On the PC-only Steam service, a wide range of prices are attached to games, and attractive weekend deals throw more pricing variability into the mix. Although Valve was initially afraid that volatility or variability in pricing would confuse or anger its customers--or even cannibalize retail sales--Newell says that was not all the case. In fact, it dramatically increased sales. Illustrating his point, Newell showed the results of a Left 4 Dead promotion Valve ran last weekend, which cut the price of the game in half to $25. The discount (and promise of new content for the game) rocketed sales of the game on Steam by 3,000 percent.

"We sold more in revenue this last weekend than we did when we launched the product," says Newell. "We were driving a huge uptick in revenue and attracting new customers." And while people believe that we're "screwing" retail, Newell showed that brick-and-mortar sales were unaffected by the online discount.

This phenomenon is not limited to Valve games. Over the holidays, Steam discounted third-party titles. Sales increased 300 percent and units-sold increased by 600 percent. Still skeptical? Newell said that a weekend sale of one third-party title drove that game's sales up by 18,000 percent and units-sold increased 36,000 percent. It energized the user base, says Newell. When the sale ended, baseline sales were double what they were prior to the weekend discount.