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I think betas can do more damage than demo's. I think Quake Wars on PC is an example. I know lots people cancelled pre-orders after playing the Beta, which is a shame.

Usually (and I mean usually), the demo's come out quite soon before the final product, so they are more polished and closer to the final version. Still, I only play demos for games that I am already interested in. If the demo is teh suck, then I might lose interest. I think maybe demos and betas are no good for sales, but good for consumers.