JUNE 4, 2015 • Valve Corp. has instituted a much wider refund policy behind its Steam digital distribution service. Starting this week consumers may request a refund for any reason during the first 14 days of use as long as the title has been played for less than two hours. Game DLC purchased separately is also refundable as long as the title the DLC is tied to has been played for less than two hours. In the case of Valve-created titles, in-game purchases of virtual items are also refundable within two weeks as long as the items have not been consumed or transferred. Valve reserves the right to deny refunds should it determine abuse of the new policy by individual users. In the past, under the Steam refund policy purchases that would not run once downloaded and installed on user PCs were not refundable without an exception being made by Valve.

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Impact: In a new DFC Intelligence report on digital distribution of PC games chargebacks and refunds were identified as a major market problem. This is why having a service like Steam that can handle the headaches of refunds is so important for most game developers. With so many computer games being purchased via Steam these days a change in the original restrictive refund policy was always in the cards. Core gamers are pretty savvy by nature. They follow the progress of a wide selection of titles during development and have a good idea whether they will like, and whether that product will work well on their PC, long before making a digital purchase. Mainstream consumers are not so well informed and are more inclined to make impulse purchases. Steam could operate for years with its original restrictive refund policy because core gamers were the main customers. That’s changing as acceptance of digital distribution becomes much more widespread. Yet we suspect there is some competitive and governmental intrigue at work in Valve’s new refund policy.

A year ago the European Union put in a new refund policy for online orders whereby consumers may cancel orders within 14 days for any reason as long as they returned the merchandise unused. The EU did make an exception for virtual content that the refund must be requested before the music, app or game was downloaded. Valve skirted the refund requirement entirely by not having a delay between making a purchase and the start of downloading when it updated its European Steam refund policy last March. A week later GOG.com played on the situation to remind gamers that purchases with them did not result in immediate downloads. GOG went further to extend the refund period from two weeks to 30 days and made the policy global. Steam was never in danger of losing its dominant position in digital distribution over evading refunds in Europe, but the policy did fly in the face of Valve’s community-friendly reputation. While the old rules fell within the letter of EU regulation they ignored the spirit of the requirements. These new refund options put Steam back on the high ground competitively thanks to the post-download provision. Following GOG’s lead, Valve did the right thing and made the new refund policy worldwide. Digital distribution is still a young industry but it is nice to see its purveyors are getting in line with the necessary service aspects of the business.