Loss leaders don’t have to literally force people to buy your other stuff. Supermarkets sell a bunch of things at a loss that they know people are price sensitive to, because most people don’t do their weekly shop spread across multiple supermarkets. That, after all, is how supermarkets took over from the butcher, the greengrocer, the baker, etc. So it may still be that selling Steam Machines gets people in the door and more likely to buy Steam games.
But in this case this is a fairly picky point. People who aren’t already in the Steam ecosystem are fairly unlikely to buy a Steam machine, I would say, so a lot of your potential customers are already buying those games on Steam and you gain nothing. Maybe due to the form factor it replaces an XBox and so those people buy more games on Steam rather than on XBox? Hard to say.
Certainly the safer bet is to aim to at least break even.
Sustainable loss leaders are stuff like chicken or hotdogs at Costco. Easily sourced and no supply constraints and inexpensive relative to other goods they sell. Not expensive hardware during times of components rising in price along with supply difficulties while costing more than products they primarily sell.
Valve’s problem isn’t even that their hardware isn’t selling, but that they dont have enough. And I dont think people realize how small Valve’s manufacturing division actually is with how it took years for the Steam Deck to sell 6 million while the Switch 2 did 6 million in a month.
Loss leaders don’t have to literally force people to buy your other stuff. Supermarkets sell a bunch of things at a loss that they know people are price sensitive to, because most people don’t do their weekly shop spread across multiple supermarkets. That, after all, is how supermarkets took over from the butcher, the greengrocer, the baker, etc. So it may still be that selling Steam Machines gets people in the door and more likely to buy Steam games.
But in this case this is a fairly picky point. People who aren’t already in the Steam ecosystem are fairly unlikely to buy a Steam machine, I would say, so a lot of your potential customers are already buying those games on Steam and you gain nothing. Maybe due to the form factor it replaces an XBox and so those people buy more games on Steam rather than on XBox? Hard to say.
Certainly the safer bet is to aim to at least break even.
Sustainable loss leaders are stuff like chicken or hotdogs at Costco. Easily sourced and no supply constraints and inexpensive relative to other goods they sell. Not expensive hardware during times of components rising in price along with supply difficulties while costing more than products they primarily sell.
Valve’s problem isn’t even that their hardware isn’t selling, but that they dont have enough. And I dont think people realize how small Valve’s manufacturing division actually is with how it took years for the Steam Deck to sell 6 million while the Switch 2 did 6 million in a month.