Digital overtaking retail for Valve

By Oli Welsh Published 30 May, 2008

Three months until Steam makes more money.

Speaking to a select group of journalists about Steam and the future of PC gaming today, Valve president Gabe Newell revealed that the company will soon be making more money from digital distribution of its games than traditional boxed sales.

"We see sub ten per cent growth rates in our core, packaged retail business," Newell said. "Right now we're seeing close to 200 per cent growth in the alternative ways of connecting with customers.

"It will actually pass over in the next three months, how much of our business is coming from retail versus how much is coming from other channels," he said. He noted that Valve had invested in internet cafés as well as its Steam platform.

Asked later how Steam could match the reassurance of possessing a physical copy of a game, Newell countered, "At this point, people have had Steam long enough that their experience is that Steam is more reliable than physical media."

He pointed out that easy access to all Steam games from any PC - soon to be backed up with game save support via Steam Cloud - made digital copies of games more permanent, not less.

"This is just a more reliable and dependable situation. I mean, I bought Heroes of Might and Magic four different times now, I swear."

He also revealed that Valve was considering distributing non-games media or software through Steam, although this was a long-term plan only.

"It's something that we're looking at," he said. "Right now we're focused on games... but I think as we get more mature, there's no reason that we wouldn't." He mentioned the possibility of distributing the Firefox browser, with Steam Cloud backing up personal bookmarks and settings on any machine.

In addition to promoting Steam, the conference at Valve's Seattle HQ was aimed at countering recent claims that the PC games market was dying. Newell and his colleagues argued that alternative business models like Steam, MMOs and casual games platforms - as well as a truly global audience - made the PC the centre of growth and innovation in the games market.

We'll have a more detailed report on how Valve's best minds see the future of PC gaming soon.

Picture of Oli.

About Oli Welsh

Oli is Eurogamer's acting deputy editor and reviews editor and likes to take things one word at a time. He is among the best dressed people in South London.

Read more articles from Oli by visiting the Oli Welsh archive page.

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Comments (21) Latest comment 4 years ago

Comments threads automatically close after 30 days, but please feel free to continue chatting on the forum!

  • quantumsheep #1 4 years ago

    cripes!

  • ChrisOTR #2 4 years ago

    I like Valve, and Steam, but it's patronizing nonsense to suggest that Steam games are more 'permanent' than a CD or DVD (as long as it's not a CD or DVD with an online DRM crippleware feature- worst of both worlds!)

    Personally, my Steam collection won't expand beyond a certain point until Valve convince me that my games are mine, indefinitely- and they won't convince me of that until Steam games are totally free of DRM and can be backed up and run on a different PC *without calling home*...

    Unfortunately it doesn't seem like other people are as bothered as I am. I want to pay for my games, but without DRM. Is that so wrong?!

    (Same rant, expressed differently, in the 'Steam Cloud' thread. Your mileage may vary.)
    Edited by 1 at 30/05/08 @ 03:51

  • GamesConnoisseur #3 4 years ago

    ChristOTR: I understand the annoyance of redownloading games onto new PC, games that wont activate without broadband connection and so on. But intersted in why you are against DRM?

    My view is DRM is just a way for publishers to better ensure those who paid for their games can use it, and would not be too suprised if this become the norms for all kind of downloads across the board and not just at Steam.

    By the way I have sizeable Steam collection and had already twice redownload everything when twice had problems with previous two PCs.

  • lambtron #4 4 years ago

    "Unfortunately it doesn't seem like other people are as bothered as I am. I want to pay for my games, but without DRM. Is that so wrong?!"

    I'm not a pirate. Therefore I am not bothered.

  • lambtron #5 4 years ago

    @disc

    There are two things I would say in response to your post.

    1. Valve apparently don't take much of a markup from other people's games - as opposed to the (reportedly) 40-50% markup that traditional retailers take.
    2. I'd much rather we lived in a world where the actual devs of a game get the lion's share of the money rather than the middle men.

  • ChrisOTR #6 4 years ago

    lambtron: I'm not a pirate either. You've missed the point - might want to think a little harder about what's going to happen in, say, 10 years, when Steam's very likely to have disappeared (either because Valve's gone, or because they're thinking of other things)... How're you going to play the game you paid for then?

    And yes, I know by then it's likely to be an old game, but it would be a real shame not to be able to revisit past loves (in gaming, of course!!!)
    Edited by 1 at 30/05/08 @ 10:03

  • MGG #7 4 years ago

    Chris, do you have to post this on every Steam story? Has this not been answered already?

    Valve have promised that they will "free up" any games if and when Steam disappears. Which, looking at the money they are making and the success of the system is not going to be for a while. Meanwhile, you may want to compare the expected life of Steam, with the expected life of your hard drive, and the chances of losing/damaging your games, CD's and DVD's. I cant remember half the games I have lost to damaged discs, crashed hard drives or "helpful" relatives throwing them out.....

  • Codger81 #8 4 years ago

    @lambtron

    I'm not a pirate either, but I still won't touch their stuff until I'm able to back it up on a dvd of my own.

  • loopy #9 4 years ago

    "I'm not a pirate either, but I still won't touch their stuff until I'm able to back it up on a dvd of my own."

    You already can, and have been able to for a while.

  • ChrisOTR #10 4 years ago

    MGG: Chance of my losing the CD: 0%. And, could you provide a link to the Valve promise you mentioned?

    loopy: But your "backup" is totally dependent on Steam, and therefore is worthless.
    Edited by 1 at 30/05/08 @ 11:15

  • Krusty #11 4 years ago

    Steam makes money.
    If Valve decide to move to other things someone will buy Steam off them.

    Failing that, since they're all good eggs, I'm sure they'd just remove DRM and release everything for free.
    They have so much money they have to dig through it to get into the offices I expect, so why would they care?!

    I bought Darwinia again through Steam for the convenience (even though CD was not protected).
    I may even buy Trials 2 again, for the convenience.

    Don't understand these "what if Steam disappears" people!


    I'd say there's more chance of Apple becoming the games platform of choice and MS dying than Valve running out of money.

  • sneetch #12 4 years ago

    @ChrisOTR
    "lambtron: I'm not a pirate either. You've missed the point - might want to think a little harder about what's going to happen in, say, 10 years, when Steam's very likely to have disappeared (either because Valve's gone, or because they're thinking of other things)... How're you going to play the game you paid for then?"

    Why is Steam "very likely" to have disappeared in 10 years time? It's a profitable service by a company that has been around for 12 years now, I don't see them going anywhere anytime soon.

    @ChrisOTR
    "MGG: Chance of my losing the CD: 0%. And, could you provide a link to the Valve promise you mentioned? "

    Chance of destruction by fire or loss through theft: sadly > 0%.

    If it's such a concern I'd suggest you contact VALVes billing department and ask them what'll happen, they'll be able to clear it up quickly. Asking a bunch of random people in a forum probably won't help much. :)

  • sneetch #13 4 years ago

    @Krusty
    "I'd say there's more chance of Apple becoming the games platform of choice and MS dying than Valve running out of money."

    Somewhere about the same level as "hell freezing over" or "monkeys flying out of peoples asses... with spears" then. :)

  • ChrisOTR #14 4 years ago

    sneetch: You. Me. This thread. Ten years from now. We both bring a humble pie, and someone eats. Deal? ;) ;) ;)

    In all seriousness I did try to raise this on the Valve forum as well, prefixed (as I did here) with a note saying I'm actually a fan of Steam. But I got shot down there too! Should've learnt. Never mind, I guess no one else is bothered, so I'll just suck it up.

  • loopy #15 4 years ago

    "loopy: But your "backup" is totally dependent on Steam, and therefore is worthless."

    No it isn't. You only need Steam to update further(if you choose to) after reinstall, not to reinstall from a backup.

  • thewolfiv #16 4 years ago

    I only buy Valve games as they are the only ones at a reasonable price. I bought other non steam games bioshock and COH and paid the same price as the dvd version or even more, surely the games are less expensive without boxes dvds etc and should cost less? my only gripe with steam...digital distribution was suppose to cut prices not increase them!!!
    Edited by 1 at 30/05/08 @ 13:30

  • hiddenranbir #17 4 years ago

    Maybe Valve can get their head out and stop publishers from locking out entire regions of the world!

    In comparison to my 600 games available, my poor mate from AUS only has 200!
    Edited by 1 at 30/05/08 @ 13:51

  • EDvanDamme #18 4 years ago

    I think it’s also worth mentioning to anyone deluded enough who believes digital distribution will bring prices down, WRONG.
    Right now no one has to pay the full retail price on any game if you shop around.
    Competition among retail sees some prices slashed especially on AAA titles. The moment a publisher has sole control on delivery you can kiss goodbye to any discount. Take it or F*** Off
    No to mention "importing" a digital download game can be more strictly enforced with IP addresses & credit card address checks.



  • YourMessageHere #19 4 years ago

    The continued existence of retail is what ought to mean online distribution of games is cheaper; true you can shop around, but valve are doing themselves no favours by not pricing their games competitively. I for one was especially severely disappointed by the immense markup on european CoD4 over Steam; even with weak $ and strong £, $74.99 is not even slightly reasonable. It's much cheaper to buy a boxed copy if you're not from the US. There have been other games for which I ended up buying the boxed copy instead for the sake of economy, even though ideally I'd prefer to have them on Steam for convenience.

  • Ryuken #20 4 years ago

    True but in the end the PC version of CoD 4 has a scandalously high price no matter where you want to buy it, even now. As if Activision thinks they are selling it on consoles.

  • Nill #21 4 years ago

    ChrisOTR: Unfortunately it doesn't seem like other people are as bothered as I am.

    Oh, but we are. If properly tendered to, a CD or DVD can have a lifespan of several hundred years.

    Let's see if Valve even exists a fraction of that time.