know is the ATI Rage Pro hardware built into the motherboards of all the machines I run these days (Dell Optiplex GX1's that I get at auctions for from 80 cents to five bucks as complete systems) works fine. I hear that we're supposed to hate ATI or something. The ATI hardware *I* have works great, including when I use it with freenixes.)

    • If you look at the benchmarks, the performance of HL2 on the ATI hardware at the time is significantly better than the nVidia hardware at the time.

      I can think of no other game that shares this disparity, generally nVidia's offerings are on par or better than the ATI ones across the board.

      There's only one reason for such a marked difference in the performance of HL2 on ATI gear compared to other software running on ATI - performance optimisation. That's the nicest way to put it. Sabotaging nVidia is anot
      • Eh, don't see the big deal. I was able to play HL2 on what is essentially a geforce2 (geforce4 MX 440 Go) and while it wasn't on especially high detail it was fine.
        • Ahh... yes... you don't see the big deal because you disabled it.

          The ooooh-ahhhh factor is when you're running 1600x1200 8xFSAA 8 tap aniso or better. (Difficult on a laptop, but laptops are not meant for gaming). And yes they put 3D accelerators in laptops, but those are regarded in some circles as a bit of a joke.

          So yes, especially high detail is the whole point, otherwise the money you spent on that laptop would be better spent on a PS/2 or XBox or Gamecube, depending on your preferences.
  • EverQuest 2 was used by NVidia in a similar fashion to ATI's use of Half-Life 2. While there weren't any vouchers, NVidia was doing a lot of advertising of EQ2, and, in return, EQ2 got the splash screen saying that NVidia is the "way it's meant to be played" or something along those lines.

    The hardware and software manufacturers no longer even try to pretend that they aren't in cahoots. They know they drive each others' sales.
    • The Nvidia "way it's meant to be played" thing has been used for tons of games. I think just about anything Electronic Arts puts out had the slogan at some point.
      The thing that's really irritating is for the most part it's just bs marketing. So while for example, Half Life 2 did actually run a bit better on ATI and Doom 3 ran a bit better on Nvidia - for most games it isn't true. I was pretty annoyed when I bought a Nvidia 5600 Ultra and found that performance was a bit off in Battlefield Vietnam. A game th

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