Valve's Comprehensive Strategy Shows How To Go From Fee To Free... And Increase Revenue Twelve-fold
from the nicely-done dept
We've writen about Valve's approach to the market many times before. The company believes strongly that "piracy" is a service problem not a legal problem. It knows that it can easily compete with piracy by offering a better service, something that it regularly succeeds in doing. However, On The Media calls our attention to an absolutely fantastic case study found on Gamasutra, not (directly) about how Valve competed with infringement, but how it turned Team Fortress 2 from a fee-based game to a free-to-play game and increased revenue twelve-fold.Of course, over the years, we've covered other online games going from fee-based to free and making more money for it, inspiring more and more other games to do the same. But what's most interesting here is the level of detail. In the case of TF2, it's clearly not about "give it away and pray," but a careful strategy that really does seem focused on connecting with fans and being awesome while giving fans a good reason to buy.
For example, the team at Valve connected with fans in a really cool way. It put out "teaser trailers" with product updates, and then scoured feedback to come up with ideas that fans might like in the game:
[Valve's Joe] Ludwig showed TF2's Sniper-focused update as an example. Each content update started with a teaser trailer that hinted at several possible new items or features, and Valve developers would monitor the community reaction in the forums to determine which aspects caught the players' attention. "We found people in the forums talking about how cool it would be if the Pyro could light the sniper's arrows on fire. To be honest, we hadn't considered it, but we were able to implement it by the time the update shipped," Ludwig said.Separately, Valve was very careful and deliberate about how they "went free" and moved to offering in-game purchases. Recognizing that there's an unfortunate incentive to then make in-game purchases make the actual gameplay worse (such as by making it "pay to win") the team made very strategic choices about how they would have in-game purchases, such that they were never required to play the game how you wanted:
In another instance, players picked up on a blueprint displayed in passing within the teaser trailer for the Engineer-focused update of a mechanical hand item. Ludwig explained that "[The players] didn't realize it, but they were indirectly voting on the content of the update. When the update shipped, it included that robot hand."
Once Valve rolled out the in-game item system, it needed to get the players used to the idea of paying for them. "This wasn't a change we made lightly, but it was something we had to do to get our game into the free-to-play business model," Ludwig said.In other words, this was entirely designed around the idea of giving people a good reason to buy rather than a negative reason that makes them feel forced to buy. Too many companies (hello most newspaper paywalls!) seem to think that "forcing" people to pay is a "reason to buy." It's not. It may get some people to pay, but it pisses off lots of people. Valve carefully structured its business model here to make people want to buy.
"They had never paid for an item in TF2 at any point in the past, and we weren't sure how willing they'd be to pay now."
Ludwig outlined the players' possible objections to the item store, the first of which was TF2 turning into a "pay-to-win" game:
"We dealt with the pay to win concern in a few ways. The first was to make items involve tradeoffs, so there's no clear winner between two items. But by far the biggest thing we did to change this perception was to make all the items that change the game free. You can get them from item drops, or from the crafting system. It might be a little easier to buy them in the store, but you can get them without paying. The only items we sell exclusive to the store are cosmetic or items optional to gameplay."
But the real key here is just how much this effort increased revenue. Many people have assumed that taking a fee-based game and going free-to-play is really an "end of life" strategy to try to squeeze the last remnants of revenue out of a game, but Valve is showing it's not that at all. It was a strategic choice to maximize revenue. This is the same point we've made for well over a decade in talking about how to use free as a part of a business model to increase your market. When properly applied (which is not just "give it away and pray"), free becomes a revenue multiplier, and Valve's example of TF2 is really a perfect case study of how to do it right.
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Filed Under: business models, connect with fans, fee, free, reasons to buy, revenue, team fortress 2, video games
Companies: valve
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Bu, bu, but . . . free?
Freetards just want everything for free.
Free is not a business model.
But artists and creators need to make money!
(what other troll arguments can you quote?)
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Re: Bu, bu, but . . . free?
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Re: Re: Bu, bu, but . . . free?
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Re: Bu, bu, but . . . free?
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Original Team Fortress...
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Re: Bu, bu, but . . . free?
You should go under a rock and stay there as there is very little use of your life above the ground.
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the hats piss ppl off, but who can say no the this http://city16.files.wordpress.com/2010/12/hat-trick-111.png
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Re:
Here's just a partial list I posted a few weeks back:
http://www.techdirt.com/articles/20120225/00505417877/funniestmost-insightful-comments-week -techdirt.shtml#c106
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Re: Re:
Age of Conan
APB: Reloaded
Carte
Doctor Who: Worlds in Time
RaiderZ
Warface
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Re: Re:-P
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That will then be topped with comments that there are literally no meaningful examples of new business models emerging.
The more thoughtful will however just point out that this example doesn't work in x part of y business and therefore is not worth paying attention to.
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Re: Right On!
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They need to work with technology rather than fighting it and it will work out better for all involved.
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But I have to keep it real and honest about Valve. They do some things wrong. They quickly make up for it while doing what the community wants.
They have dedicated servers for people to buy at cheeap rates. This means that even if you're an evil douchebag player, you get to see more ads because you're a negative externality elsewhere.
If you're a good player that gives to the community in a number of ways, they give you free weapons.
If you create weapons, you have ways to be supported by the Steam community if you put up a good design that the community enjoys.
If you do things such as the Female Scout update, they love you long time.
Basically, what they've done is build a community of people that add value to the game. Sure, it's four years old. But to the people playing Valve games, they've serviced it so that the community continues to support the games, the personalities, and the players who have found tremendous value in keeping the game going.
Of course, there are still downsides... But as a Valve fanboy, let's ignore those while I gleam the good side of a great company. :)
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DRM and Paywall!
Why aren't we hearing the usual complaints about DRM here? Don't ask me.
Perhaps, you'll say because it's free. It's rather clever for them to bury the winning pieces in some complex maze and assert that all you have to do is find them and you can play for free. Revenue wouldn't be up that much if that were true.
Sounds to me like they just adopted the old fashioned studio rules. Give them a taste and then make sure to get their money while they're on the edge of their seat.
Not that I have any problem with that. It's just a clever ruse to put a new veneer on the old quid-pro-quo.
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Re: DRM and Paywall!
I think you need to ask the nurse is she forgot your medicine today pops.
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Oh, crap. I think I heard something in my skull pop. Ow.
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Re: DRM and Paywall!
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Re: DRM and Paywall!
Same reason you don't hear about it on Netflix, because it's non-intrusive DRM. I'm not a fan of DRM, but if it does not make me jump through 15 hoops to use it, I don't care about it.
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Re: Re: DRM and Paywall!
All you can ask is that they create a service that is easier and better to use than the piracy option and Valve and Netflix have both done this. As a result I pay for both.
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Re: Re: DRM and Paywall!
The mmo games are actually a nice case study. Many were discontinued but you can still play them in 'private' servers so even thouse, I think their source codes should be released to the public once the company stops supporting them.
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Re: DRM and Paywall!
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bob is a Wookie. bob lives in Endor. darryl also lives in Endor. darryl is an Ewok.
If bob is a Wookie, why does he live in Endor?
IT MAKES NO SENSE!
LOOK AT THE MONKEY!
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Re: DRM and Paywall!
Paytard.
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Re: DRM and Paywall!
I was sold on steam when my PC poofed and after a rebuild and install of Steam, it then goes and installs all of my games. That one feature... SOLD!!! When they run sales... ITS A SALE.
"You can't pirate their games because the game checks in with the server all of the time." FALSE. Different DRM does different things. Shouldn't you know that?
http://steamdrm.flibitijibibo.com/the-big-drm-list/
"Sounds to me like they just adopted the old fashioned studio rules." - Sounds to me you really dont have a grasp on what you are talking about, and if they adopted anything it was because they were forced to.
It also appears that they are just implementing DRM out there already to appease the Game producers.
Example:
EA Account required to run (requires constant Internet connection even in single player mode)
EA ACCOUNT, has nothing to do with Steam.
Ubisoft DRM
Unless otherwise noted, you must have a constant Internet connection at ALL times to play these games.
Thats UBIsoft
Its nice to see lists like this so we know which games to pirate.
So while you like to sit there and ha ha, it is these DRM schemes that push users to be a swashbuckling pirate. Arrggggggg!!!! Off to the torrents we be!!!!!
I think you need to read this:
https://www.insightcommunity.com/step2/311/why-i-pirate-an-open-letter-to-content-creators
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Re: Re: DRM and Paywall!
I definitely felt the negative side of Valve's DRM.
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Re: Re: Re: DRM and Paywall!
How do you know it was DRM?
Any update can fail. Or be crappy out of the box.
CIP:
Alice Madness Returns. OOTB one of the ini's were coded incorrectly. You got to a certain point and the key mapping for a weapon did not work. I spent hours going through forums to find a fix. Nothing to do with DRM, although makes you wonder if the time spent on DRM was spent on QA, if that would have happened.
It still is a good point, that you had to go through BS just to play a game. I didnt see your error but at lease if it was just an exe to update program files there may be an error code & logs to look through to narrow where to look for a fix.
Personally, I have never had any technical issues with Steam.
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Re: DRM and Paywall!
You're also intentionally misunderstanding the position. No one has a problem with paying for thing we 'want'. It's when you we're told we need to pay for things we don't want and then don't pay for them that MPAA/RIAA/etc get crotchety.
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Steam is indeed DRM, but it's DRM that doesn't step on legitimate users toes too much. That's why you don't hear complaining.
However, you're 100$ wrong that you can't pirate their games. You absolutely can. There are fake Steam servers you can run yourself for the games to check in with and let you run them.
And yet, only a tiny fraction of players do this. You know why? Because there is more value in playing to play on Steam's servers than there is in playing for free on you or your buddy's.
Like Netflix, Steam is proof that people don't pirate just because they want stuff for free.
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Re: DRM and Paywall!
Let's try this, once again, go and ACTUALLY use Steam. I'll give you a few pointers on it. Steam may be DRM, but it's non-intrusive DRM. It provides more benefits in it's use, so as such, it's seen as ACCEPTABLE DRM by it's users.
You obviously don't know this, but you don't need to be online with Steam. Just long enough to download the games, after that you can switch to offline mode. Where the game DOES NOT check in with the server all the time.
Also, as has already been noted, TF2 is free to play. Period. The special/bonus items are free as well, but if you don't want to find them yourself, you can purchase them. But they are NOT winning pieces that have to be bought. Either way, finding them is more a bonus than anything else. You DO NOT have to "find them and you can play for free". You play for free from the get go.
bob, seriously, stop posting about things you don't understand. It only makes you look like an even bigger idiot. And honestly, up until this latest beauty of yours, I'd have said that was impossible for you to do. I stand corrected in that regard.
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Re: DRM and Paywall!
Steam is DRM but it's value added DRM that does not work like you think (at all, it's offline mode could use some rejigging but once I've download a game on steam I do not have to be online to play it) and the idea that it actually stop piracy is laughable. If a game is realised as steam works all it does to prevent piracy is hold back parts of the code until realise day. Once the game is out it will quickly be cracked.
>Why aren't we hearing the usual complaints about DRM here? Don't ask me.
I won't because you are clearly ill informed. If you think that there are not people who dislike steam then you are very wrong. It just happens that most people forgive steam it's role as DRM and it's other problems because of the value it adds in other ways.
>Perhaps, you'll say because it's free. It's rather clever for them to bury the winning pieces in some complex maze and assert that all you have to do is find them and you can play for free. Revenue wouldn't be up that much if that were true.
This is how most good free to play models work, when you buy something that effects game play you should only be paying to save time. Another player who does not pay should be able to with time and effort get the same result.
>Sounds to me like they just adopted the old fashioned studio rules. Give them a taste and then make sure to get their money while they're on the edge of their seat.
TF2 has been out for a very long time, it's been on sale for next to nothing more times than I care to remember. How this is meant to be getting people on to the edge of their seats I don't know. What it is doing is allowing players to get more content for a game they enjoy and for the makers of that content to be paid to do so.
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Re: DRM and Paywall!
I have the answer:
Those who have ever heard of SecuRom DRM would know what I am talking about.
Valve actively removes DRM from titles sold on Steam. A prime example is GTA IV. The Brick and Mortar version used SecuROM DRM....the Steam Version had it removed from it's release.
Steam works the way a CD check would normally work..and you for all of valve's single player games, an internet connection is not required to play if your internet goes down.
"Sounds to me like they just adopted the old fashioned studio rules. Give them a taste and then make sure to get their money while they're on the edge of their seat."
That is how the likes of DOOM and Quake sold back in the day. Two very successful franchises...oh the memories of my youth :-)
I have been using Steam since I bought Half-Life 2 (it came on 5 discs :-) ) and I could not be happier with Valve and their Distribution Center. They have always treated their users well. It is that business model I wish EA and a few others would adopt that policy.
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1. They effectively bundled TF2 with something else people already wanted to buy, half-life 2. So, step 1 to having a successful free offering: start with a huge audience and leverage it. The first 20 million is always the hardest.
2. The stuff they're selling (hats, guns) are artificially scarce. They use DRM to enforce the scarcity.
3. They have managed to offload their recurring costs (server operation and maintenance) to the community, yet restrict the sales channel and DRM to themselves. Server operators are left to front their own costs or beg for donations via PayPal.
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2) Well, except for the fact that almost all items can be acquired for free, and that server-side mods can grant any items they want to users for that session, and that there is an entire community-based trading economy to acquire items without paying.
3) Aside from the dozens (hundreds?) of official, Valve-hosted servers, you seem to be ignoring the part where online communities *want* the ability to host their own servers.
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HL2 came first. TF2 was a separate purchase later, though you had the option of buying The Orange Box and getting several items at a discount, including HL2. I did that and ended up with an extra copy of HL2 (that I later gifted to my brother-in-law). As for bundling TF2 with something else people wanted to buy, well, I suppose. But there were a lot of TFC players, for example, that were eager to play TF2. You make it sound like they only drummed up interest in TF2 via HL2 sales; that is very much not true. TF2 didn't just spring up out of nowhere. Team Fortress has been around since the Quake days, and people were hoping for a TFC sequel for years before it happened.
Artificial scarcity: yep. Kind of. But gameplay tends to be like that anyway. In Killing Floor, you earn money by killing zombies, which you can then use to buy more badass weapons as the game progresses. Over many games you level your perks from 0 up to 6, which gives you more power and greater ability. There are other games where you do leveling and accumulating. Well, technically all those items are subject to artificial scarcity. If I had complete control of the server I could give all the players £1,000,000 and max out their experience points. Put them all into godmode and give them instakills. But that takes away the challenge, doesn't it? What fun is the gameplay if you don't actually earn all that stuff? Still, it's all artificial, isn't it?
The artificial scarcity you seem so contemptuous of is part of the game, and most people seem to accept that.
Ever play chess? You're only allowed to move certain pieces certain ways. But if you were allowed unlimited movement, white would capture black's king on the first move; the game would be won on a coin toss. The movement restriction is an artificial scarcity, but having it is what makes the game a challenge.
The DRM is there, but it's part of the account. That account gives you access to a community, including voice comms and text messenging with your friends; it also saves your game stats and allows you to play any Steam game you own on any computer. All you need to do is log in and, if it's a new installation, do an extra verification and download the game. It's all part of an overall platform; if you focus just on the DRM you're missing all the good stuff.
Sorry that they're not paying people to play. Enough people are willing to front money for servers that Valve doesn't need to. If servers become too scarce to support the community then they will be easy enough to monetize, won't they? And as long as they're plentiful, it's not a problem. Is Valve riding on the backs of the server operators? I suppose you can make that argument, but then you'll have to explain why they're worse than any other multiplayer game creator? Back to my Killing Floor example: they're making a game and selling it; the greedy bastards are taking advantage by not providing server space for free, right?
(Actually, they do provide a free service: there's a central server that helps you connect to playing servers. They pay for that and maintain it.)
Let's be clear about the whole strategy here: they've created something people want enough that they're willing to pay for it, and to run their own servers. Then they found a way to have the game pay even more, whilst giving the game itself away for free.
You don't have to play, and even if you play, you don't have to pay. Neither does anybody else. But enough like what they see that they're willing to.
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You guys are now calling game features like hats and guns DRM? cukoo cukoo.
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I applaud their decision to take an old property and inject new opportunities for revenue through in game purchases. Personally I HATE the idea of in-game purchases, but kuddos to them for finding people willing to part with their cash piecemeal.
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Free is a billion dollar industry. Nobody is asking if Free to play games are working anymore, they are asking if pay to play games are.
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I don't care if F2P is a billion dollar industry I will not play a game that offers in game purchases. I have deleted dozens of games that offer them. I find them intrusive to gameplay, and many are obstructive to the game objectives. Just let me pay a known dollar amount upfront rather than nickel and diming me to death later - at least I know up front how much it will cost me to complete a game versus investing 20 hours and finding out I need to buy more crap to complete the objectives.
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Well, like mike said, Valve took great measures to ensure that TF2 would NOT be a pay2win game, all the purchases are OPTIONAL and do not effect gameplay that significantly at all. I think what you have a problem with is not in game purchases but rather a game that makes itself out to be "free" but rather requires some sort of payment to advance a.k.a a "pay2win" game.
"Why doesn't the article give the details on how they calculated the increased revenue? Was the increase based on quarterly sales? What periods were considered? Need more details before I can determine if this is just a propaganda piece."
The claim was in the Gamasutra article he linked to. From what I gather the claim was made by Valve's Joe Ludwig during GDC.
here's the article if your to lazy to find it up there:
http://gamasutra.com/view/news/164922/GDC_2012_How_Valve_made_Team_Fortress_2_freetoplay.php
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I recently returned to playing Star Trek Online. I bought it when it first came out and I wasn't impressed with the game play and all the bugs and missing content while paying a monthly fee to basically beta test their game. So I stopped for a long while. Now that it is free-to-play I'm back playing and enjoying it. But it isn't pay-to-win. All the optional in-game purchase stuff is simply cosmetic (like being able to fly the original Enterprise NCC-1701 rather than the Enterprise A) and has zero impact on your ability to succeed (or fail) in the game.
If they are making money off this business model, great for them. But I laugh at the people that are dropping money on these things (especially those that pay for stupid pets to follow them around).
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https://twitter.com/#!/j_smedley/status/138695511971598336
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But hey, who am I to criticize your random bitter comments.
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You folks wanna see Linux games? Make one. That's the beauty of Linux. You can make it yourself.
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Bill's Hat
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Re: Bill's Hat
http://www.youtube.com/watch?v=vEvabcZfZIw&feature=related
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You know that game demos existed before the miracle of Steam, right? Then there game rental services...
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Oh they still do. But if you have them you are a dirty stinkin, baby smacking, puppy kicking pirate.
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Free games that succeed
With the accessibility of programs/gmes at our finger tips the gaming industry will need to change in order to keep up. The free to play with optional cosmetic purchases will always keep people interested. The obligation to play the game because you are paying for it goes away completely and I along with others love to look "fancy". ^_^
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Re: Free games that succeed
clearly enough people did NOT have that problem for it to be all good for the company anyway :)
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Video Game Renaissance
For example the Humble Indie Bundle. Proof that anybody, even indie developers, can offer their product DRM free with a reason to buy (charity) and make a bunch of money off it!
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Hats
Maybe you should put your JEALOUSY at the BEHATTEDNESS of others into CREATING HATS YOURSELF, then you might start to understand how PROTECTING HAT RIGHTS is VITAL for the future of HATS in all areas of life.
And while you're at it, you might want to look into the BLATANT DISCRIMINATION against HAT CONTENT PRODUCERS that exists in ALL LEVELS OF INTERNET DESIGN. There is absolutely NO LEGISLATION to protect the valuable HAT CONTENT INDUSTRY JOBS - reckless game designers can even make games that feature exactly ZERO HATS, and NO HAT FUNCTIONALITY, BLATANTLY STEALING market opportunities from HARD WORKING, APPLE PIE EATING, FLAG WAVING HAT CONTENT PRODUCERS. How are HAT DEVELOPERS supposed to make an HONEST LIVING without hard currency* earned from HATS?
These developers, exercising their contemptible CHOICE, must be made to USE OUR HATS to PROTECT JOBS from TERRORISTS.
PIRATE HATS must be STAMPED OUT.
The IRONY is that if you, HATLESS HAT-HATING MASNICK CRIMINAL TERRORIST PAEDOPHILE SUPPORTER OF TAX INCREASES could wear HATS, it would at least COVER UP your BALD FACED LIES about HATS, and HAT NECESSITY FOR PROGRESS.
*currency = HATS; alternatively, HAT LINCOLN
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