Author: alexanderjcford

Valve: The Steam digital distribution platform, and their Domination of the online game sales market

Steam  – Digital business models post 2

(“Valve Headquarters | Wikipedia”, 2016)

Steam is an online digital content delivery platform on all major operating systems, allowing for games to be played online, from any device.

Steam took on a digital business model for Steam back in 2003, as a method of providing automatic updates for their released games on PC (Sayer & Wilde, 2018), initially starting out with Counter Strike (Counter Strike, 2000).  When Valve initially founded the platform, they developed it with the idea of providing technical updates and content to their games through direct control. Ideally this was done to improve player experience, preventing the need for manual updating, improving the user experience of said games. In addition, it was a way for Valve to begin to foster a controlled social network around their games, allowing for server browsing for players. This was also supported in many ways, by the growth of online social media sites like Facebook, “Regular updates to the Steam software platform introduced social network features just as mainstream sites like MySpace and Facebook were emerging, and its popularity has undergone rapid subsequent growth.” (Moore, 2009). With these early stages of growth and implementation, Valve saw suit to further develop the platform for the upcoming 2004 release of, ‘Half-Life 2’. The previous success of the Half Life series had brought much of the fame and admiration Valve enjoys as a development studio in its early years, setting themselves up as a forerunner in the games development industry.

With Half-Life 2’s release in 2004, Valve had setup a new method of games distribution. By establishing Steam as a required piece of software in order to play Half-Life 2, they forced the player base to install the software. Valve’s goal was to make sure that gamers remembered, Steam was the place to go in order to play online with your friends. Not only did this force consumers into using their software, Valve did it in a way that made it seem like simply being another piece of software to have on their PC.

For Valve, the biggest sign of change came in 2005, with the release of the first non-Valve games onto Steam. With the release of Ragdoll Kung Fu (Healey, 2005) and Darwinia (Delay, 2005), this marked the beginning of the modern Steam storefront. Over the next 3 years we see the introduction of further developments for Steam, with dozens of additional games being added to the store. Players start to shift their view towards buying games online, directly from Steam, with the view for Steam to become the hub for all gaming on PC. Valves’ vision of turning Steam into the forefront of games distribution truly starting to come alive at this point. In 2007, we also see the platform integrate the use of new Steam Community features. Valve’s concepting of overall brand design for Steam has meant that their focus on community fostering lead to a huge expansion in their userbase, as gamers moved over to Steam as their main games distribution platform. On top of this, in a similar style to ITunes (McElhearn, 2016), it was a way for people to store all of their games in one place. With constant updates and new content being added regularly, players kept coming back to the platform.

At this point, another major method of relevance to the online gaming space was finally coming into play. DRM, or Digital rights management software, began to become a more prevalent technological requirement in the gaming space due to the rise in the rates of software piracy. With traditional games production, you would simply buy the game on CD, then placing it into your computer and play said game from the disk. However, Steam meant that when you purchased a game, you would be provided with a game key, acting as an authenticator to show the products legitimate status. At this point, Steam was built to be a DRM machine (Conditt, 2020). Over time, the majority of companies that sold games on disk required you to run it through Steam, with it acting as an authenticator, in an effort to reduce piracy. This not only won over the support of games developers when it came to choosing an online sales platform, but also meant that their online distribution model was now really starting to show serious returns. Their dominance in the field of online games distribution went unchallenged by any major competition, even now, their financial performance shows just how strong their market presence is. With the continual shift towards games as a service, rather than a product, and their financial success, Valve has made serious strides in shifting from a games development studio, to a digital service provider, due to the massive financial gains differences between the two.  

(“Steam sales revenue 2017 | Statista”, 2017)

(788 words)

References

Conditt, J. (2020). We’re all kinda fine with DRM now. Retrieved 6 March 2020, from https://www.engadget.com/2020/02/12/drm-geforce-now-steam-xbox-playstation-subscription-streaming/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAADfxtkgUoXcdUMXhk4UVJX3hcOO8Y4BqBrDO974llflxQF0-GDpkqp_6u-aDGmsB9DWGrVhj0jBh8tVJ0pmzyL0ZvHK4acn_qm6ke_x7Or5we7RM3AUyVemafX30z7VG6KSbVOZ3IY838ELjIJVywVYZhHUt_-bk_5yfsh-7oZck

Delay, C. (2005). Darwinia [Windows]. Walton-on-Thames, England: Introversion Software.

Healey, M. (2005). Ragdoll Kung Fu [Windows]. QI Studios.

McElhearn, K. (2016). 15 years of iTunes: A look at Apple’s media app and its influence on an industry. Retrieved 5 March 2020, from https://www.macworld.com/article/3019878/15-years-of-itunes-a-look-at-apples-media-app-and-its-influence-on-an-industry.html

Moore, C. (2009). Digital games distribution: The presence of the past and the future of obsolescence. Retrieved 5 March 2020, from https://ro.uow.edu.au/cgi/viewcontent.cgi?referer=https://scholar.google.com/&httpsredir=1&article=1943&context=artspapers

Sayer, M., & Wilde, T. (2018). The 15-year evolution of Steam. Retrieved 5 March 2020, from https://www.pcgamer.com/steam-versions/

Steam sales revenue 2017 | Statista. (2017). Retrieved 6 March 2020, from https://www.statista.com/statistics/547025/steam-game-sales-revenue/

Valve. (2000). Counter Strike (Version Release) [Microsoft Windows]. Washington, US.

Esports & the Pro-league

(Rainbow Six: Siege Invitational Winners, 2019)

Traditionally, professional gamers are those who would gather together to compete with each other in tournaments and competitions to win accolades or ranked positions. This is highly similar to that of any number of traditional sports, such as Chess or endurance running. In the past, we could look to dozens of different contests in the gaming sphere, from Tetris (Pajitnov, 1988) to Street Fighter. (Nishiyama & Matsumoto, 1987) The age of gaming in person on an international stage has changed as time has progressed. With the further development and advancement of both the internet and VOIP (Voice over internet protocol), players from all over the world are now able to compete with each other no matter the time or place of play. The origins of being a professional gamer stem from games like those above, with people coming together to prove who the best of the best was among their local gaming groups. The earliest known example of this was the Stanford University Spacewar competition.  This later stemmed into regional and national contests, such as the Space Invaders Championship, hosted by Atari in 1980, with more than 10,000 participants competing. However, it was still considered by many an amateur sport at best, due to its lack of large-scale exposure. In the face of it being a real career, the feasibility of such a career was small, with the prize pool for such contests often being too small to justify long term commitment to a game.

This, however, has all changed thanks to the combined effect of dozens of different factors from improved computing power, to the internet and digital communications. Nowadays, you can play in competitive games of all kinds with people from all over the world. We’ve also seen a rise in the different types of game that have arrived In the competitive gaming space. New genres such as MOBA’s (Multiplayer Online Battle Arena’s) have become prevalent in the online gaming space as high intensity and complex competition that people turned to compete. Examples like Dota 2 (Dota 2, 2013)and LoL (League of Legends, 2009)are the most prevalent MOBA’s on the market, with their live tournament reach in 2019 being around 2 million concurrent viewers at peak. In addition to the high viewer count, the prize pool for the 2019 DOTA 2 international achieved a size of over $34 Million, making it the largest Esports prize pool in history. The role of a Professional E-Sports player has never been more realistic for those around the world. With there being dozens of professional teams for dozens of games across the competitive space, the ability for players and the support they need to exist is ever more realistic. With the ability for the wide-reaching accessibility of international contest that can simply be accessed through the use of a PC and an internet connection, players have been able to take their work everywhere they go. One issue, however, Is that the majority of players do need access to high powered devices to play their game of choice at a level of performance that allows them the fastest and smoothest playing experience in order not to disadvantage them against their competitors. This does provide some existent barriers to entry, as this type of equipment is often expensive and needs space and strong access to utilities such as high-speed internet to function at the level expected.

Curiously, the breakdown of gamers according to a study by the Internet Advertising Bureau (Jayanth, 2014) revealed that in 2014, 52% of gamers were female, up from 49% in 2011. This figure is likely to have grown in recent times. However, it is little surprise to see that both the breakdown of female E-Sports players and views are both proportionally lower compared to their male counterparts. In a study by Interpret in 2019 (Takahashi, 2019), their findings showed that the ratio of Female Esports viewers had grown from Q4 in 2016 from 23.9% to 30.4% in Q4 of 2018, demonstrating growth of nearly 6.5% in viewership. A trend showing the growing presence of female gamers in the viewing community of Esports overall. The future of Esports and gaming is one that is always divided, but the trend data doesn’t lie and we are seeing an ever-persistent shift towards a future where both male and female professional players are being given the chance to compete internationally no matter their background or gender. We are also likely to see even more development in the sector as the number of games and players continues to grow to new levels year on year. In the world of Esports, it doesn’t matter where you’re from, it’s winning that matters the most, and the online stages of Twitch and Esports couldn’t agree more.

References

Jayanth, M. (2014). 52% of gamers are women – but the industry doesn’t know it | Meg Jayanth. Retrieved 4 February 2020, from https://www.theguardian.com/commentisfree/2014/sep/18/52-percent-people-playing-games-women-industry-doesnt-know

Nishiyama, T., & Matsumoto, H. (1987). Street Fighter [Arcade]. Osaka, Japan: Capcom.

Pajitnov, A. (1988). Tetris (Version Release) [Arcade]. California U.S.: Atari.

Rainbow Six: Siege Invitational Winners. (2019). [Image]. Retrieved from https://www.gamereactor.eu/media/40/g2are6_2754033_650x.png

Riot Games. (2009). League of Legends (Version Release) [Windows/Mac]. Los Angeles, California, U.S.

Takahashi, D. (2019). Interpret: Women make up 30% of esports audience, up 6.5% from 2016. Retrieved 14 February 2020, from https://venturebeat.com/2019/02/21/interpret-female-esports-viewership-grew-6-5-percentage-points-over-two-years/

Valve. (2013). Dota 2 (Version release) [Windows/Mac/Linux]. Washington, U.S.

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