The Steam Engine
Newell wants to get one thing straight: digital distribution isn't just a margin enhancer. Speaking during a panel discussion on the final day of the GDC, he makes it clear to the large audience in front of him that while Steam saves his company money, it also offers more valuable benefits. These include unmatched insight into customer behavior, as well as the ability to create a tremendously firm bond with gamers. And the kicker, Newell tells the audience, is this: Even when customers buy a copy of Day of Defeat, for example, at a retail location, Steam is driving the demand for that purchase.
Day of Defeat: Source is a perfect example of how Steam and digital distribution has grown. Last month, Valve offered a free trial weekend for the World War II game to Steam subscribers, which Newell believes will spark both digital and retail sales for the title.
Steam also gives Valve a tremendous amount of insight into its customers. In addition to basic data about customers, such as which video cards they use - check out Valve's Steam survey. Valve can also track customer behavior. Some of those findings have surprised even Newell himself. "We didn't understand, for example, that there were customers that didn't want to buy Counterstrike: Source but bought Counterstrike 1 or Half-Life 1," he says. "There's no way to get a lot of that data from retail."
There's also the issue of pricing elasticity online. For example, if the price of Day of Defeat: Source is cut in half, then the game will sell twice as many copies. Will online distribution therefore be a boon for gamers looking for more affordable content? Perhaps. "Maybe we should be more aggressive with our pricing online," Newell says.
Valve's chief executive says that online distribution is a scalable business, and doesn't believe that bandwidth availability and infrastructure will be an issue for game developers. Thus, the opportunity is there for many game makers to build their own versions of Steam.
The question simply put, is if they build it, will gamers come? "The critical factor is how well software developers connect with their audience," Newell says. "There's much more interesting things that can be done online with customers. I'd be really excited to see a game developer start putting forums and an RIC in the actual games."
Newell says that trying to interact with customers through traditional means is like "cooking with giant oven mitts." Jason Della Rocca, executive director of the International Game Developers Association (IGDA), agrees. "There are more distribution options to get the content out," Della Rocca says. "But it's not about getting the content out. It's about connecting with your target audience, because there are a thousand other developers out there trying to do the same thing."
