Valve: Why the PC is the future

Newell and co. stick up for their roots (and Steam).

When Valve summoned a handful of US and UK journalists to its Seattle headquarters at the end of last month, it promised to talk about the future of Steam, its digital distribution system. That it did, revealing the ambitious Steam Cloud service for remote storage of game data, and boasting that it would soon be making more money selling games digitally, all the while remaining untroubled by piracy.

Valve mastermind Gabe Newell and his cohorts had an ulterior motive for bringing reporters together, however, and unusually for an ulterior motive, it wasn't a wholly self-interested one. It was this: to evangelise the PC as the games platform of the future.

"This really should be done by a company like Intel or Microsoft, somebody who's a lot more central to the PC," says Newell, pointing out that companies like Blizzard, PopCap and GameTap would have just as much to say as Valve about how PC gaming is leading innovation in technology, business models, and community-building. But, notwithstanding Microsoft's occasional promotion of Games For Windows - an initiative Newell refrains from attacking directly, but exudes disdain for - that support has not been forthcoming.

Where console platforms have merciless and well-funded PR armies poised to combat any criticism, negative stories about the PC - mostly publishers, or developers like Crytek, complaining of rampant piracy and flat sales - run unimpeded. Sales data that focuses solely on boxed copies sold at retail appear to back them up. Valve has had enough. "There's a perception problem," says Newell. "The stories that are getting written are not reflecting what is really going on."

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Although all consoles now offer download services and support for indie game development, Audiosurf's creator believes his game could only have happened on PC.

You want figures? There are 260 million online PC gamers, a market that dwarfs the install base of any console platform, online or offline. Each year, 255 million new PCs are made; not all of them for gaming, it's true, but Newell argues that the enormous capital investment and economies of scale involved in this huge market ensure that PCs remain at the cutting edge of hardware development, and consoles their "stepchildren", in connectivity and graphics technology especially. Meanwhile, Valve's business development guru, Jason Holtman, notes that without the pressure of cyclical hardware cycles, PC gaming projects - he points to Steam as an example - can grow organically, over long periods of time, and with no ceiling whatsoever to their potential audiences.

More pertinent, perhaps, are the figures directly relating to games revenue that the retail charts - admittedly a stale procession of Sims expansions and under-performing console ports - don't pick up. "If you look into the future, there's an important transition that's about to happen, and it's going to happen on the PC first," says Newell.

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Valve is continuing to produce its Team Fortress 2 promo videos because they continue to increase sales. With online distribution, there's no reason to stop promoting a game after launch.

At its heart, he explains, is a shift from viewing games as a physical product, to viewing them as a service - something that is also happening in other entertainment media. Digital distribution is part of that; more fluid and varied forms of game development, with games that change and engage their communities of players over time, are another; as is, naturally, the persistence and subscription (or otherwise) revenues of MMO games. None of this is reflected in the sales charts analysts, executives - and gamers - obsess over.

Valve sees 200 per cent growth in these alternative channels - not just Steam, but including the likes of cyber-cafes as well - versus less than 10 per cent in bricks-and-mortar shop sales. Steam has a 15 million-strong player-base with 1.25 million peak concurrent users, and 191 per cent annual growth; none too far off a console platform in itself. The PC casual games market, driven by the likes of PopCap, has gone from next to nothing to USD 1.5 billion dollar industry in under ten years, and has doubled in size in just three. Perhaps most surprisingly, Valve has found that digital distribution doesn't cannibalise retail sales - in fact, a free Day of Defeat weekend on Steam created more new retail sales than online ones.

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