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Valve: Steam is making us rich

Valve: Steam is making us rich

According to Gabe Newell's DICE Summit keynote, Valve is getting filthy rich off of Steam.

This is more of a news summary than a news article, but Gabe Newell's keynote speech at this year's DICE summit has revealed more than a few tidbits of interesting information about Valve's Steam platform and we figured we'd have to share.

The Valve co-founder started his keynote by giving a summary of why he thinks Steam is so successful and how he thinks Valve as a company is doing a good job of tackling piracy head on. He claimed that most of this success came from looking at pirates as under-served customers and that the solution was to create DRM methods that benefit the user, such as Steam.

What Steam is really good at, claims Valve, is giving gamers a definite reason to buy games on Steam, because facilities like auto-updates, achievements, VAC and friend lists are preferable than laboriously circumventing the Steam platform.

Going on, Newell revealed some truly staggering figures about how successful Steam is. There's 20 million people on the service now, apparently, with a 100 percent year-on-year growth that's kept up since 2004.

Most interesting though was the talk about after-sale support, such as the Team Fortress 2 updates. Apparently every time they drop a new update they get a minimum of a 100 percent increase in sales for that game, while the ability to gift games to other accounts has seen a 71 percent increase in sales, total, and a 75 percent increase in the number of Steam registrations.

Discount offers over short periods have a huge impact too, apparently. That recent half-price weekend on Left 4 Dead? That caused a 3000 percent increase in sales, plus a 1600 percent increase in Steam registrations.

By analysing the figures Valve's been able to make some interesting predictions too. A 10 percent price reduction creates an average income increase (not just in sales) of 35 percent, while a 25 percent discount gives an increase of 245 percent. 50 percent discounts create average increases of 320 percent, while a price slash of 75 percent off will push income up by a staggering 1470 percent.

The single most impressive figure though is that one (unfortunately unnamed) third-party game saw an increase in sales of 36,000 percent in a single sale weekend. Wow.

If you want to know more about Steam then you can check out our Full Steam Ahead feature, which offers an in-depth look at the platform. What do you think of Valve's sales strategy though? Let us know in the forums.

45 Comments

Discuss in the forums Reply
StephenK 20th February 2009, 11:09 Quote
Still, shame about the euro prices. I love Steam and believe that it's a good model for future services. The 25%-50% more expensive than high-street makes buying games on steam a bitter pill to swallow though.
naokaji 20th February 2009, 11:15 Quote
I've always said it, if you want to sell the games in high numbers and reduce pirating you have to meet certain conditions:

1: Quality Game
2: No hassle to get it running
3: Keep the patches / content updates comming
4: Lower the price

It's what customers want, valve gets 3.5 of those 4 points (price one only sometimes), so it is really no surprise that steam is a huge success.
C0nKer 20th February 2009, 11:19 Quote
Steam could be the next Google I suppose.
bogie170 20th February 2009, 11:30 Quote
Steam has come a long way in a little time. They just need to sort out their pricing as sometime it is much more expensive to buy in pounds as opposed to euros or dollars.

It is an awesome system and I hope companys like EA learn some of Valves policies and start treating customers better.

Bring on BF1943 and BF3 to Steam!
proxess 20th February 2009, 11:30 Quote
Discount offers over short periods have a huge impact too, apparently. That recent half-price weekend on Left 4 Dead? That caused a 3000 percent increase in sales, plus a 1600 percent increase in Steam registrations.

Astonishing figures!
Tokukachi 20th February 2009, 11:32 Quote
Quote:
Originally Posted by Article

The single most impressive figure though is that one (unfortunately unnamed) third-party game saw an increase in sales of 36,000 percent in a single sale weekend. Wow.

This is almost certainly DoW soulstorm, as when it was first put on steam (6+ month after it had come out) I cant imagine a lot of people picked it up. But when they said if you had it you got early access to the DoW II beta and reduced the cost to 99p, I can imagine sales skyrocketed!
CardJoe 20th February 2009, 11:34 Quote
Euro to GBP to USD prices aren't as bad as you'd think...

http://steamreview.org/posts/localisedprices/
Tyrmot 20th February 2009, 11:42 Quote
The dollar-pound conversion is annoying but certainly not restricted to steam... What is really stupid is that a boxed copy of eg Dawn of War II is £23 on Amazon and £35 on Steam!! What kind of logic is that? To persuade me to buy a non-physical copy of a game (ie one that I could lose any time Valve say so) I would expect that price difference to be the other way around...
WildTangent 20th February 2009, 11:48 Quote
Steam has come a long way in it's short life. I'd venture to say that it is the ONLY successful DRM system out there in as much as it doesn't impose unfair restrictions, and provides a host of benefits over traditional distribution and rights management systems. And now, with these numbers, even the haters can't deny it's success.
Psytek 20th February 2009, 11:56 Quote
Valve's own games are fairly priced, but most 3rd party games are listed above the recommended retail price in the UK. COD4 is still full price iirc.
perplekks45 20th February 2009, 12:10 Quote
I remember back when Steam was introduced how me and all my mates stayed with WON as long as there were enough servers. We didn't like Steam, the stability issues, the updates that would fail at 99% most of the time, it lagged a lot worse than WON and the way it was forced upon us. But today I have to agree with everybody saying it is the most advanced distribution platform we have, arguably the best DRM solution and after all just an impressive bit of software.
Kylevdm 20th February 2009, 12:18 Quote
Steam is excellent, I am quite happy to pay an extra few quid to get the game on steam where I don't have to worry about patching etc. Although it would be cool if they had a subscription(say £15 a month or whatever) and you could download what ever games (limited to 3 at a time) but this is just my opioin. I love the January sales though BioShock for £3!!!!
V3ctor 20th February 2009, 12:21 Quote
I like steam, i use at least 3 pc's in 3 different locations... i just login to steam, download the game and play... I just don't like some prices... It's cheaper to spend diesel, time, and go to a store buy a physical game instead of buying on steam...
tank_rider 20th February 2009, 12:27 Quote
what a refreshing view that at least one of the game platform teams is looking at why people pirate and come up with a sensible reason, rather than the your all the spawn of satan approach most developers take.
Tyrmot 20th February 2009, 12:54 Quote
I'm amazed at how willing people are to only 'own' the game in digital format...
UrbanMarine 20th February 2009, 13:05 Quote
Only problem with Steam is their fixed retail pricing. I can get the Orange Box for $20 in a store but they want $30 on Steam. If they did better price adjustments, I'd buy more stuff from them.
Leitchy 20th February 2009, 13:07 Quote
I really like the Steam platform, and the good quality games they (Valve) churn out.

As was mentioned above I wish they would be more competitive a month or two after the initial release of any game on Steam, to reflect what you can the physical media for at sites such as Amazon and Play.com!

Roll on HL2:Ep 3 and a film afterwords!!!!!
cyrilthefish 20th February 2009, 13:15 Quote
I really love steam, best thing to happen to PC gaming in a long time :D

Only 2 things about it annoy me:

-The price on some games: I'll happily pay a few £ extra to never have to worry about CDs/no-cd cracks/patches and so on. but sometimes the pricing on some games is downright silly
take X3 for instance, £13.99 on steam, £5.48 on play.com, the difference is a little too much to swallow, so i'm holding back on buying it until it's cheaper

-Regional restrictions: without doubt the single most annoying thing on steam for me. I know it's forced on them by 3rd parties, but that doesn't make it any less frustrating :(
B1GBUD 20th February 2009, 13:17 Quote
I hated Steam initially... I bought a retail copy of HL2 and had to register a steam account and wait for servers to process the activation. This was mainly down to the success of HL2 and Steam's short-sightedness. I think I had to wait 3 hours to play the game.... annoying... yes, easily forgotton.... not really. But I think they've learned from it

Since then, Steam has improved 10 fold and I'm only too happy to spunk my hard earned spondoolies on the latest and greatest Valve product.

Keep it going guys, great job
Phil Rhodes 20th February 2009, 13:56 Quote
Quote:
I'm amazed at how willing people are to only 'own' the game in digital format...

I'm almost getting bored saying it.

The only upside is the rich, fulfilling chortle I'll be able to have when Steam vanishes one day and hundreds of millions of dollars' worth of software stops working. At that point, forums like this will be wall to wall with Angry German Kids thrashing their keyboards and hyperventilating with impotent rage.

Until that time we have to put up with this "reich will last for a thousand years" drivel.
cyrilthefish 20th February 2009, 14:13 Quote
Quote:
Originally Posted by Phil Rhodes
I'm almost getting bored saying it.

The only upside is the rich, fulfilling chortle I'll be able to have when Steam vanishes one day and hundreds of millions of dollars' worth of software stops working. At that point, forums like this will be wall to wall with Angry German Kids thrashing their keyboards and hyperventilating with impotent rage.

Until that time we have to put up with this "reich will last for a thousand years" drivel.
And watch steam games get unlocked by crackers minutes later

the only thing people would lose by steam vanishing is the ability to re-download games...
kylew 20th February 2009, 14:17 Quote
Quote:
Originally Posted by Phil Rhodes
Quote:
I'm amazed at how willing people are to only 'own' the game in digital format...

I'm almost getting bored saying it.

The only upside is the rich, fulfilling chortle I'll be able to have when Steam vanishes one day and hundreds of millions of dollars' worth of software stops working. At that point, forums like this will be wall to wall with Angry German Kids thrashing their keyboards and hyperventilating with impotent rage.

Until that time we have to put up with this "reich will last for a thousand years" drivel.

I'm pretty sure that will never happen. All that would happen is that some one would come out with a cracked steam client which negated any online authentication.

There are, or at least have been many different cracked steam clients, though they're hardly worth it. Steam is great for online gaming, especially with friends.

I fall in to the category that I don't mind spending the RRP in steam on a new game, or slightly more due to its lack of in your face DRM.

In fact, I'd go as far as to say that the DRM included in steam is actually positive and beneficial. I have a few computers which I have steam installed on so I can play my steam games where ever I am. All I 'want' from steam now is to be able to have your saves/profiles stored online too so that I can continue a game from where I left off on what ever PC I am on.
naokaji 20th February 2009, 14:19 Quote
Quote:
Originally Posted by Phil Rhodes
I'm almost getting bored saying it.

The only upside is the rich, fulfilling chortle I'll be able to have when Steam vanishes one day and hundreds of millions of dollars' worth of software stops working. At that point, forums like this will be wall to wall with Angry German Kids thrashing their keyboards and hyperventilating with impotent rage.

Until that time we have to put up with this "reich will last for a thousand years" drivel.

Of course there is a risk that Valve goes bankrupt and all steam purchases are lost, but lets face it, it is the best option we have.

Why?

Look at the retail purchased games.

First, avalaibility is going down, simply put, walk into a games selling store and look at the size of the pc game shelfs, they barely have enough room for the high profile games, imagine what effort it would take for smaller developers to get shelf space, with digital distribution there is no such thing as limited shelf space, there is no such thing as games that are only ordered on request, there is no such thing as sold out....

Second:
You don't actually own the games you buy in retail either, just like with digital distribution. Face it, with limited number of installs, forced sign up to multiple online services, rootkits and anti resale measures in place you are no better off with a retail box. Yes, steam is evil, but so are the "anti piracy" and anti resale crap they have in retail products, with steam you get the evil as well, but atleast it's hassle free.

so that is retail market covered, what other options are there? EA store?
Kúsař 20th February 2009, 14:21 Quote
I hope someone at EA reads that part about price reduction. That's where EA fails...
The Growler 20th February 2009, 14:24 Quote
Personally, I think Steam is hard to beat. They update your games automatically, you don't have to have your disk in the drive etc. etc. One of the disks for one of my HL games was damaged but no problem reinstalling, I just click on the link in Steam and it downloads and installs the whole (updated) game.
The only downside I've experienced is you need to be sure you install Steam on a large partition because there's no option to install new games on a different drive. Once you know about it though it's easily managed.
Phil Rhodes 20th February 2009, 14:28 Quote
Quote:
I'm pretty sure that will never happen.

Oh well, as long as you think so, that's fine, I guess...
thEcat 20th February 2009, 16:14 Quote
Steam?

Hated it, a long while back. More recently started to appreciate the advantages it brings and now using it is a natural and all to convenient process. I'm not a fan of the regional pricing nor the regional censorship but as others have mentioned these 'features' are not necessarily 100% at Valves discretion. I'll remain happy so long as they continue to play fair.

Very interesting figures especially for the return on discounts.
Quote:
Originally Posted by Phil Rhodes
Oh well, as long as you think so, that's fine, I guess...

iirc the eventuality of Steam going bust is already accounted for by some inbuilt mechanism that allows the existing drm to killed. Besides, I have a feeling that if Steam hit problems it would not be short of buyers, in the near future at least.
badders 20th February 2009, 16:35 Quote
Quote:
Originally Posted by Phil Rhodes
I'm almost getting bored saying it.

The only upside is the rich, fulfilling chortle I'll be able to have when Steam vanishes one day and hundreds of millions of dollars' worth of software stops working. At that point, forums like this will be wall to wall with Angry German Kids thrashing their keyboards and hyperventilating with impotent rage.

Until that time we have to put up with this "reich will last for a thousand years" drivel.

Well until that date, we'll keep using it, and you can carry on not using it.

Sounds good to me.
Evildead666 20th February 2009, 16:41 Quote
I'm a great fan of Steam.
Have a lot of games for it, more than 30 anyhoo, haven't counted....

the prices are a tad high, especially considering there is no packaging and no physical product.....
If the download price was consistently less than retail price (not counting special offers in stores etc...) then they would have even more people.

i just love the special offers they have, and am sorely tempted at times... ;)
DriftCarl 20th February 2009, 21:51 Quote
Valve have been very lucky, They moved counter strike onto steam a long time ago, since CS was a free mod and 10000's of players played it, they complained a bit about steam but they put up with it as they didnt have to pay for CS, or any subscription fees.

Valve ironed out alot of bugs and problems during that time, they fixed alot of issues and I am sure optimised the backend systems of steam. This ment that when they started selling games on steam, they had done most of the hard work already, and have increased their sales drastically. They are in a position now to bypass publishers all together if they want and just release games on Steam. I have an average collection of steam games now, even though i rarely login to it or even play the games anymore, its nice to know that I can get a new computer, install steam, loginto my account and download all the games I have ever bought on steam without having to mess about with CD keys, stupidly intrusive DRM or install anything extra(except for that stupid rockstar crap.
Spaceraver 21st February 2009, 01:33 Quote
Phil.. Find me any clue that Steam goes under and i'll send you money for it.
It just isn't going to happen any time soon. The platform in itself is so successful that there is no way Valve would kill it nevertheless let it die on it's own hand.
I'm with Steam (and Valve) on this one. It will not die overnight.
Only when i see bad figures from Valve prompting emminent closure I would demand a DRM patch from them.
Sark.inc 21st February 2009, 08:27 Quote
Quote:
Originally Posted by Tyrmot
I'm amazed at how willing people are to only 'own' the game in digital format...

When u consider how easy it is to loose CD keys and/or damage CDs it makes sense to get it on steam, hell yes you might loose it if they choose to, but that is more than likely going to be a very rare case.


tbh, i would pay the retail price on steam for the simple fact i can backup games, take a copy over to a friends, install steam, log on and reinstall the game with no hassle. Hell if i loose the backup cd so what, i can make another.
DXR_13KE 21st February 2009, 12:44 Quote
if i want to buy a game i will order it from game, free delivery and cheaper than steam....
Hamish 21st February 2009, 17:58 Quote
Quote:
Originally Posted by CardJoe
Euro to GBP to USD prices aren't as bad as you'd think...

http://steamreview.org/posts/localisedprices/

thats not really the problem tho, its the difference between steam pricing and local retail pricing thats become a problem

when the £ was strong and it was about $2 = £1 then steam prices converted into £ were about the same as buying from amazon or play or whatever
but most games are £5-£10 more on steam than retail, the only advantage being you (maybe) get to play the game a few hours earlier

personally im not worried about valve/steam going under and leaving everyone in the lurch
firstly, i have faith that if something terrible did happen and valve/steam closed valve would release something to unlock all your games so that they dont require steam running to play
or at the very least someone would create some similar tool

its not that different from scratching/losing a dvd and being unable to install a game again anyway tbh
[PUNK] crompers 21st February 2009, 17:58 Quote
i think gamers are gonna have to get over the idea that you "own" a game anyway, all you own is a licence and its been like that for a while. i have faith in valve enough to bee confident they wont go under.

at the end of the day games are fairly transitory media anyway; i dont enjoy playing an old game as much as i do watching an old film although i know there are plenty would disagree but for me losing old games isnt a huge tragedy
Timmy_the_tortoise 22nd February 2009, 13:56 Quote
Steam Wins @ Life.
boggsi 22nd February 2009, 14:45 Quote
Massive steam fan. However please please please support HTTP download and proxy servers.. I am stuck behind a ridiculous firewall at university and hence have trouble downloading. I don't mind paying the few quid a month for PingFu but the max d/l speed is 40 kbp/s.. Not fun when you want to get FEAR2 up and running!
Er-El 22nd February 2009, 17:39 Quote
Steam still isn't perfect though and there's a lot of areas they need to go over and improve upon.
For example, can I play my games when I lose my internet connection? No. It'd be nice if they could figure out a way around that one.
Another thing, though nothing major the Steam client still feels a bit sluggish, particularly when compared to GFWL's in-game UI which is more snappy.
Timmy_the_tortoise 22nd February 2009, 18:44 Quote
Quote:
Originally Posted by Er-El
Steam still isn't perfect though and there's a lot of areas they need to go over and improve upon.
For example, can I play my games when I lose my internet connection? No. It'd be nice if they could figure out a way around that one.
Another thing, though nothing major the Steam client still feels a bit sluggish, particularly when compared to GFWL's in-game UI which is more snappy.

Er.... "Work Offline" much?
LeMaltor 22nd February 2009, 22:18 Quote
Quote:
Originally Posted by CardJoe
Euro to GBP to USD prices aren't as bad as you'd think...

http://steamreview.org/posts/localisedprices/

As Hamish said that's not the problem, Empire: Total War - Steam price £39.99, play.com price £29.99. Why is there a £10 difference, it makes no sense O_o
Er-El 22nd February 2009, 23:02 Quote
Quote:
Originally Posted by Timmy_the_tortoise
Er.... "Work Offline" much?
What are you talking about?
LeMaltor 22nd February 2009, 23:14 Quote
Quote:
Originally Posted by Er-El
What are you talking about?

You can play singleplayer games offline, steam has an offline mode, or multiplayer games against bots if you have any.

Pull your internet cable out and see what steam does.
Er-El 23rd February 2009, 18:44 Quote
Quote:
Originally Posted by LeMaltor
You can play singleplayer games offline, steam has an offline mode, or multiplayer games against bots if you have any.

Pull your internet cable out and see what steam does.
Oh. Thanks for the update.
impar 26th February 2009, 22:05 Quote
Greetings!
Quote:
Originally Posted by CardJoe
Euro to GBP to USD prices aren't as bad as you'd think...
http://steamreview.org/posts/localisedprices/
FlatOut: Ultimate Carnage - 39,99€, not 10€.
Quote:
Originally Posted by LeMaltor
As Hamish said that's not the problem, Empire: Total War - Steam price £39.99, play.com price £29.99. Why is there a £10 difference, it makes no sense O_o
Even more absurd in the Special Forces Edition of ETW. Steam wants more £€$ for less (no package bundle).
DrCruel 10th November 2011, 22:45 Quote
I'm a notorious hater of STEAM, and I never thought they'd lose money. their sales model really should rake the cash in, and apparently it has. How could it fail?

1) Monopolize game distribution, and make STEAM mandatory fro almost all new games.
2) Reduce usage rights for the end user, retaining those rights for STEAM exclusively.
3) Cater to gamers with expensive hardware and premium boadband connections, and screw over players with cheaper rigs and slow internet speeds - because rich players pay more.

Of course they're getting rich. Most crooked schemes like this will enrich the people responsible, at least in the short term. That's exactly the point. Meanwhile STEAM is putting itself in the position to eventually own and control all non-current games - because they control the permission to play them.

My problem with STEAM is that they're ripping me off, and pushing me out of my hobby. Why should their financial success make me happier about it?
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